UAE TERRORIST FINANCING AND MONEY LAUNDERING LAWS,

C O N F I D E N T I A L SECTION 01 OF 02 ABU DHABI 000356

SIPDIS

STATE FOR NEA/ARPI, S/CT, INL/ENT, EB/ESC
STATE PASS FEDERAL RESERVE
SECDEF FOR OSD, OUSD (P)
NSC FOR PATRICK HEFFERNAN

E.O. 12958: DECL: 01/24/2015
TAGS: ECON EFIN ETTC PTER TC
SUBJECT: UAE TERRORIST FINANCING AND MONEY LAUNDERING LAWS,
REGULATIONS, AND PROCEDURES

(U) Classified by Ambassador Michele J. Sison, reason 1.4
(b) and (d).


1. (SBU) Summary: Abdelrahim Mohammed Al Awadi, head of
the Anti-Money Laundering Unit at the Central Bank (AMLSCU)
presented UAE laws and regulations governing money laundering
and terrorist financing to USG officials at the Terrorist
Financing Subcommittee of the January 11-12 Joint Military
Commission. Al Awadi also spoke about US/UAE cooperation and
implementation of terrorist financing sanctions against Al
Qaida and the Taliban. Additionally, Al Awadi asked several
questions related to judicial action on terrorist financing
cases. He also provided statistics on Central Bank actions
on money laundering. End summary.


2. (C) Al Awadi participated actively in the JMC
subcommittee, asking the most questions of any of the UAE
participants. He pointedly asked how intelligence
information could be used to build legal cases, and
specifically stated that intelligence information is often
classified or unusable in a court system. While
acknowledging that UN designations are a useful tool, he
seemed interested in exploring other ways to be able to
legally justify the freezing of accounts and actions based on
intelligence sources.


3. (U) Abdelrahim gave a lengthy presentation on the
specific UAE laws, regulations, and procedures governing
terrorist financing and money laundering:

-- Federal Law No. 3 of 1987 on the Penal Code includes
Anti-Money Laundering provisions.

-- Regulation No. 14/93 of June 1993 from the Central Bank
regarding the opening of bank accounts. The regulation
consists of eleven articles including KYC (Know your
Customer) provisions and requires financial institutions to
oversee transfers in banks and report suspicious
transactions. The regulation also stipulates that an NGO
cannot open an account without appropriate approval from the
Ministry of Labor and Social Affairs. The law requires banks
to verify customer documentation, and is meant to prevent
banks from opening secret accounts.

-- Regulation No. 163/98 of February 1998 deals with
suspicious transactions. It requests banks to provide the
Central Bank with information on transactions whose size is
not commensurate with the income of the concerned individual,
or which does not have an economic cause or clear legal
objective.

-- The Central Bank set up a special unit to investigate
fraud and suspicious cases in 1998. It became the Anti-Money
Laundering and Suspicious Cases Unit (AMLSCU) at Central Bank
in 2000. AMLSCU operates under the aegis of the National
Anti-Money Laundering Committee.

-- The National Anti-Money Laundering Committee (NAMLC) was
set up in November 2000 under the Chairmanship of the
Governor of the Central Bank, and includes representatives
from the Ministry of Foreign Affairs, Central Bank, Ministry
of Justice, Ministry of Finance and Industry, Ministry of
Economy and Planning, and Ministry of Interior. NAMLC has
responsibility for coordinating anti-money laundering
policies in the UAE. After September 11, the NAMLC took on
the role of combating terrorism financing in the UAE.

-- Regulation 24/2000 issued in November 2000 lists
procedures for preventing money laundering. It expanded
requirements on customer identification and reporting of
suspicious transactions.

-- A Central Bank Regulation issued in January 2002 requires
that individuals (over 18 years of age) declare amounts of
cash greater than AED 40,000 imported into the country.

-- Regulation 1815/2001 requests moneychangers to record
details of money changing transactions of AED 2,000 or more
($544),which is the lowest threshold in the world. The
regulation also requires moneychangers to verify customer
identity.

-- Free Trade Zone Authorities are required to implement
procedures related to establishing companies and identifying
the persons involved in setting up the companies.

-- 4/2002 Law from January 22, 2002 which criminalizes money
laundering.
-- Hawala broker regulations which require hawala dealers to
provide the Central Bank with details regarding remittances
and to report any suspicious transactions. There are
currently 151 hawalas registered, 128 of which have their
certificates. The remaining 23 are in the process of
completing the Central Bank,s requirements.

-- The UAE will host the third Hawala Conference in April
2005

-- Ministry of Economy and Planning issued regulations
detailing customer identification and suspicious transactions
reporting requirements for insurance companies and brokers,
accountants and auditors.

-- The Securities and Commodities Authority issued a
regulation concerning procedures for anti-money laundering,
which apply to the securities markets licensed in the UAE and
their brokers. Settlement of transactions of amounts of AED
40,000 and above are required to be documented with customer
verification.

-- Federal Law 1/2004 (issued July 28, 2004) on combating
terrorism.

-- Formed a National Anti Terrorism Commission Committee
that is governed by Federal Law 1/2004 on Combating Terrorism
Offenses.


4. (SBU) Al Awadi also stated that the UAE cooperates with
the US and other partners in the fight against money
laundering and terrorist financing. He mentioned that teams
from the UK, Germany, Turkey, Pakistan, and GCC countries
have visited the UAE to discuss and implement plans regarding
money laundering and terrorist financing. Additionally, the
UAE has hosted 78 training sessions, seminars, conferences,
and workshops on this topic in recent years.


5. (U) The UAE Central Bank has frozen 21 accounts pursuant
to UNSCRs on combating terrorist financing since November.
In terms of international cooperation, the AMLSCU has
responded to 484 requests from counterparts and frozen 23
accounts based on this information. The AMLSCU has referred
88 cases to counterparts and frozen 13 accounts based on the
information provided. From December 2000 to November 30,
2004, AMLSCU received reports of 2259 suspicious
transactions, 2148 of which were investigated by AMLSCU, the
Central Bank, or law enforcement officials. In 27 cases, the
Central Bank issued freeze orders and referred the cases to
the Public Prosecutor. There are 12 cases currently in the
process of prosecution for money laundering. Nine cases are
currently in the process of judgment for money laundering and
confiscation of proceeds, al Awadi reported.
SISON