UAE imposes $11m in fines for anti-money laundering offences in the first half of 2022

The UAE's anti-money laundering task force imposed fines of more than Dh41 million ($11m) in the first six months of 2022, as it continues to rein in illicit financial activity.

The Emirates' higher committee overseeing the national strategy on Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) also doubled its efforts to assist in international co-operation and mutual legal assistance cases and requests, state news agency Wam cited Hamid Al Zaabi, director general of the executive office of AML/CFT, as saying.

The UAE's progress in the fight against illicit finance was presented during the committee's 15th meeting, which was chaired by Sheikh Abdullah bin Zayed, Minister of Foreign Affairs and International Co-operation.

The financial system's rapid digital transformation has increased the vulnerability to fraud.

The Covid-19 pandemic also led to an increase in money laundering and terrorist financing, fraud, cyber attacks, bribery and corruption across the financial system, the UAE Central Bank said in September.

The UAE has been at the forefront of the fight against illegal financial activity as it seeks to promote a secure ecosystem in the country.

In June, Dubai Police arrested brothers Atul and Rajesh Gupta after an Interpol Red Notice was issued against them for allegedly looting billions from state-owned companies in South Africa.

Days before, the emirate's authorities arrested hedge-fund trader Sanjay Shah on an international arrest warrant from Denmark, alleging that the British citizen was a central player in a scheme in which foreign businesses pretended to own shares in Danish companies and claimed tax refunds for which they were not eligible.

In November, the UAE Central Bank established the Networking and Cyber Security Operations Centre to help defend the financial system's IT infrastructure against illegal activity and cyber attacks.

Senior judges in Abu Dhabi also highlighted the UAE’s efforts to fight money laundering this week. Mansour Al Marzouqi, chief justice of the Abu Dhabi Criminal Court, said anti-money laundering mechanisms were crucial in strengthening control in the fight against financial crime.

Globally, money laundering activity is projected to more than double to $5.8 billion by 2027 from an estimated $2.8bn in 2022, research firm Markets and Markets said in a report this month.

Sheikh Abdullah bin Zayed, Minister of Foreign Affairs and International Co-operation, chaired the 15th meeting of the UAE's Higher Committee Overseeing the National Strategy on Anti-Money Laundering and Countering the Financing of Terrorism. Wam

The UAE's AML/CFT committee said authorities have reached out to the private sector to ensure effective implementation of sanctions. It conducted 11 outreach programmes for the private sector with more than 7,000 participants.

"The higher committee welcomed the steps taken and the progress achieved by all authorities, which reflects the UAE’s commitment to combating money laundering and terrorist financing," the Wam report said.

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What can victims do?

Always use only regulated platforms

Stop all transactions and communication on suspicion

Save all evidence (screenshots, chat logs, transaction IDs)

Report to local authorities

Warn others to prevent further harm

Courtesy: Crystal Intelligence

Maestro

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

How to wear a kandura

Dos

Wear the right fabric for the right season and occasion
Always ask for the dress code if you don’t know
Wear a white kandura, white ghutra / shemagh (headwear) and black shoes for work
Wear 100 per cent cotton under the kandura as most fabrics are polyester

Don’ts

Wear hamdania for work, always wear a ghutra and agal
Buy a kandura only based on how it feels; ask questions about the fabric and understand what you are buying