UAE set to partner with Pakistan in fresh clamp down on money laundering

Two countries are working towards establishing a legal framework to share information on financial crimes

Pakistan's top model, Ayaan Ayaan Ali, center, leaves a court in Rawalpindi, Pakistan, Monday, June 1, 2015. Ali is under detention since her midnight arrest on March 14 at Islamabad airport and faces money laundering charges after authorities seized over $500,000 before she boarded a Dubai-bound flight. Pakistani law makes it illegal��for a passenger��carry over $10,000 on��a flight. (AP Photo/B.K. Bangash)
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In March 2015, Pakistani Customs officers stopped a glamorous young woman at Islamabad’s Benazir Bhutto International Airport.

Ayyan Ali, then 22, was one of the country's top models and widely known as the face of a large mobile phone company.

Officers said they found more than $500,000 in cash which they claimed she was trying to smuggle out of Pakistan on a flight to the UAE.

Her criminal case, which remains ongoing, attracted widespread and intense media attention due to her celebrity status. Ms Ali continues to deny allegations of smuggling.

Today, away from the public glare that the incident created, billions of dollars are still believed to be being smuggled out of Pakistan each year.

But Pakistani Prime Minister Imran Khan has pledged to stop the practice. His government, in the middle of a financial crisis and lacking foreign currency, is hoping to claw back money illegally moved overseas.

“All sorts of money is going out,” said Mirza Shahzad Akhbar, Mr Khan’s special adviser on accountability. “There’s proceeds of crime that’s going out, there’s non-taxed money that’s going out – it’s all getting mixed.

“This is our government’s effort to start to reduce it and then get to the point of actually stopping it completely. In that, I think Dubai or UAE has to play the most important role.”

Pakistani Prime Minister Imran Khan prepares to speak at the opening of the Future Investment Initiative conference, in Riyadh, Saudi Arabia, Tuesday, Oct. 23, 2018. The high-profile economic forum in Saudi Arabia is the kingdom's first major event on the world stage since the killing of writer Jamal Khashoggi at the Saudi Consulate in Istanbul earlier this month. (AP Photo/Amr Nabil)
Imran Khan, pictured in Riyadh for the Future Investment Initiative, has vowed to halt the siphoning of money out of Pakistan. AP

Each year, around $10 billion is estimated to be siphoned out of Pakistan by charter flight, ship, via Afghanistan, or by hawala – a system of money transfer commonly used across the Middle East.

The vast sums often come from the fruits of the drug trade, corruption and extortion rackets, or is just cash being hidden from the taxman.

After Mr Khan's populist campaign promised to track down and return money illegally looted from the country, the issue is understood to have been a focus of talks between Mr Khan and UAE leaders during his visit to the country in September.

Mr Akhbar said Islamabad was pushing for mutual assistance agreements to help track down money and assets, and had been offered the UAE's "full co-operation". He said that he was due to hold further talks with Sultan Al Badi, Minister of Justice.

The two countries are believed to be close to agreeing on a draft law to allow the sharing of information on financial crimes in foreign jurisdictions.

The UAE this week also announced a new anti-money laundering law to battle the financing of terrorism.

Mr Akhbar told The National how dirty money was laundered through obscure shell companies in tax havens. Once the cash is clean, criminals often invest the cash in countries such as the UK, Switzerland and the UAE.

Pakistani investigators recently uncovered a network of more than 100 such shell companies that had been used to launder billions of rupees.

“The mutual cooperation between the two countries [UAE and Pakistan] can really help us put a stop to it,” said Mr Akhbar, a former prosecutor.

"This [money laundering] does not help any government. But we have to be watchful if this money is corrupt, or this money is the proceeds of crime."

Mr Akhbar said more than 10,000 commercial and residential sites belonging to Pakistanis have been identified in the UAE.

Significantly, a recent report by Pakistan's Federal Investigation Agency submitted to the country's Supreme Court identified Mr Khan's sister, Aleema Khanum, as among 44 prominent political figures from Pakistan who own unnamed properties in the UAE.

Investigators are understood to be examining the names in an effort to establish which properties, if any, have been declared to tax authorities.


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Younis Haji Al Khoori, undersecretary at the UAE Ministry of Finance, confirmed that the UAE was exchanging tax information with Pakistan, but said he could not comment on property specifically.

“The UAE is committed to implementing international economic standards to the highest levels of transparency with regards to tax-related matters,” Mr Al Khoori said. “The UAE is fulfilling its international commitments and signed international treaties”.

DUBAI, UNITED ARAB EMIRATES - SEPTEMBER 14:  A general view of high-rise residential apartment buildings in Dubai Marina on September 14, 2015 in Dubai, United Arab Emirates.  (Photo by Francois Nel/Getty Images)
Metamaterials could help engineers cool buildings without the need for expensive air conditioning systems. Getty

Charles Laubach, a partner at Afridi & Angell legal firm in Dubai, said while the UAE was making inroads into tackling money-laundering, there remained room for improvement.

He said anti-money laundering laws first introduced in the country in 2002 had been tightened significantly in 2014, and that he expected further, even stricter steps in the near future.

The changes have made it harder to open bank accounts, for example, while regulated companies involved in finance also have to comply with strict rules to ensure suspicious transactions are spotted and reported.

"Every country in the world has room for improvement," said Mr Laubach, who has worked in the UAE for more than three decades.

“But anti-money laundering regulations mean it is getting harder and harder to hide the proceeds of illicit activity, whether it’s in the form of money or property.

“The government wants the UAE to have an excellent reputation worldwide for compliance.

“They don’t want the reputation of being a money laundering haven which would be bad for the image the UAE is trying to project overseas. The UAE takes this very seriously and they’re moving in the right direction.”


Imran Khan interview


Mr Khan has also approached Sajid Javid, Britain's Home Secretary, who agreed to a new anti-corruption partnership on a recent visit to Islamabad.

London has become notorious in the eyes of many in Pakistan as a haven for members of Pakistan's political elite to stash their corrupt wealth.

But British officials stress that corruption cases can only be brought on solid evidence and are unlikely to succeed if they appear to be merely political persecutions.

Mr Akhbar said Pakistan's message to the UAE was simple: “We will give you the access to our systems, we would like to have the same kind of co-operation from you.

“I hope that they can cut all the red tape and our policemen can speak to their policemen and they can investigate things together.”


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