Whopping $500 million fines are just one reason sanctions and anti-money laundering measures continue to haunt international commerce. With advances in electronic transmittals, hundreds of billions in dirty money swirls all over the world with breathtaking speed and efficiency. Rather than passively watching the problem spiral, however, the United Arab Emirates and one of its prominent regulators have stepped in with aggressive preemptive action.

With last week’s mega fine imposed by the U.S. on ABN Amro (since acquired by Royal Bank of Scotland) for “turning a blind eye” to sanctions against Iran, Cuba and other countries, the focus of international efforts to control criminal cash flows has received renewed attention. The U.S. and the UN have traditionally borne the yoke of international trafficking cops, but when it comes to money laundering, the United Arab Emirates and the Dubai Financial Services Authority (DFSA) have drawn a line in the sand.

The Sanctions Committee of the United Nations, for example, is a subset of the UN Security Council. From Saddam’s Iraq, to Darfur in the Sudan, the UN has long advocated the use of sanctions “as an enforcement tool when peace has been threatened and diplomatic efforts have failed.” As a consequence, companies and individuals doing business with rogue states bring themselves within the legal jurisdiction of a world body.

The U.S., meanwhile, has a number of different mechanisms for combating illicit traffic. On an international scale, the Office of Foreign Assets Control (OFAC), contained within the Department of Treasury, maintains a list of Specially Designated Nationals. Doing business with individuals and companies on this list subjects U.S. citizens and residents to criminal penalties. Because the list is public information, a presumption of intent when doing business with any person or entity on the list. OFAC maintains a list of 20 extant sanctions programs on its website; the site also includes a list of memoranda between OFAC and bank regulators.

Though not as large or influential as the UN or U.S., the UAE, a geographically a tiny Gulf outpost, has in its own right backed up its claim as a world financial center by committing considerable energy and resources to combating not only money laundering but the financing of terror. The DFSA oversees the Dubai International Financial Centre (DIFC), a self-contained financial free zone with its own civil and commercial law framework located in the Emirate of Dubai. As for penal law, however, UAE federal law still applies not only to the DIFC but all free zones. The DFSA thus provides the compliance mechanisms and the UAE the criminal penalties for money laundering.

While not an Islamic issue, money laundering has received attention from both the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) and the Islamic Financial Services Board (IFSB). Both organizations, in their respective governance and corporate responsibility provisions, underscore the importance of compliance with relevant AML laws.

via A Line in the Sand: Getting Tough on Money Laundering in Dubai and the UAE.

Related articles by Zemanta

• ABN Amro laundering case settled (news.bbc.co.uk)

“You definitely need to do it, because it gives you warning of major storms,” said John Pescatore, an analyst with Gartner Inc. and a former analyst with the National Security Agency. “But it’s not going to tell you about individual raindrops.”

Faisal Shahzad, a naturalized U.S. citizen of Pakistani descent was arrested Monday at New York’s John F. Kennedy International airport in connection with an attempt to detonate a car bomb in Times Square. Shahzad, who is scheduled to be indicted on terrorism-related charges in Manhattan today, was pulled off a plane bound for Dubai, minutes before the jetliner was scheduled to take off.

Shahzad is alleged to have parked an explosives-laden vehicle in Times Square, apparently with the intention of blowing it up. Media reports quoting the FBI and other authorities said the bomb could have caused a substantial number of deaths and injuries had it detonated.

The anti-terrorism task force was quickly able to identify Shahzad as the prime suspect in the case thanks to a series of mistakes the would-be bomber made. But for the moment, there is little to show that authorities had any inkling of either Shahzad or of his plot beforehand.

via N.Y. bomb plot highlights limitations of data mining – Computerworld.

Related articles by Zemanta

• The Times Square scare: being alert, acting fast in a dangerous world (seattletimes.nwsource.com)
• Suspect Admits Bomb Plot (online.wsj.com)
• What Led Up to the Arrest of a Bombing Suspect (nytimes.com)
• Security Slip Let Suspect on Plane, Near Takeoff (abcnews.go.com)
• ‘Arrests In Karachi’ Over Times Square Bomb (news.sky.com)
• New York Times Square bomb: three passengers removed from Dubai flight (telegraph.co.uk)
• Emirates Passengers Didn’t Know About Terror Suspect’s Arrest (businessweek.com)

Contribute online through ClintonBushHaitiFund.org.
Text “QUAKE” to 20222 to charge a  $10 donation to the Clinton Bush Haiti Fund (the donation will be added to your cell phone bill).
Find more ways to help through the Center for International Disaster Information.

All numbers below are accurate as of noon Sunday, January 17, 2010

AIRPORTS AND AIRSPACE

The airfield is open for 24/7 operations and has a 100-aircraft per day capacity, this is an increase from yesterday’s 60 aircraft per day capacity. The airport has received more than 600 short tons of supplies. USAF air traffic control and airfield management personnel continue to manage air operations at the airport with approval of the Government of Haiti. There are 30 military helicopters providing relief to the people of Haiti. These helicopters are operating out of nine landing zones, including five drop-off points.

SAFETY

Approximately 5,800 military personnel on the ground or afloat.  Approximately 7,500 additional military personnel are expected to arrive by 1/18. More than 1,000 personnel from the 82nd Airborne Division arrived in Haiti on 1/16.

HEALTH

More than 250 HHS medical personnel have arrived in Haiti.  2 planeloads of medicine, medical equipment and supplies from HHS have arrived in Haiti with a third expected to arrive today. 3,840 hygiene kits taken from USAID stockpiles in Miami have arrived. The USNS Comfort is currently underway and expected to arrive on 1/20 with 600 medical personal on board.

EVACUATION AND RESCUES

As of 0900 a total of 1,760 American citizens have been airlifted out of Haiti. USAID/DART reported that a U.S. Urban Search and Rescue (USAR) team had rescued an additional three individuals at the Caribbean Market. As of 0900, US USAR teams have rescued 26 individuals.  There are currently six US USAR teams operating in Haiti along with 21 international USAR teams from around the world.  US teams are based out of Fairfax VA, Los Angeles CA, Miami FL (two teams), New York NY and Virginia Beach VA. Each USAR team includes approximately 70 team members.

FOOD AND WATER

U.S. military aircraft have airlifted 130,000 humanitarian daily rations and more than 70,000 bottles of water to Port-au-Prince. Three water purification units are operational and can supply 180,000 liters per day. USS Carl Vinson continues to provide potable water production. U.S. military aircraft will continue to support the delivery of an additional 600,000 daily rations over the next several days. Six additional water purification units are scheduled to arrive in the coming days from USAID stockpiles in Dubai. Each unit provides 1000,000 liters of safe drinking water serving 10,000 people per day.  12,000 water containers have arrived from Miami. Yesterday, the U.N. World Food Program distributed high-energy biscuits to a total of 50,000 people. The World Food Program Port-au-Prince metropolitan areas schools feeding program is now serving hot meals to 50,000 affected people.

via An Update on the U.S. Government’s Response to the Haiti Earthquake | The White House.

Denniston told Emirates Business that Dubai had grown fast into a financial hub and its legal system needed to keep pace with this growth. He pointed out that legal disputes in the region were lesser as compared to many developed countries which has helped to bring financial investments into the GCC states.

Besides, the setting up of arbitration courts at Dubai International Financial Centre DIFC and other financial hubs in the Gulf had led to a more confident business environment, he felt.

GE places the UAE and the GCC high on its list of potential business locations, seeing opportunities in the regions infrastructure, energy and healthcare sectors. The company has had a presence in the region as far back as the 1930s. It has been working in the UAE, Saudi Arabia and Kuwait and has undertaken a range of projects in Lebanon and Jordan.

via Transparency attracts foreign capital.

But not all of Asia is gloating. Missing altogether from Eversheds’ report is the city that’s most worried about losing ground to Shanghai: Hong Kong.

Obviously, such surveys are to be taken with a grain of salt; after all, over a tenth of Eversheds’ respondents predicted Dubai would emerge as the world’s preeminent financial center in decade’s time.

And Hong Kong, a special administrative region of China with a separate local government and legal system, has been booming recently. So far this year, its exchange is leading the world in initial public offerings, mostly on behalf of mainland Chinese companies. It remains the preferred regional base for global banks and, consequently, international law firms.

Still, Hong Kong has long had a complex about Shanghai, which was the region’s preeminent financial center before falling under communist rule in 1949. Now that that same communist government has embraced capitalism, fears abound that Shanghai will be promoted at Hong Kong’s expense.

That anxiety was reflected in a Reuters article last week, in which one Hong Kong banker fretted that his city would become a second city — a Boston or a Chicago to Shanghai’s New York.

via Will Shanghai Overtake Hong Kong as World Financial Center?.

The passing of anti-bribery laws and regulations and renewed efforts by governments to clarify and codify specific regulations in more recent legislations and decrees further highlight national efforts to combat corruption at all levels.

For example, provisions in the UAE Penal Code make acceptance of a bribe by a public official a criminal offence, punishable by imprisonment and fines and the provider of a bribe or the person who facilitates a bribe can also face criminal liability. Several countries in the Gulf, including the UAE, have signed up to the UN Convention against Corruption and companies in Dubai regulated by the DIFC and DFSA too have a handful of regulations and compliance procedures to watch out for.

American and European companies doing business in the region are always concerned with FCPA and OECD Anti-Bribery provisions and the number of investigations carried out by the US Securities and Exchange Commission for alleged violations of FCPA provisions globally has increased from nine in 2003 to more than 90 in 2008.

It is interesting to note that more local companies in the Gulf are beginning to recognise the act's impact and relevance in relation to business transactions, which is making thing easier for everyone.

What is also often misunderstood is that the FCPA applies only to American companies, when in fact the provisions apply to any entity with physical assets or securities registered in the United States.

[continued] Risk management a must today.

The Am Law Daily wrote on Tuesday about the mass of law firms that rushed into Dubai over the past two years to get in on the real estate and financing boom sweeping the Gulf region, but we wanted to know a bit more about the climate there this week, now that Dubai World, the massive sovereign wealth conglomerate, has announced plans to restructure about half its $60 billion in outstanding debt. So we called Jawad Ali, a King & Spalding partner based in Dubai and the deputy head of the firms Middle East & Islamic Finance practice group.

Ali, who has worked mostly in the Middle East since 1994, specializes in Islamic financial products, such as sukuk, products that act much like traditional bonds but remain in compliance with Islamic law, or Shariah. The law forbids interest as well as financial products that generally allow investors to, in Alis words, “make money off of money.” Investors must share profits with lenders, and there must be a real asset tied to the investment — in the case of the Dubai World subsidiary in the most trouble a unit called Nakheel, that asset is real estate.Ali was kind enough to take us through Islamic finance and describe the climate in Dubai right now.

[continued] Islamic Finance Practices Face Their First Test With Dubai World Debt.