Page 57 - Aug Sept 2016
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The Washing Machine - Fighting Money Laundering in the Middle East
can negatively impact efforts at other and anti-terrorist financing efforts, or
institutions by not demonstrating continue doing business in ways that
a unified front and by making that can undermine global AML compliance
institution more appealing to both efforts.
money launderers and to customers who One of the biggest problems for AML
find AML obligations uncomfortable. initiatives in the Middle East is cultural
Financial institutions generally have customs that accept deference to
decades of experience implementing customers and anonymity. Accounts
AML programs and ensuring lacking full identification details or
compliance. But many Middle Eastern with misleading information are not
financial institutions are adopting unusual in the region. Verification of
corporate cultures that weaken AML customer information is often difficult, if
notimpossible.
“Know your customer” is an element apply a risk-based approach to its clientele
lacking at many Middle Eastern base. Bank officials frequently claim that
financial institutions which follow local they do not want to offend customers and
traditions of accommodating customers’ lose business to a less law-abiding com-
requests. Gathering customer informa- petitor.
tion is generally a sensitive issue, as
customers may view banks’ requests for One region-specific challenge is that it
additional information as intrusive or can be very difficult to perform a check
offensive. For example, it can be diffi- against a sanction lists based on a cus-
cult for a bank to refuse to enter into or tomer’s name due to the multiple available
to exit a relationship with a politically spellings of names used in the region.
connected person. Doing so could mean
trouble for the staffer involved. Financial institutions often have a formal
program in place to test the effectiveness
Lack of adequate information has a of their AML systems and controls. How-
significant impact on other aspects of ever, the quality of some of this testing can
AML programs, such as transaction be questionable. Internal auditors com-
monitoring and the bank’s ability to monly carry out this independent testing,
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