The UAE is vulnerable to money laundering through smuggling, wire transfers, trade fraud, real estate and the gold and diamond trade, the US State Department has said in an annual report.
However, the report praised the UAE and Dubai governments’ efforts to cut down on money laundering, especially in the real estate and diamond industries.
The State Department’s Money Laundering and Financial Crimes report, which monitors countries around the world, said the UAE’s robust economic development and political stability “may leave the country susceptible to possible money laundering activities”.
“Given the country’s proximity to Afghanistan, where most of the world’s opium is produced, narcotics traffickers are increasingly reported to be attracted to the UAE’s financial centres,” it said.
“Other money laundering vulnerabilities in the UAE include hawala, (small wire transfer centres), trade fraud, smuggling, the real estate boom, and the misuse of the international gold and diamond trade.
The report said hawala centers, where thousands of ex-pats would go to wire money home, are still likely to be the UAE’s biggest money laundering weakness.
While noting that Dubai is vulnerable to money laundering through its gold and diamond business, the report noted that the UAE has been a participant in the Kimberley Process certification scheme for rough diamonds since 2002, which helps cut down diamond imports from war zones.
Hossam M. Abd El-Rahman, Managing Partner of Allied Compliance Consultants “ACC” in Dubai and an Anti-money laundering expert, said that the UAE has done lots of efforts to cut down on money laundering, Bank Fraud and other financial crimes.
Abd El-Rahman, who has worked closely with the UAE and Dubai government, said that the Central Bank had made great improvements in the regulations and came up with fruitful initiatives in the recent years and made it much more difficult to launder illegally-obtained money.
