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Money laundering encourages crime and corruption, which slows the economic growth in any economy, it is considered a disturbing issue especially in emerging financial markets. Since such markets consistently try to expand their economies and financial sectors, which makes them an attractive target for money laundering.
Combating money laundry and terrorism financing laws internationally aim to fight this phenomenon in order to avoid the negative consequences on the economy that can be explored in a variety of contexts; Money demand, growth rates, income distribution, tax revenues, and financial institutions.
The Qatari Legislator in the Law number 20 of the 2019 – which replaced Law Number 4 of 2010 – proved to have great awareness of money laundering negative impacts. In this article, the writer will try to shed the light on the most important topics introduced in the law that consists of 11 chapters and 94 articles.
The Legislator defined several essential arguable terms such as Terrorism, Terrorist acts, proceeds of crime, Designated Non-Financial Businesses and Professions (DNFBPs) (which are defined by the Financial Actions Task Force (FATF) as: Real estate agents. Dealers in precious metals. Dealers in precious stones. Lawyers, notaries, other independent legal professionals, and accountants), financial groups and shell banks. The legislator tried to expand and widen the definitions in order to align with the Financial Actions Task Force (FATF) global recommendations and standards. The FATF Recommendations are the internationally endorsed global standards against money laundering and terrorist financing, the standards increase transparency and enable countries to successfully act against illicit use of their financial system.
The Law stipulates two categories of offences, money laundering offences and terrorist financing offences. Chapter two, articles (2) and (3) mention the acts to be considered as offences in a general approach, rather than providing for a specific list of offences. The penalties that shall apply to the offences are those introduced in article (46) of the Qatari penal code. Moreover, it is of great importance to state that the knowledge and intention shall be proven to convict a person, however both may be inferred from objective factual circumstances.
The Law obliged Financial institutions and DNFBPs to identify, understand, document, monitor and constantly update their Money laundering (ML) or terrorist financing (TF) risks, in addition, they must adopt a risk-based approach by developing risk-based internal policies, procedures, controls and appropriate systems to ensure their compliance with the provisions of this Law. Customer Due Diligence (CDD), Enhanced Due Diligence (EDD) and customer identification measures shall also be taken in several situations articulated in the law in articles (10, 11, 13).
All measures shall be proportionate to the level of risks, EDD shall be performed where Money laundering (ML) or terrorist financing (TF) risks are higher. Appropriate risk management systems shall be placed to determine politically exposed persons (PEP), a family member of a PEP and close associates of a PEP in order to take additional relevant due diligence measures once determined.
The law also stipulated a variety of preventive relative to different to matters such as:
- The prohibition of entering into any relationship with shell banks.
- Taking appropriate measures is mandatory in any cross-border relationship.
- The prohibition of carrying out wire transfers with persons listed in the UN security council resolutions
- maintaining records in a proper manner for a minimum of 10 years -from the date of concluding the transaction- is mandatory.
Chapter 11 of the Law, introduces the penalties that shall apply to the offences set forth in the law, excluding Money laundering (ML) or terrorist financing (TF) from the provisions of article 85 of the penal code. Penalties stipulated include fines up to 10 million QAR, imprisonment up to 20 years, the prohibition of carrying certain business activities and confiscation of funds.
New governmental bodies:
The Law provides for the creation of new governmental entities which are:
- National anti-money laundering and terrorist financing committee
- Financial information unit
- Office for seizure and confiscation
For further information in relation to the Anti-Money Laundering Law or other regulations relevant, it would be of our pleasure at Al-Hababi Law firm to assist and help!