LEGAL VIEWPOINT: Measures by Financial Institutions, Non-Financial Business and Professions to Prevent Money Laundering by Dr AbdelGadir Warsama Ghalib, Principal Legal Counsel, Bahrain

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Dr AbdelGadir Warsama Ghalib, Principal Counsel

The Financial Action Task Force – FATF – issued the FATF (40) Standard recommendations in October 2003, to control money laundering. The (40) standards, were increased later to add more standards to cover terrorism financing. Most are of the opinion that, the war against money laundering and terrorism financing is to be tackled and undertaken by banks and other financial institutions only. Yes, they play a very major drastic role in this respect. However, there are other many entities that are required to follow suit and take the same, if not more, precautions and measures to combat money laundering and terrorism financing. Such entities, among others, include many non-financial institutions, businesses and certain professionals.

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In this respect, we need to mention that, the customer due diligence, the principle of know your customer (KYC) and the record-keeping requirements as set out in FATF standard (40) recommendations, shall apply to all licensed and designated non-financial businesses and professions.

This includes, the casinos (if any), particularly when customers engage in financial transactions equal to or above the applicable designated threshold.

The real estate agents and professionals, particularly when they are involved in transactions for their client concerning the buying and selling of real estate.

The dealers in precious metals, gold sellers and dealers in all precious stones, particularly when they engage in any cash transaction with a customer equal to or above the applicable designated threshold.

The lawyers, the notaries, other independent legal professionals and the accountants, particularly when they prepare for or carry out transactions for their client related to some  activities including, buying and selling of real estate, managing of client money, securities or other assets, management of bank, savings or securities accounts, organization of contributions for the creation, operation or management of companies, the creation or operation or management of legal persons or arrangements, and buying and selling of business entities.

The trust entities and company service providers, particularly when they prepare for or carry out transactions for a client concerning certain listed and defined activities.

Above, are the non-financial institutions, businesses and other professionals that are particularly listed and defined in FATF standard recommendations. It’s believed that, money laundering criminals are looking for other ways and means to do their dirty job away from banks and financial institutions wherein the doors are now firmly closed in their faces. However, irrespective of the tough KYC application, the criminals are pursuing their attempts to penetrate through other avenues and corridors. But the regulators became more wiser and vigilant by adopting the FATF recommendations which cover all possible mechanisms. We urge, all entities included in the list to be more professional and not to allow any leakage or dirty work to be laundered. This is a legal duty and likewise a professional continuous obligation.

The FATF standard recommendations, played and is still playing a major role in all efforts taken to combat and curb money laundering and terrorism financing, the new black crimes that endanger the global economy and the national economies of all and each country. A firm stand is needed by each and every person or entity otherwise the consequences will be grave, not repairable and not curable. Don’t open the door for criminals and let’s stand together and apply the law.