December 23,2019

UAB-MENA financial crime survey results underline hardening resolve Accelus News


Published 16-Dec-2019 by Peter Shaw-Smith in Dubai

The growing importance of anti-money laundering/countering the financing of terrorism (AML/CFT) oversight and preventing the facilitation of tax evasion emerged as the main findings of a new Middle East and North Africa (MENA) banking survey. The importance of compliance department involvement in the recruitment process was also highlighted.
The 111-questionstudy, commissioned jointly by the Union of Arab Banks (UAB) and the MENA Financial Crime Compliance Group (FCCG), and conducted in the 12 months to May 2019, claimed to be the most comprehensive ever run on the risks facing regional banks. Of a total of 488 Arab banks, representatives from 128, in 18 countries, responded to the inquiry — a 26% participation rate.
“Fears of regulatory AML/CFT sanctions remain a primary concern for MENA. Over 60% of respondents stated that they are ‘very concerned’ with money laundering and terror financing matters, to outrank all other financial crime concerns such as bribery, corruption and cyber crime. These apprehensions seem to drive decisions for programme and staff appointments which are at the heart of resource allocation,” said Wissam Fattouh, UAB Secretary General and MENA FCCG Chair.
Long overdue
An assessment of bank risk-mitigation processes in the Arab world was long overdue, said Michael Matossian, founder and Deputy Chair, MENA FCCG.
“[The survey’s] purpose was to understand how MENA banks measure against international [best practice] … and gain insights on key efforts that would add greater value in the fight against financial crime. Collecting feedback from all stakeholders is critical for reaching consensus on key risk areas and strategies toward collectively making a difference across the region and beyond,” he said.
“Banks have always been entrusted with preserving the integrity of the financial system. However, over the past few years, regulators have raised their expectations of banks in fulfilment of global policy agendas, in response to the Financial Action Task Force revised assessment methodology, raising the bar for what constitutes an effective AML/CFT programme.
“To that end, the survey assists compliance officers [in assessing] how their respective banks measure against the global yardstick in order to identify key areas in need [of] enhancement,” he said.
The report said the European Union had launched a list of non-cooperative jurisdictions for tax purposes, which included the UAE and Oman. It said measures to reduce tax evasion had been tightened, through the enactment of the Foreign Account Tax Compliance Act (FATCA) and what the report terms its “global replica”, the Organisation for Economic Cooperation and Development’s (OECD) Common Reporting Standard (CRS). To date, 11 Arab countries have committed to the CRS, including Kuwait, Oman, Egypt, Morocco and Tunisia.
Definitive assessment
In a definitive assessment of financial crime programmes in place at Arab banks, 72% said they had AML/CFT schemes in operation, 67% dealing with sanctions, 54% fraud (internal and external), 52% bribery and corruption, and 47% cyber crime. Some 63% had AML investigative teams, 34% financial intelligence teams and 56% sanctions and embargo teams.
Around one-third of the compliance functions held a compliance-related certification. Some 421 officials, at 59 banks, were certified AML specialists, 53 individuals at 18 banks were certified financial crime specialists, while 457 officials at 57 banks had other AML/CFT certifications.
While a number of MENA banks were implementing best practice, there was still room for others to drive enhancements in areas that have been recognised as fundamental elements of AML/CFT programs including investigations, screening, training and scrutiny of beneficial ownership and source of funds, Matossian said.
“Increased financial crime awareness as well as raising capacity to allow for the deployment of advanced technology solutions, data analytics and machine learning will lead to increased efficiency and effectiveness. In addition, the survey has shed light on areas of concern as well as key efforts believed to enhance AML/CFT performance. These include greater public-private sector partnership, standardisation of requirements and more involvement of banks’ boards,” he said.
“There is no doubt that collaboration and dialogue between different stakeholders and across borders is the only way by which we can build greater capacity and keep up-to-date on the latest typologies. MENA FCCG has been able to bring significant action in this area and its efforts have started to pay dividends. During 2020, the group will continue its actions for making MENA a safer place to do business while making use of insights revealed under the report.”
There has been lofty endorsement for the survey.
“Every day our banks help global communities stay safe, whether by stopping organised crime from funding their illicit activity or by stopping terrorist cells from financing their attacks; with MENA FCCG there is a clear focus on common issues and objectives with the Wolfsberg Group,” John Cusack, former Wolfsberg Group co-chair, said in the report.