Money laundering and the laws to deal with it

Money laundering is all about transferring money made through criminal activities to the main economy as if it is earned through lawful means. Basically, the money is obtained through drug trafficking or by any other criminal means. There is a broad spectrum to define money laundering, and various laws have also been enacted to prevent the profit made through the criminal activities.

Several laws are now into place which applies on various organisations to prevent black money practices and their penetration into the system. These are anti-money laundering laws that criminalise the movement and profit earned through criminal activities.  

People have concerns about these laws including the apparently broad application of these statutes. This is particularly about legitimate business activities. For instance, consider a scenario when businesses or individuals handle money with no knowledge about its origin, but end up prosecuted for money laundering in the federal court.

Laws have been passed for anti-money laundering in UAE to ensure criminal deeds remain out of the cycle. Ever since the UAE AML has been issued, several ministries and other government agencies are busy issuing circular to fight with money laundering practices and terrorism. In fact, the Ministry of Justice alone has passed four circulars between 2008 and 2010 to deal with the wrong doing. Two circulars were directed at lawyers and two at Notaries Public.

Various federal laws impose severe restrictions against several groups, persons and entities considered to be engaged in money laundering activities, supporters of terrorist activities or illegal acts of making money. These sanctions are implemented through authorised parties and apply to everyone falling within the territory.

The law sanctioned in a country generally covers all its citizens – anywhere in the world, or any person within the country. The law mandates not to help those – any business or person – suspicious to have earned money through unlawful means. Consider banks, the executives have to inform authorities if someone deposits a huge amount in the account without providing clear explanation of the source of money. Failure in doing so may land the bank officials in prison. There are many other checks that authorities follow to regulate the flow of money and prevent the integration of laundered money into the main economy.

Anti-money laundering in Middle East also calls for good corporate governance practices, and businesses are required put strong emphasis on this. Failure in doing so may cause immense trouble for businesses in Dubai.