*DUBAI RAPIDLY BECOMING MAJOR MONEY LAUNDERING CENTER *
FROM THE - JOURNALS of Monte Friesner ~ Financial Crime Consultant for WANTED SA ~
Thursday March 16, 2011 >
WANTED SA has been informed this morning from our lawyer who was on assignment in Russia and the Middle East that the US Department of the Treasury has added three Dubai companies to its global blacklist, accusing them of laundering Afghan drug money.
The firms - Al Adal Exchange, Green Leaf General Trading and Connect Telecom General Trading - were added on February 18 to the Specially Designated Nationals (SDN) list managed by the department's Office of Foreign Assets Control (OFAC).
Along with a dozen other firms, the three companies are accused of acting as affiliates or subsidiaries of a major drug money-laundering outfit in Afghanistan called New Ansari Money Exchange.
According to OFAC officials, New Ansari helped to launder money for two "significant" traffickers: a man called Haji Azizullah Alizai and the Haji Juma Khan Organisation.
Between December 2009 and January 2010 New Ansari Money Exchange sent $94 million (Dh345m)from Afghanistan to Dubai, OFAC officials said.
Abdulla al Bannai, a lawyer for Connect Telecom, said the company had heard nothing from US or UAE authorities but would respond to any queries it received.
"If something happens with the local authorities, some inquiry or investigation, then we will start," he said.
One transfer between two Connect Telecom accounts in the UAE after the firm was blacklisted was held up by the Central Bank but was released within 48 hours, said Mr Bannai. He declined to comment on any links with the other Dubai-based companies named on the OFAC list.
Green Leaf officials referred questions to Connect Telecom; the two have offices in the same building in Deira. Al Adal Exchange, which operates in a storefront around the corner from the Deira offices of Connect and Green Leaf, did not respond to requests for comment.
The SDN blacklist includes more than 4,000 firms and individuals, said Marti Adams, an OFAC spokesperson. She did not provide the exact number of UAE-based entities on the list. Determining the number is difficult because the same company can be listed under different names and related groups.
Sanctioned firms are banned from doing business with US companies and are often shunned by other organisations, which fear guilt by association.
Critics say OFAC sometimes adds firms to the banned list based on weak evidence, which in some cases imposes severe penalties on firms that have done nothing illegal. In addition, many companies spend years attempting to be removed from the list.
"It amounts to an economic death penalty," said Erich Ferrari, a US-based lawyer who specialises in OFAC issues. "Anyone who does business with the US will probably shut their doors to these designated parties."
"The tendency to some degree is to overlist … to shoot and ask questions later," said Hal Eren, a former sanctions adviser at OFAC. Investigators may rely on "very thin evidence", "inaccurate information" and "rebuttable presumptions".
Nor does inclusion on the list necessarily mean an end to suspicious activity. For small firms outside the US, "the impact is not great", he said.
Even firms who do find themselves locked out of the global financial system can wriggle back in.
"Some may metamorphose into other entities," Mr Eren said.
The SDN list is updated regularly; so far this year OFAC has added 16 sets of entries and removed three. It recently blacklisted Libya's leader, Col Muammar Gaddafi, and several of his children.
As a global financial hub, the UAE faces unique challenges in halting money laundering. Since 9/11 the Government has boosted its efforts to help the US to cut off the financing of terrorist groups.
It passed a major money laundering law in 2002 and strong counterterrorism regulations in 2004, and has issued broader rules since the International Monetary Fund encouraged tougher enforcement in a 2008 report.
The Central Bank held a training session this month focusing on improving enforcement of the regulations.
The current laws are effective, but government personnel need better training in how to apply them, said Mohamed al Kamali, a member of the Central Bank's Anti-Money Laundering and Suspicious Cases Unit and director of the Abu Dhabi-based Institute of Training and Judicial Studies.
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