Wednesday, May 18, 2011

Oman’s Anti Money Laundering and Combating Terrorist Financing Law

As a bastion of stability and security in a sometimes volatile region, and with a robust regulatory and business environment, the Sultanate of Oman tends not to experience major problems with respect to money laundering or terrorist financing. However, as noted in a report by the U.S. Department of State, Oman’s long, rugged coastline remains susceptible to regional criminal activity including terrorism, maritime piracy, smuggling and the traffic and sale of illegal drugs.

Oman’s Anti Money Laundering and Combating Terrorist Financing Law (the “AML-CTFL”), which was promulgated as Royal Decree No. 79/2010, has established a framework for classifying, investigating and punishing money laundering and terrorist financing offences.

What is ‘money laundering’?

Under the AML-CTFL, a money laundering offence will be deemed to have taken place when a person handles funds knowing that such funds are derived, directly or indirectly, from the proceeds of a crime or from participation in criminal activity.

Acts of money laundering could include the conversion, transfer or deposit of such proceeds, with the intent to conceal or disguise the origin of the proceeds, or the possession or use of such proceeds.

What are ‘proceeds of crime’?

For the purposes of the AML-CTFL, proceeds can encompass a wide variety of assets, including currencies, commercial paper, securities and any property or tangible or intangible asset that has financial value.

When we talk about the ‘proceeds of crime’ in connection with money laundering, we are referring to proceeds which were derived – even indirectly – from crimes, including terrorism, illegal drugs, piracy, bribery, corruption, kidnapping, human trafficking and embezzlement.

Terrorist financing

The AML-CTFL singles out terrorist financing, which is deemed to take place when a person raises funds or provides funds, directly or indirectly, knowing that such funds will be used, wholly or partly, to finance terrorist activity or a terrorist organization. This financing can take place in Oman or abroad.

With both money laundering and terrorist financing, it is interesting to note that the links to the activity do not need to be direct in order for the offence to be convictable; however, the person committing the offence must have knowledge of the underlying illegal action.