Oman's New Anti-Money Laundering Law

Sultani Decree 30 2016 (the “New Law”) has recently been promulgated setting out Oman’s new anti- money laundering and terrorism financing regime.   The New Law, which provides a more comprehensive set of rules consistent with internationally approved standards, replaces the previous law issued under Sultani Decree 79 2010 (the “Old Law”).

The New Law has largely come about as a result of a desire for the Sultanate to adhere to recognised international standards with regard to anti-money laundering and terrorism financing.  The New Law was created with the aim of addressing the concerns raised in Oman’s Mutual Joint Evaluation Report of 2010, amended and issued by the International Financial Action Task Force in 2013.   Further, the New Law was issued in compliance with the requirements of various international agreements and treaties ratified by Oman in respect of anti-money laundering and terrorism financing.

National Centre for Financial Information

The New Law establishes the National Centre for Financial Information (“Centre”).  Unlike the existing Financial Intelligence Unit (“FIU”), which is part of the Royal Oman Police, the new Centre will have complete autonomy, with financial and legal independence.  The Inspector General will decide which employees of the FIU will be transferred to the Centre.  The responsibilities of the Centre will include, amongst others, all responsibilities previously held by the FIU.

Areas of focus

The New Law focusses on risk assessment and preventative measures including know-your-client procedures and due diligence on customer identification.   Such measures include increasing the responsibility on financial and non-financial institutions to extensively check their accounts, records and employee details as well as anything else that may intimate money laundering or terrorism financing.

The changes also focus on Politically Exposed Persons who represent risks, correspondent banking relationships, financial operations, sanctions on financial institutions and non-financial businesses, professions and financial institutions, with particular regard to those countries that do not adequately apply proper financial standards.

The New Law also contains provisions concerning international cooperation, customs declarations and strengthening sanctions imposed on violators.

Prosecution

The New Law has provided the public prosecutor with wider powers in relation to investigating potential breaches of the law.  Such powers include the right to ask for any documents in relation to any entity, be it private or public.  The public prosecutor, in conjunction with the Royal Oman Police, may also employ techniques that are used to capture criminals, including wiretapping, staking out, using undercover police, freezing accounts, applying travel bans and several other measures.  The New Law provides for greater cooperation with other countries in relation to finding, capturing and extraditing violators.

Penalties

Penalties under the New Law for breach are much more severe than under the Old Law.  For example, the minimum prison sentence for breach under the New Law is five years, whereas it was three years under the Old Law.  Financial penalties under the New Law are also much higher than under the Old Law.  For example, under the New Law, violators face a minimum penalty of OMR 50,000, whereas the minimum penalty under the Old Law was OMR 5,000.

The New Law has given the courts the power of reducing or even potentially excluding liability to those  persons  who  come  forward  and  provide  information  regarding  money  laundering  or  the financing of terrorism.

Conclusion

The New Law has addressed the legislative shortcomings of the Old Law and has created a comprehensive  framework  combatting  money  laundering  and  terrorism  financing  in  line  with approved international recommendations.

We expect that the New Law will have a major impact on how the concerned authorities will be able to act in relation to anti-money laundering and terrorism financing types of activities, in light of having been granted broader investigative powers.