Palgrave Studies in Risk, Crime and Society

Series Editors

Kieran   McCartan Department of Health and Social Sciences

University of the West of England Bristol ,  United Kingdom

Philip   N. S. Rumney Department of Law

University of the West of England Bristol ,  United Kingdom

Nicholas   Ryder Department of Law

University of the West of England Bristol ,  United Kingdom

Risk is a major contemporary issue which has widespread implications for theory, policy, governance, public protection, professional practice and societal understandings of crime and criminal justice. Th e potential harm associated with risk can lead to uncertainty, fear and confl ict as well as disproportionate, ineff ective and ill-judged state responses to per-ceived risk and risky groups. Risk, Crime and Society is a series featuring monographs and edited collections which examine the notion of risk, the risky behaviour of individuals and groups, as well as state responses to risk and its consequences in contemporary society. Th e series will include critical examinations of the notion of risk and the problematic nature of state responses to perceived risk. While Risk, Crime and Society will consider the problems associated with ‘mainstream’ risky groups includ-ing sex off enders, terrorists and white collar criminals, it welcomes schol-arly analysis which broadens our understanding of how risk is defi ned, interpreted and managed. Risk, Crime and Society examines risk in contemporary society through the multi-disciplinary perspectives of law, criminology and socio-legal studies and will feature work that is theoreti-cal as well as empirical in nature.

More information about this series at http://www.springer.com/series/14593

Dr. Waleed   Alhosani

Anti-Money Laundering

A Comparative and Critical Analysis of the UK and UAE’s Financial Intelligence Units

Palgrave Studies in Risk, Crime and Society ISBN 978-1-137-59454-9 ISBN 978-1-137-59455-6 (eBook) DOI 10.1057/978-1-137-59455-6

Library of Congress Control Number: 2016944839

© Th e Editor(s) (if applicable) and Th e Author(s) 2016 Th e author(s) has/have asserted their right(s) to be identifi ed as the author(s) of this work in accordance with the Copyright, Designs and Patents Act 1988. Th is work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifi cally the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfi lms or in any other physical way, and trans-mission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. Th e use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specifi c statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. Th e publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made.

Cover illustration: © Gavin Hellier/Alamy Stock Photo.

Printed on acid-free paper

Th is Palgrave Macmillan imprint is published by Springer Nature Th e registered company is Macmillan Publishers Ltd. London

Dr. Waleed Alhosani Dubai Public Prosecution Assistant Chief Prosecutor SHARJAH , United Arab Emirates

I wish to dedicate this work to my wonderful parents. Without them, this work would not have been possible. Th ey have encouraged me relentlessly to

strive for knowledge since the day I was born. I am eternally indebted to their constant support, both emotionally and fi nancially.

I am also indebted to my brothers and sisters, my wife and my sons, Saqer and Saeed, who were always there for moral support.

vii

UAE

Attorney general v Mashreq bank 2548/2011 Attorney general v Others 370/2008 HSBC Bank v Others 2901/2005

UK

Ahmad (Mohammad) v HM Advocate [2009] HCJAC 60 Attorney-General v Guardian Newspapers Ltd [1990] 1 AC 109 Bankers Trust Co v Shapira [1980]1 WLR 1274 Barker v Wilson [1980]1 WLR 884 Bowman v Fels [2005] EWCA Civ 226 Brandeaux Advisers (UK) Ltd v Chadwick [2010] EWHC 3241 (QB) Bucknell v Bucknell [1969] 1 WLR 1204 Christofi v Barclays Bank Plc [1998] 1 W.L.R. 1245 Christofi v Barclays Bank Plc [2000] 1 WLR 937 DB Deniz Nakliyati TAS v Yugopetrol [1992]1 WLR 437 Durant v Financial Services Authority [2003] EWCA Civ 1746 Eckman v Midland Bank Ltd [1973] QB 519

Table o f Cases

viii Table of Cases

Foster v Bank of London [1862] 3 F. & F. 214 Harding v Williams [1880] 14D 197 Hardy v Veasey (1867–68) L.R. 3 Ex. 107 Libyan Arab Foreign Bank v Bankers Trust Co [1988] 1 Lloyd’s Rep 259 Manifest Shipping CO Ltd v Uni-Polaris insurance CO Ltd case (‘the star

sea’) [2001] UKHL 1 Owen v Sambrook [1981] Crim LR 329 R v Da Silva [2006] EWCA Crim 1654 R v Fazal (Mohammed Yassen) [2009] EWCA Crim 1697 R v Gibson [2000] Crim. L.R. 479 R v Kausar (Rahila) [2009] EWCA Crim 2242 R v Marlborough St Metropolitan Stipedendiary Magistrate, ex parte Simpson

[1980] Crim LR 305 R v Montila [2004] UKHL 50 R v Nottingham Justices, ex parte Lynn [1984] 79 Crim App Rep 234 R v Phillip Griffi ths and Leslie Dennis Pattison [2006] EWCA Crim 2155 R v Rooney [2006] EWCA Crim 1841 R v Saik [2006] UKHL 18 Regina v Anwoir and others [2008] EWCA Crim 1354 Regina v Tat Venh Fay [2012] EWCA Crim 367 Shah v HSBC Private Bank (UK) Ltd [2010] EWCA Civ 31 Sommers v Sturdy [1957] 10 DLR (2d) 269 South Staff ordshire Tramways Co v Ebbsmith [1895] 2 QB 669 Squirrell Ltd v National Westminster Bank plc [2005] EWHC 664 (Ch) Sunderland v Barclays Bank Ltd [1938] 5 LDAB 163 Tassell v Cooper [1850] 9 CB 509 Tournier v National Provincial and Union Bank of England [1924] 1 KB

461 UMBS Online Ltd v SOCA [2007] EWCA Civ 406 Warner v Metropolitan Police Commissioner [1969] 2 A.C. 256 Weld Blundell v Stephens [1920] AC 956, 965 Williams v Summerfi eld [1972] 2 QB 512

ix

International Conventions

European Convention on Human Rights 1950 United Nations Convention against Corruption 2005 United Nations Convention against Illicit Traffi c in Narcotic Drugs and

Psychotropic Substances (Vienna Convention) 1988 United Nations Convention against Transnational Organised Crime

2000 (Palermo Convention)

Switzerland

Swiss Federal Act on Banks and Savings Banks 2009

UAE

Central Bank Regulation 24/2000 and its Addendum 2922/2008 Constitution of the United Arab Emirates 1971 Dubai International Financial Centre Non-Financial AML/ATF

Regulations Dubai Multi Commodities Centre AML/ATF Policy

Table of Conventions, S tatutes and Regulations

x Table of Conventions, Statutes and Regulations

Emirates Securities and Commodities Authority Regulation 17/2010 concerning AML and CFT and its amendment 40/2011

Federal Law No. 1 of 2004 on Combating Terrorism Off ences Federal Law No. 18 of 1993 on Commercial Transactions Federal Law on Money Laundering Criminalisation 2002 Federal Law 8/2004 regarding the Financial Free Zones Federal Penal Procedures Code 35/1992 Insurance Authority Regulation 1/2009 regarding AML and CFT in

insurance activities Penal Code 1987 Union Law No. 10 of 1980 Concerning the Central Bank, the Monetary

System and Organisation of Banking

UK

Bankers’ Books Evidence Act 1879 Banking Act 1979 Banking and Financial Dealings Act 1971 Commissioners of Revenue and Customs Act 2002 Coroners and Justice Act 2009 Crime and Courts Act 2013 Criminal Justice Act 1988 Data Protection Act 1998 Drug Traffi cking Act 1994 Drug Traffi cking Off ences Act 1986 Financial Services Act 2012 Financial Services and Markets Act 2000 Human Rights Act 1998 Money Laundering Regulations 2007 Money Laundering (Amended) Regulations 2012 Payment Services Regulations 2009 Proceeds of Crime Act 2002 Serious Crime Act 2007 Serious Organised Crime and Police Act 2005 Terrorism Act 2002

xi

Contents

1 Introduction 1

2 Financial Intelligence Units in the UK and UAE to Date 17

3 Banking Confi dentiality Versus Disclosure 39

4 Th e Nature of the FIU from the Perspective of International Standards 65

5 Th e Emergence of the UAE FIU in Counteracting ML 117

6 Empirical Investigation in Relation to the AMLSCU 171

7 Th e UK’s AML Legislation and System 205

8 Th e UK’s SARs Regime on ML 243

xii Contents

9 Th e Role of the SOCA, Now the NCA, in the SARs Regime 281

10 Recommendations and Conclusion 323

Bibliography 369

Index 383

xiii

ABCUL Association of British Credit Unions Ltd ABI Association of British Insurers AED Arab Emirates Dirham AFM Association of Financial Mutuals AML Anti-money laundering AMLSCU Anti-Money Laundering and Suspicious Cases Unit APG Asia/Pacifi c Group on Money Laundering ARA Assets Recovery Agency ATF Anti-Terrorist Financing ATM Automated teller machines BCOBS Banking Conduct of Business Sourcebook BNIs Bearer-Negotiable Instruments BPC Border Policing Command BSED Banking Supervision and Examination Department CBR 24/2000 Central Bank Regulations 24/2000 CCA 2013 Crime and Courts Act 2013 CDD Customer due diligence CEOP Child Exploitation and Online Protection Centre CFATF Caribbean Financial Action Task Force CFT Combating the fi nancing of terrorism CPS Crown Prosecution Service CTRs Cash transaction reports DFSA Dubai Financial Services Authority

Abbreviations

xiv Abbreviations

DIFC Dubai International Financial Centre DMCC Dubai Multi Commodities Centre DNFBPs Designated non-fi nancial business and professions DPA 1998 Data Protection Act 1998 DPRK Democratic People’s Republic of Korea DVLA Driver Vehicle Licensing Authority EAG Eurasian Group EC European Commission ECC Economic Crime Command ECDD Enhanced customer due diligence ECHR European Convention on Human Rights EEA European Economic Area ESAAMLG Eastern and Southern Africa Anti-Money Laundering Group ESCA Emirates Securities and Commodities Authority ESW Egmont Secure Web EU European Union FATF Financial Action Task Force FCA Financial Conduct Authority FIU Financial Information Unit (UAE) FIU Financial Intelligence Unit FLMLC 2002 Federal Law on Money Laundering Criminalisation 2002 FPEPs Foreign politically exposed persons FSA Financial Services Authority FSMA 2000 Financial Services and Markets Act 2000 FSRBs FATF-Style Regional Bodies FT Financing of terrorism GAFISUD Financial Action Task Force on Money Laundering in South

America GCC Gulf Cooperation Council GDCI General Department of Criminal Investigations GDP Gross domestic product GIABA Inter-Governmental Action Group against Money

Laundering in West Africa GIFCS Group of International Finance Centre Supervisors GTBUK Guaranty Trust Bank UK Limited HMCE Her Majesty’s Customs and Excise HMIC Her Majesty’s Inspectors of Constabulary

Abbreviations xv

HMRC Her Majesty’s Revenue and Customs ICO Information Commissioner’s Offi ce IMF International Monetary Fund IT Information technology ITMS Intelligent Transactional Monitoring Systems ITWG Information Technology Working Group JMLSG Joint Money Laundering Steering Group KYC Know Your Customer LEAs Law enforcement agencies LIV Limited Intelligence Value LWG Legal Working Group ME Mutual Evaluation MENAFATF Middle East and North Africa Financial Action Task Force MER Mutual Evaluation Report ML Money laundering MLRO Money Laundering Reporting Offi cer MLRs 2007 Money Laundering Regulations 2007 MONEYVAL Council of Europe Committee of Experts on the Evaluation

of Anti-Money Laundering Measures and the Financing of Terrorism

MOU Memorandum of Understanding MSBs Money Services Businesses MVTS Money or value transfer services NAMLC National Anti-Money Laundering Committee NAMLL National anti-money laundering laws NCA National Crime Agency NCCT National Committee to Combat Terrorism NCIS National Crime Intelligence Service NCS National Crime Squad NPIA National Policing Improvement Agency NTFIU National Terrorist Financial Investigation Unit OCC Organised Crime Command OECD Organisation for Economic Corporation and Development OFCs Off shore Financial Centres OGBS Off shore Group of Banking Supervisors OMLP Offi ce for Money Laundering Prevention OpWG Operational Working Group OWG Outreach Working Group

xvi Abbreviations

PEPs Politically exposed persons POCA 2002 Proceeds of Crime Act 2002 PRA Prudential Regulation Authority RBA Risk-based approach SAFIU Saudi Arabia Financial Intelligence Unit SARs Suspicious activities reports SCA 2007 Serious Crime Act 2007 SOCA Serious Organised Crime Agency SOCPA 2005 Serious Organised Crime and Police Act 2005 STRs Suspicious Transactions Reports SYSC Senior Management Arrangements Systems and Controls TBUK Turkish Bank (UK) TF Terrorist Financing TWG Training Working Group TYFQ Twice Yearly Feedback Questionnaire UAE United Arab Emirates UK United Kingdom UN United Nations US United States

xvii

List of Figures

Fig. 6.1 STRs statistics 2002–2011 196 Fig. 6.2 Submission of STRs by banks and other

reporting entities—2010 197 Fig. 6.3 Submission of STRs by banks and other reporting

entities—2009 198 Fig. 6.4 Submission of STRs by banks and other

reporting entities—2011 198 Fig. 6.5 STRs referred to the LEAs 2008–2011 199 Fig. 6.6 Outcome of STRs and cases—2011 200 Fig. 9.1 SARs by sector Oct. 2007–Sep. 2010 304 Fig. 9.2 SARs by sector Oct. 2010–Sep. 2011 306 Fig. 9.3 SARs by sector Oct. 2011–Sep. 2012 306 Fig. 9.4 SARs by sector Oct. 2012–Sep. 2013 307

xix

List of Tables

Table 6.1 STRs 2007–2011 190 Table 9.1 Statistics on SARs between 2009 and 2013 308