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Crypto trading fuels financial crime in the UAE

By Shruthi Nair

The rise in the use of cryptocurrencies in the UAE has resulted in an increase in financial crime, according to a Dubai lawyer.

“Cryptocurrency has given money launderers a feature that they have dreamt of – secrecy,” Maroun Abou Harb, an associate at law firm BSA, said during an exclusive video interview with AGBI.

“This is the easiest tool a launderer can use to launder money.”

“Given that cryptocurrency is new, we don’t have enough regulations yet or compliance standards imposed on crypto companies to restrict these crimes,” he added. 

The UAE recently announced the establishment of federal prosecution offices dedicated to money laundering and other economic crime. 

“After Covid-19, we have seen fraud cases on the rise in Dubai,” said Michael Kortbawi, partner at BSA. 

The new offices are the latest initiatives by the UAE government to help the country get off the grey list compiled by the Financial Action Task Force (FATF).

The Paris-based watchdog set up by the G7 to combat money laundering and terrorism financing, placed the Emirates on its grey list in March last year.

When the FATF places a jurisdiction on the grey list it means the country has committed to resolve swiftly the identified strategic deficiencies within agreed timeframes and is subject to increased monitoring.

“The agenda that the UAE government is working on is to put Dubai on the white list and make it compliant with the national standards of money laundering,” Kortbawi said. 

The new anti-money laundering offices will be responsible for investigating and prosecuting financial crime cases, seizing assets, imposing financial penalties, and protecting the Emirates’ financial system from abuse by criminals and terrorists.

Economic crimes

Types of fraud: Securities, insurance, credit card fraud, identity theft and tax fraud.

Money laundering: A series of transactions to “clean” the money and make it difficult to trace back to its illegal origin.

Insider trading: Using non-public information about securities of a company to make trades, taking advantage of information that is not available to the general public.

Cybercrime: Includes hacking, online scams, phishing and other forms of digital fraud.

Intellectual property theft: Unauthorised use or theft of intellectual property, such as patents, copyrights or trademarks for financial gain.

Penalties

Imprisonment: The most common penalty for economic crime. The length of imprisonment can vary depending on the severity of the crime.

Fines: Economic crime can also result in fines, which can be substantial. For example, in the United States, the maximum fine for money laundering is $500,000 or twice the amount of the laundered funds, whichever is greater.

Disqualification: In some cases, people convicted of economic crime may be disqualified from holding certain positions, such as serving as a corporate director or officer.

Civil penalties: In addition to criminal penalties, economic crimes can also result in civil penalties. For example, the government may sue someone who has committed fraud to recover damages.

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