Money Laundering and Financial Crimes in Dubai: A Critical Study of Strategies and Future Direction of Control Belaisha Bin Belaisha A thesis submitted in partial fulfilment of the requirements of the Nottingham Trent University and Southampton Solent University for the degree of Doctor of Philosophy January 2015 Abstract Preventing money laundering is a major international problem. Several attempts, from the national to the international level, have been made to address and prevent money laundering. These are often frustrated by the dynamic nature of the crime itself. However, regardless of its reach and dynamism in illegal or legal transactions, which are often intertwined, individual nations need to address the issue of money laundering to signify to an international audience and legitimate commercial interests their intent to tackle money laundering and thus illustrate that public and private state run organisations in the financial and law enforcement sectors are honest and professional, and that their country is a ‘place to do business’. This thesis, therefore, presents an evaluation of the strategies and future directions of money laundering in Dubai, as it is a ‘new’, dynamic place in which to conduct business and the financial centre of the Middle East. It examines the various ways in which legislation and law enforcement in Dubai are struggling with and tackling the issues and problems of money laundering in the face of organised crime and terrorism. In this thesis, the concepts of money laundering and financial crimes in Dubai, with a special focus on strategies as well as future direction of control, are explored in some depth. This work has established that Dubai has a substantial anti-money laundering framework; however, it suffers from some weaknesses. These weaknesses are caused by the poor relationship between anti-money laundering units, the Anti-Organised Crime Department of the Dubai police, the financial sector and the Central Bank of Dubai. This situation is particularly evident when it comes to sharing information on those suspected of money laundering in Dubai. The ‘lack of a relationship’ is illustrated by primary research, as is the fact that other nations have (i.e. the UK) developed a more intelligence-led approach and partnerships in their quest to prevent money laundering where possible in their jurisdiction. This thesis highlights the progress that is needed in Dubai and the UAE to prevent money laundering, and as such is an original contribution to knowledge in an under-researched field in the Middle East. II Acknowledgements First of all, I would like to express my greatest thanks to Allah – the creator of the whole Universe. I would like to express my deepest gratitude to my primary supervisor, Professor Patricia Park, who provided me with excellent, timely and well-targeted support and guidance which contributed significantly to the successful completion of my PhD. Additionally, her personal care and motivation really inspired me to keep going until the successful completion of the thesis. I believe that, due to her help, it was possible for me to produce a consistent, coherent and quality piece of research. My deep thanks go to Sheikh Mohammed bin Rashid Al Maktoum, ruler of Dubai and Prime Minister of the United Arab Emirates (UAE), for providing me with an excellent opportunity and encouragement to successfully complete my PhD. I am highly indebted to the Dubai Police Department of the UAE for facilitating the acquisition of the required information and materials for my project. I am also extremely grateful to my father and mother. Without their encouragement, it would have been impossible to complete this thesis. I owe my loving parents much of what I have achieved. I thank them for their support throughout my life. My father has put education as a first priority in my life and raised me to set high goals for myself. I dedicate this work to them, to honour their love and patience and prayers during these years. Finally, words are not enough to convey my gratitude to my family. To my wife and daughters, who demonstrated and provided immense understanding, encouragement as well as great sacrifice during the duration of this research. I could never have completed this research without their considerable encouragement, cooperation and patience. Thank you. II Abbreviations AML Anti-Money Laundering AMLSCU Anti-Money Laundering and Suspicious Cases Unit AOCD Anti-Organised Crime Department APG Asia Pacific Group on Money Laundering ARA Assets Recovery Agency CFATF Caribbean Financial Action Task Force CTR Currency Transaction Reports DFSA Dubai Financial Services Authority DIFC Dubai International Financial Centre FATF Financial Action Task Force FTZs Financial Free Zones FIU Financial Intelligence Unit FTZs Free Trade Zones ICT Information and Communication Technology IDB Inter-American Development Bank ILP Intelligence Led Policing IMF International Monetary Fund KYC Know your Client MENAFATF Middle East and North Africa Financial Action Task Force MLRO Money Laundering Reporting Officer NAMLC National Anti-Money Laundering Committee III NIM National Intelligence Model OGBS Offshore Group of Banking Supervisors PEP Political Expose Persons PoCA Proceeds of Crime Act SOCA Serious Organised Crime Agency SRA Solicitors Regulation Authority STRs Suspicious Transaction Reports NAMLC The National Anti-Money Laundering Committee UNODCCP The United Nations Office for Drug Control and Crime Prevention UAECB UAE Central Bank UAEG UAE Government WCO World Customs Organisation IV Declaration I declare that the work contained in this thesis has not been submitted for any other award and that it is all my own work Name: Signature : Date: V Table of Contents Abstract ................................................................................................................................................... II Acknowledgements ............................................................................................................................. II Abbreviations ...................................................................................................................................... III Declaration ............................................................................................................................................. V Table of Contents ................................................................................................................................ VI List of Table and Figures ................................................................................................................. XII Chapter One ............................................................................................................................................ 1 1.1. Introduction .......................................................................................................................................... 1 1.2. Problem Statement ............................................................................................................................. 9 1.3. Research Aim ...................................................................................................................................... 10 1.4. The Objectives of this Research ................................................................................................... 10 1.5. Contribution and importance of the study ............................................................................... 10 1.6. The Structure of the Thesis ............................................................................................................ 12 1.7. Method approach .............................................................................................................................. 16 1.8. Grounded Theory .............................................................................................................................. 16 1.9. Problem Statement ........................................................................................................................... 18 1.10. The Objectives of this Research ................................................................................................. 18 1.11. Practitioner Researcher or Research Practitioner ............................................................. 18 Chapter Two Stages, laws and concepts of money laundering ..................................................................... 20 2.1. Introduction ........................................................................................................................................ 20 2.2. What is money laundering? Techniques and stages ............................................................. 25 2.3. Legal definitions and international conventions ................................................................... 31 2.4. Definition of Hawala ........................................................................................................................ 32 2.5. International Conventions ............................................................................................................. 34 VI 2.6. Section 340 (11) of the POCA (2002) defined money laundering .................................... 47 2.7. Evaluation of money laundering laws and conventions ...................................................... 62 2.8. Secondary Data .................................................................................................................................