Financial Crime World

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Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) in Oman

Introduction

The following article provides an overview of key points related to Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) in Oman, specifically focusing on the identification and assessment of Money Laundering/Terrorist Financing (ML/TF) risks.

Methods of Money Laundering

Money laundering is a complex process that involves various methods to conceal the origin of illicit funds. The following are some common methods used for money laundering:

  • Commodity exchanges
  • Wire transfers
  • Underground banking
  • Trade-based money laundering
  • Abuse of non-profit organizations
  • Investment in capital markets
  • Mingling (business investment)
  • Others

Identification and Assessment of ML/TF Risks

Financial Institutions (FIs) are required to apply a risk-based approach (RBA) to identify, assess, and understand the ML/TF risks they face. This involves allocating resources on a risk-sensitive basis to mitigate these risks effectively.

Risk-Based Approach

The RBA is central to effective AML/CFT implementation, as it allows FIs to identify and take measures commensurate with their specific ML/TF risks. FIs should not disregard certain ML/TF risks or exempt themselves from taking reasonable mitigation measures.

Non-Financial Businesses

Non-financial businesses can be used for money laundering and terrorist financing by providing a means to legitimize illicit funds through transactions or services, making it difficult to trace the origin of the funds.

Recommendations

The following are some key recommendations for FIs and non-financial businesses:

  • FIs:

    • Implement a comprehensive RBA to identify, assess, and understand their ML/TF risks.
    • Allocate resources on a risk-sensitive basis to mitigate ML/TF risks effectively.
    • Not disregard certain ML/TF risks or exempt themselves from taking reasonable mitigation measures.

  • Non-Financial Businesses:

    • Be aware of the potential risks associated with money laundering and terrorist financing, and take steps to prevent such activities.