Financial Crime World

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Oman’s Financial Institutions Must Be Vigilant Against Money Laundering and Terrorist Financing Risks

Muscat, Oman - The Omani government has emphasized the importance of financial institutions (FIs) to be aware of the risks associated with dealing with virtual asset service providers (VASPs) and virtual assets (VAs). According to the Financial Action Task Force (FATF), VASPs and VAs may be used for money laundering and terrorist financing, posing a significant threat to the stability and integrity of the financial system.

AML/ CFT Compliance

The Omani AML/CFT Law and Supervisory Instructions require FIs to apply a risk-based approach in identifying and assessing these risks. This means that FIs must understand the ML/TF risks faced by Oman and take measures commensurate with those risks to mitigate them effectively.

Risks to be Aware of

In particular, FIs should be aware of the following risks:

  • Life Insurance Products: may be used for money laundering when they have saving or investment features, including options for full or partial withdrawals or early surrenders.
  • General Insurance Product: there are several cases where the early cancellation of policies with return of premium has been used to launder money.
  • Overpayment of Premiums: arranging for excessive numbers or excessively high values of insurance reimbursements by cheque or wire transfer.
  • Using Prepaid Cards: prepaid cards can be misused for money laundering and terrorist financing due to their potential anonymity and ease of cross-border transactions.
  • Tax Evasion: this can occur through underreporting income or creating false deductions, resulting in the generation of untraceable funds that can be used for illicit purposes.
  • 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.

Business Risk Assessment

FIs must conduct a business ML/TF risk assessment to identify areas which would be prioritized in combating ML/TF. The risk assessment is a critical step in establishing an effective AML/CFT compliance program, as it highlights risks associated with the FI’s business and thus the specific controls to be applied.

Compliance is Key

The Omani government has emphasized that FIs must take a comprehensive approach to identifying and mitigating ML/TF risks, including implementing measures to prevent the misuse of VASPs and VAs. Failure to comply with AML/CFT regulations may result in severe consequences, including fines and even license revocation.

Prioritize AML/CFT Compliance

FIs are urged to take heed of these warnings and to prioritize AML/CFT compliance to protect the stability and integrity of the financial system.