Financial Crime World

Compliance Program for Financial Institutions in Jordan: An Overview of the AML/CTFLaw and Notification Obligations

Introduction

In a significant move to combat money laundering and terrorist financing, Jordan enacted the Anti-Money Laundering and Counter Terrorist Financing Law No. 20 of 2021 (the “AML/CFT Law”) on September 16, 2021. The new law replaces its predecessor, the Anti-Money Laundering and Counter Terrorist Financing Law No. 46 of 2007 and its Amendments (“Repealed AML/CFT Law”). The AML/CFT Law introduces a revised framework that provides for a more comprehensive and robust oversight model to tackle financial crimes.

Definition of Money Laundering and Terrorist Financing

The law defines money laundering as the transfer or concealment of proceeds from criminal activities, while terrorist financing is defined as providing or collecting funds with knowledge that they will be used to commit an act of terror. The AML/CFT Law also introduces a broader scope for what constitutes money laundering and terrorist financing, allowing for a more inclusive understanding of the circumstances surrounding these crimes.

Obligations on Financial Institutions

The law obligates financial institutions to implement effective compliance programs to prevent money laundering and terrorist financing. This includes:

  • Identifying and verifying the identity of customers
  • Conducting due diligence on business relationships
  • Reporting suspicious transactions to the AML/CFT Unit (the “Unit”)

Notification Obligations

Financial institutions must also notify the Unit of any reportable transactions or activities, including cash transactions exceeding a certain threshold. The law prohibits disclosure of reports submitted to the Unit to unauthorized persons, except in limited circumstances such as intergroup disclosures between financial institutions within a single group.

Obligations on Authorities

The AML/CFT Law also imposes obligations on authorities such as:

  • The Central Bank of Jordan
  • The Jordanian Securities Commission
  • The Ministry of Industry, Trade and Supply

These authorities are required to undertake procedures aimed at capturing financial crimes and reporting them to the Unit. These include:

  • Field and office inspections
  • Communication with foreign authorities that supervise financial crime
  • Retention of reports and statistics on information gathered pursuant to the AML/CFT Law

Conclusion

In conclusion, the AML/CFT Law marks a significant development in Jordan’s efforts to combat money laundering and terrorist financing. The law provides for a more comprehensive and robust oversight model to tackle financial crimes and obligates financial institutions to implement effective compliance programs to prevent such crimes.

At Al Tamimi & Company, our Banking and Finance team advises on financial agreements and transactions, and can assist clients in navigating the requirements of the AML/CFT Law.

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