Jordan’s Financial Sector: A Hub for Money Laundering Risks

The Hashemite Kingdom of Jordan has been assessed as facing a “high” level of national money laundering risks, according to recent reports. With over 17,600 regulated institutions and 6,656 non-profit organizations, the country’s financial sector is home to around 195,000 legal entities.

Financial Sector Composition

Banks are the main component of the financial sector in Jordan, accounting for 93.4% of total assets in 2018. The money exchange sector, although relatively small with a ratio of assets to total financial assets of just 0.3%, plays a significant role due to the large volume of transfers executed through its channels.

The non-financial sector, which includes real estate offices, jewelry shops, lawyers, and accountants, also contributes significantly to the country’s economy. The real estate market, for instance, saw trading valued at JD 5 billion in 2018, with JD 4 billion accounting for 14% of GDP.

Money Laundering Risks

However, the country’s financial sector is not immune to money laundering risks. According to a recent assessment, Jordan faces a “high” level of national money laundering risks, with a risk score of 4.1 out of 7.0.

Major Threats

The report identifies domestic and foreign criminal proceeds as major threats to the financial sector. Domestic proceeds from crimes committed within the country are estimated to be around JD 941 million, or approximately 3.7% of GDP. The majority of these proceeds come from:

• Tax evasion: estimated to generate criminal proceeds of approximately JD 695 million
• Robbery/criminal theft and theft: account for approximately JD 78 million in criminal proceeds
• Trafficking in illicit drugs: generates significant criminal proceeds, estimated to be around JD 66 million

Recommendations

The report urges financial institutions to remain vigilant in identifying and reporting suspicious transactions to combat money laundering risks.