Financial Crime World

Oman Takes a Strong Stance Against Financial Crime: Implementing Effective Risk Assessment Tools

In a bid to combat financial crime and ensure the integrity of its financial system, Oman has established a robust framework for assessing risks associated with money laundering (ML) and terrorist financing (TF). The National Committee for Anti-Money Laundering and Combating the Financing of Terrorism (NAC), which serves as the primary coordinating body, plays a pivotal role in formulating policies and fostering inter-agency collaboration to tackle these threats.

Key Provisions

The regulatory framework requires financial institutions to conduct thorough risk assessments, categorize customers into different risk categories, and implement due diligence measures accordingly. These measures include:

Prohibition on Anonymous Accounts

  • Financial institutions are prohibited from opening or maintaining anonymous, fictitious, or coded accounts.

Customer Due Diligence

  • Institutions must verify the identity of customers, beneficial owners, and representatives using reliable documentation issued by public authorities.
  • This includes obtaining accurate information about the customer’s name, date of birth, address, occupation, and financial history.

Enhanced Due Diligence for High-Risk Customers

  • Financial institutions should employ enhanced measures, such as obtaining additional information, updating data more frequently, and getting senior management’s approval, for high-risk scenarios.
  • This includes verifying the customer’s source of funds, business activities, and any other relevant factors.

Transaction Reporting

  • Institutions must maintain records of domestic and international transactions for at least ten years post-execution and provide copies to the Centre upon demand.
  • This includes reporting suspicious transactions that may indicate ML or TF activity.

Internal Policies and Controls

To ensure effective implementation of these provisions, financial institutions are required to develop and apply AML/CFT policies, controls, and procedures in compliance with the Law, relevant Central Bank of Oman decisions, and the Centre’s instructions. These policies should:

Address Risk Evaluation

  • Establish identification and verification procedures for customers and beneficial owners.
  • This includes evaluating the customer’s risk profile based on various factors.

Create Systems

  • For record maintenance of customer information and transactions.
  • This includes maintaining accurate and up-to-date records of all customer interactions.

Outline Suspicious Transaction Reporting

  • As per Article 47 of the Law, institutions must report suspicious transactions that may indicate ML or TF activity.
  • This includes reporting any transactions that appear unusual or inconsistent with the customer’s normal behavior.

Feature an Independent Audit Function

  • To assess compliance with AML/CFT policies and the Law.
  • This includes conducting regular audits to ensure that all AML/CFT policies and procedures are being followed correctly.

Compliance Officer

Financial institutions should appoint a senior management-level compliance officer responsible for AML/CFT obligations, who must frequently report to the Board of Directors on activities, measures taken, and the overall effectiveness of the AML/CFT program.

Oman’s commitment to combating financial crime and ensuring the integrity of its financial system is evident in these provisions. By implementing effective risk assessment tools and internal policies, financial institutions can better detect and prevent ML/TF risks, ultimately contributing to a safer and more secure financial environment for all stakeholders.