Financial Crime World

Financial Crime and Terrorism Financing in Oman: Evaluation Reveals Gaps in Legal Framework and Enforcement

A recent joint evaluation conducted by the Middle East and Northern Africa Financial Action Task Force (MENAFATF) and the Financial Action Task Force (FATF) has highlighted concerns over financial crime and terrorism financing in Oman. The assessment, carried out from July 17 to 28, 2010, revealed that while Oman’s anti-money laundering (AML) and combating the financing of terrorism (CFT) system is generally in line with international standards, there are significant gaps in its legal framework and enforcement.

Oman has a robust AML/CFT law, enacted in July 2010, but its implementation is hindered by the lack of updated Executive Regulations. The current regulations, dating back to 2004, are no longer effective, leading to inconsistencies and vulnerabilities in the system. Moreover, the low number of convictions for money laundering and the absence of investigations, prosecutions, and convictions relating to terrorist financing raise questions about the effectiveness of Oman’s legal framework.

Law Enforcement Agencies

The report highlighted concerns over the country’s law enforcement agencies, including the Financial Intelligence Unit (FIU) and the Royal Omani Police. While the FIU has made progress in functioning effectively, there is still a need for improvement in its capacity and experience in analyzing suspicious transaction reports (STRs). The time spent on analyzing STRs is also too long, which can hinder effective investigation and prosecution.

Financial Institutions

Financial institutions (FIs) and designated non-financial businesses and professions (DNFBPs) were also found to be lacking in their obligations under the AML/CFT law. While both the Central Bank of Oman and the Capital Markets Authority have sufficient powers and financial resources to conduct supervisory activities, very few corrective measures have been applied for AML/CFT violations. Moreover, the DNFBPs sector is characterized by a low money laundering/terrorist financing risk perception, which can lead to inadequate measures to prevent such crimes.

United Nations Security Council Resolutions

The evaluation also noted that Oman has not implemented relevant United Nations Security Council resolutions (UNSCRs) effectively, particularly in regards to freezing terrorist assets. There are gaps in the legal framework and no procedures are in place to implement most of UNSCR 1267 and its successor resolutions.

Conclusion

Overall, the assessment concluded that while Oman has made significant progress in setting up an AML/CFT system, there is still a need for improvement in several areas, including its legal framework, law enforcement agencies, and financial institutions. The authorities must take immediate action to address these gaps and ensure that Oman’s financial system is not exploited by criminals or terrorists.

Recommendations

  • Update Executive Regulations to align with international standards
  • Improve the capacity and experience of the Financial Intelligence Unit in analyzing suspicious transaction reports
  • Enhance supervision and enforcement of AML/CFT obligations on financial institutions and designated non-financial businesses and professions
  • Implement relevant United Nations Security Council resolutions effectively, particularly in regards to freezing terrorist assets.