Title: Oman Cracks Down on Financial Crimes: New Penal Code Strengthens Regulations against Corruption and Misappropriation

Introducing Oman’s New Penal Code

On January 11, 2018, Oman’s new Penal Code came into effect, replacing the outdated 1974 code to better align with the country’s development and international treaties. The Middle East’s increased focus on combating financial crimes compelled this bold move.

Public Officials and Public Property

Defining a Public Official

The new Penal Code broadens the definition of a public official (Article 11), thereby prompting businesses to reevaluate their compliance policies regarding ownership structures (Article 10). If the Omani Government holds more than 40% of a company’s share capital, the company becomes classified as public property, imposing specific compliance obligations on its employees.

Extraterritorial Application

Many companies may not be aware they fall under the definition of public property, even if their operations extend overseas. Article 19 of the Penal Code allows provisions regarding public property to apply extraterritorially to Omani public officials.

Preventing Financial Crimes

Oman’s new Penal Code prioritizes preventing financial crimes, which can negatively impact commercial activities, threaten national security, and damage the economy and society’s trust. Consequently, attraction of foreign investment and establishment of an open society are crucial.

New Regulations Targeting Financial Crimes

Safeguarding Public Funds

Chapter IV (Articles 213-222) of the Penal Code tackles offenses damaging public property, including embezzlement, misappropriation, and illegitimately obtaining benefits from government contracts.

Combating Corruption and Bribery

Corruption depletes resources for legitimate actors and damages the country’s reputation for foreign investors. The Penal Code criminalizes offering and accepting bribes for public officials through Articles 207-212.

Consequences for Businesses

Businesses face criminal penalties and fines if their representatives or agents engage in offenses on their behalf or in their name (Article 21). Compliance policies must cover external representatives and subcontractors, necessitating thorough due diligence and contracting stipulations.

Focus on Transnational Organized Crime

Oman’s new Penal Code reflects a determination to maintain a safe and transparent business environment by targeting transnational organized crime. Companies must be aware of the risks of inadvertent involvement, as unintended support for criminal activities can severely harm a company’s reputation.

Conclusion

Oman’s updated Penal Code represents a significant step in combating financial crimes and upholding transparency within the public sector. International businesses operating in Oman should revise their compliance policies accordingly to remain compliant and maintain a strong reputation. Implementing stringent compliance measures, transparency, and collaboration with contracting parties will foster a culture of compliance.