Financial Crime World

Qatar’s Battle Against Financial Crimes: Defining Money Laundering and Terrorism Financing

In the desert nation of Qatar, the war against financial crimes, particularly money laundering and terrorism financing, is a top priority. This article explores the definitions, identifying factors, and reporting requirements under Qatar’s Law No. (20) of 2019 on Combatting Money Laundering and Terrorism Financing.

Understanding Money Laundering

Money laundering refers to the process of masking the source of illicit funds by integrating them into legitimate businesses or transactions. According to Article 2 of the Qatari law, money laundering offenses include:

  1. Conversion or transfer of funds knowing that they are proceeds of a crime,
  2. Concealment or disguise of the true nature, source, location, disposition, or movement of funds,
  3. Acquisition, possession, or use of funds knowing that they are proceeds of a crime, and
  4. Partnership, association, or conspiracy to commit, attempt, or aid any above-mentioned activities.

Predicate Offenses, Proceeds, and Identifying Money Laundering

Predicate Offenses

A predicate offense is any act that is a misdemeanor or felony under any law in force in Qatar, regardless of where it was committed. Proceeds are any funds derived from committing a predicate offense. Money laundering is made up of three stages: placement, layering, and integration.

  1. In the placement stage, criminals introduce illicit funds into the financial system.
  2. In the layering stage, criminals create a complex network of transactions to disguise the source of the funds.
  3. In the integration stage, criminals convert the illicit funds into apparently legitimate sources.

Terrorism Financing

Terrorism financing refers to the provision of financial and non-financial support to terrorist organizations. Article 3 of the law covers both individual and organizational support, regardless of the link to a specific terrorist act.

Reporting Suspicious Transactions

Financial institutions and designated non-financial businesses and professions (DNFBPs) must report any suspicious transactions to the Qatar Financial Information Unit (QFIU) within three working days for completed transactions and within 24 hours for transactions linked to, or intended for use in, terrorist acts or by terrorist organizations.

Consequences of Non-Compliance

Failure to comply with AML/CFT (Anti-Money Laundering/Combatting the Financing of Terrorism) requirements can result in sanctions and penalties, including financial penalties, prohibition from working in the relevant sectors, suspension or dismissal of directors and management, revocation of licenses, and withdrawal of registrations.

Additional Requirements and Concepts

Politiically Exposed Persons (PEPs) and Beneficial Ownership

  1. PEPs are individuals who hold prominent public functions, and DNFBPs must identify and verify their identities.
  2. A beneficial owner is a natural person who ultimately owns or controls a legal person or arrangement through ownership interest, voting rights, or effective control. DNFBPs must identify and verify the identity of the beneficial owner of a legal person, legal arrangement, or trust.

Freeze, Seizure, and Confiscation

Freeze refers to the prohibition of transfer, conversion, disposition, or movement of assets on the basis of a decision by a competent authority until an unfreezing order or a confiscation order is issued. Seizure involves a prohibition on transfer, conversion, disposition, movement, or transport of funds by a decision issued by a judiciary or competent authority. Confiscation is the permanent deprivation of funds or other assets through a judicial ruling.

In conclusion, Qatar’s robust legal framework against money laundering and terrorism financing requires all financial and non-financial businesses to maintain strong internal controls and reporting systems to root out illicit funds and prevent the financing of terrorist activities.