Money Laundering in United Arab Emirates, Research Paper Example

The purpose of the study is to research some of the possible causes money laundering and how it is affecting the UAE by using research along with the Fishbone Analysis methods. The UAE has a serious social problem with money laundering activities because of lax banking regulations loopholes, absence of corporation employee laws and terrorist money laundering activities. There is a rising epidemic of money laundering fraud in United Arab Emirates(UAE) because most laws are directed towards the civil servants but not for employees of private corporations in UAE. The problem with the legal regulations open the UAE for more illegal transactions because One of the factors is criminals can circumvent the laws. This loophole is a primary concern by the UAE government that has amended the Articles 234 and Article 247 UEA Criminal codes(Steemkamp,2011). The new revision that holds corporation’s managers or board members accountable and prison time of 5 years does not address the major corporation’s ability to evade the banking regulations(Boustany,20111).

The UAE has some of the same problems as other countries with banking financial reporting systems that is directly related to more incidences of money laundering in UAE. The second factor is the UAE has some serious money laundering issues because many terrorist groups have found the poor money laundering regulations. The third factor is the UAE has not implemented new regulations and preventive measures to effectively monitoring money laundering activities however, they have failed in preventing and detecting illegal money transactions in the UAE.  The fourth factor is UAE is a rich country with oil that has criminals using gold and oil transactions to hid the true owners of these funds or to wash the money clean with an investment in gold. As a result, the criminals send the illegally obtain money to UAE banks and withdraw the money that has been washed clean with foreign exchange. Unfortunately, UAE is fast becoming the primary destination for money laundering activities in the world.

Fishbone Data Analysis

One of the ways to analyze and critically examine the UAE money laundering issues is finding the root cause by identifying some of the not so obvious underlying factors or causes of money laundering in UAE. It is important to understand the contributing factors to fix a UAE banking system failure in order to develop the best course of action for change. The Fishbone Data Analysis technique will be used to analyze all the potential causes of money laundering in UAE. The purpose of the Fishbone data analysis is to present the causes using a graphical diagram-based method. This method provides a visual presentation and solutions that help discover the root causes, identify the bottlenecks and provide quality solutions.

Identify the problem

The UAE has the standard problems that most countries are combating such as lax banking regulations, foreign money transactions, electronic banking transactions and corruption. However, UAE has some additional problems such as terrorist groups trying to disguise monies to finance terrorist activities.

Identify the major factors involved

There are several major factors that contribute to the UAE influx of money laundering activities. The factors are a lack of corporation laws that fine or imprison the employees of the corporation. The corporation’s managers, board members or employees are held accountable and they can be fined and imprisoned. However, the corporations that make the banking transactions remain a factor in money laundering activities.  The second factor is the UAE has some serious money laundering issues because many terrorist groups have found the poor money laundering regulations. The third factor is the UAE has not implemented new regulations and preventive measures to prevent and detecting illegal money transactions. The fourth factor is UAE is a rich country with oil that has criminals using gold and oil transactions to hide illegal transactions.

Identify major causes

The primary cause is UAE is an oil rich country that is a perfect environment for criminals to disguise illegal funds. Secondly, the foreign exchange of illegal money laundering has become a popular way to change the dirty money to clean. These are smaller transactions that are impossible to trace but give the criminal a way to move and exchange the money without detection.

Identify 6 causes

There are six causes why UAE has a plethora of money laundering activities. The first cause is the UAE government does not have enough laws implemented that allow lawyers to prosecute money laundering in UAE. The second cause is UAE lacks strong banking regulations that prevent money laundering. The third cause is UAE’s lack of disclosure laws concerning money leaving the UAE. The fourth cause is the failure of UAE Banks to report suspicious transactions. The fifth cause is UAE major fraud and corruptions activities such as terrorism in UAE. The six cause is the lack of money laundering legal guidance for UAE lawyers suspecting illegal activities.

Recommendations

 The UAE recommendations would be developing improved money laundering banking regulations that address the loopholes in the banking systems. The UAE laws that hold corporation employee and board members responsible should be amended to include punishing the entire corporation accountable not just employees. The UAE needs new tough regulations that address terrorist groups laundering regulations. The UAE need concentrate on all transaction that include gold and oil to better detect illegal money transactions in the UAE. The UAE to development prevention programs that specifically concentrate on any suspicious banking transaction. Another recommendation would be adding specific regulations to address terrorist groups money laundering activities. The UAE needs to implement rigid laws that address the six causes of money laundering activities.  (1) The UAE providing power to lawyers to prosecute. (2)  The UAE lacks strong banking regulations. (3) UAE’s lack of disclosure laws. (4) UAE Banks failure to report suspicious transactions. (5) UAE addressing corruptions specifically terrorist banking activities. (6) UAE lawyers need more regulations to expose suspecting illegal activities.

References

Boustany, M. (2011, Feb). United Arab Emirates: Combating fraud and money laundering in the UAE. Retrieved from http://www.mondaq.com/x/121782/White+Collar+Crime+Fraud/Combating+Fraud+And+Money+Laundering+In+The+UAE