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Combating Crimes: A Deep Dive into UAE’s Financial Landscape

The UAE’s recent removal from the FATF’s "Grey List" signals global recognition of its robust measures against money laundering and financial crimes.

This decision underscores the country’s sustained efforts in investigating and prosecuting high-risk money laundering cases effectively, reflecting its commitment to global Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) standards. This milestone boosts investor confidence, strengthens the UAE’s reputation as a responsible financial hub, and sets a benchmark for other jurisdictions in combating financial crimes.

The UAE has emerged as a global financial hub in recent decades, attracting investors and businesses from around the world. However, with this growth in financial activity comes an increased risk of financial crimes, including money laundering. It poses a significant threat to the integrity of the financial system, national security and the economy.

What is Money Laundering?

Money laundering is the process of disguising the origins of illegally obtained money, typically by passing it through a complex sequence of banking transfers or commercial transactions.
The UAE, with its advanced financial infrastructure and diverse economy, presents an attractive environment for money launderers seeking to conceal the proceeds of their illicit activities.
Common methods of money laundering include structuring transactions to avoid reporting requirements, using shell companies to obscure ownership and investing in high-value assets such as real estate or luxury goods.

What are the Financial Crimes in the UAE?

The UAE faces various other financial crimes that undermine the integrity of its financial system. These include fraud, corruption, terrorist financing and tax evasion. Fraudulent activities range from corporate fraud to investment scams targeting unsuspecting individuals.
Corruption poses a serious threat to the UAE’s reputation as a business-friendly destination and erodes public trust in government institutions.
While relatively rare, terrorist financing remains a concern due to the country’s strategic location and international connections.
Tax evasion, while not as prevalent as in some other jurisdictions, remains a priority for regulatory authorities seeking to uphold tax compliance standards.

What are the Steps Taken to Combat Financial Crimes?

Legal and Regulatory Reforms: The UAE has enacted comprehensive legislation to address money laundering and financial crimes. The Federal Decree-Law No. 20 of 2018 on anti-money laundering (AML) and combating the financing of terrorism (CFT) established a legal framework to prevent and detect illicit financial activities. This law mandates reporting of suspicious transactions, customer due diligence, and the establishment of a financial intelligence unit (FIU) to analyse and disseminate information.

Enhanced Due Diligence: Financial institutions in the UAE are required to implement stringent due diligence measures to verify the identity of their customers, assess the nature of their transactions and monitor accounts for suspicious activities. Enhanced due diligence is applied to high-risk customers and transactions, ensuring a higher level of scrutiny and risk mitigation.

Regulatory Oversight: The UAE Central Bank and other regulatory authorities exercise strict supervision over financial institutions to ensure compliance with AML/CFT regulations. Regular inspections, audits, and enforcement actions are conducted to assess adherence to compliance standards and identify any lapses or deficiencies.

International Cooperation: The UAE actively participates in international efforts to combat money laundering and financial crimes. It is a member of various international organisations, including the Financial Action Task Force (FATF), and has signed numerous bilateral and multilateral agreements for information exchange and mutual legal assistance.

Technological Solutions: The UAE is leveraging advanced technologies such as artificial intelligence and blockchain to enhance its AML/CFT efforts. These technologies enable more effective monitoring of financial transactions, identification of suspicious patterns, and rapid response to emerging threats.

Bold Action

In a concerted effort to combat money laundering and terrorism financing, the UAE seized assets totalling $354 million between March and July last year. This decisive action reflects the country’s intensified measures to tackle financial crimes, underscoring its commitment to safeguarding its financial system and upholding global standards against illicit activities.

The UAE’s removal from the FATF’s "Grey List" is a testament to its unwavering commitment to combating money laundering and financial crimes. It reflects the country’s proactive approach, robust regulatory framework, and sustained efforts in upholding global AML/CFT standards. This milestone not only enhances the UAE’s standing in the international financial community but also reaffirms its role as a responsible global player in safeguarding the integrity of the financial system.

(The writer is a legal associate at Dubai-based NYK Law Firm)

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EU countries Unanimously Endorse World-first, Pioneering AI Legislation

Close on the heels of Abu Dhabi enacting a legislation to establish the Artificial Intelligence and Advanced Technology Council (AIATC), the EU member states last Friday approved landmark rules on reining in artificial intelligence, after tough last-mile negotiations on the legislation billed as a world first.
As countries around the world grapple with how to formulate legislation to deal with matters related to artificial intelligence, the European Union move is considered as a pioneer and a game changer in this field.
Brussels first proposed an AI law in 2021 but spent most of last year racing to greenlight the text after chatbot ChatGPT exploded onto the scene.
EU states and lawmakers had agreed on a draft set of rules back in December, and their approval after that should have been a formality.
But some countries, including France and Germany, flagged concerns that raised fears the AI law would fail in the final stretch -- leading to a new round of talks to nail down its contents.
EU ambassadors finally signed off on the text during a meeting Friday in Brussels, after French and German concerns were assuaged.
"We are very happy to announce that... ambassadors just unanimously confirmed the final compromise text," Belgium, which holds the EU's rotating presidency, said.
The EU's top tech enforcer, Thierry Breton, hailed the "historical, world-first, pioneering" rules.
"The AI Act unleashed a lot of passion ... and rightly so! Today member states endorsed the political agreement reached in December -- recognising the perfect balance found by the negotiators between innovation and safety," he said.
China introduced rules on generative AI last year, while US President Joe Biden issued an executive order regulating the technology, but the EU's law is the most comprehensive, with binding rules on a wide range of issues from risk to copyright.

Protecting innovation

The EU law will regulate AI systems based on risk assessments of the software models involved -- to be carried out by the firms themselves.
The higher the identified risk to individuals' rights or health, for example, the greater the systems' obligations.
Berlin and Paris had been particularly keen to protect AI startups, to prevent the rules from inhibiting future "European AI champions".
Seeking to address their concerns, the EU's executive arm in late January launched a package of pro-innovation measures to support European startups in AI development.
ChatGPT has demonstrated the dizzying advances of a technology -- generative AI -- that can quickly produce text, images and audio from simple commands in everyday language.
The easily-accessible chatbot from US-based OpenAI could create eloquent essays and passionate poetry within seconds, as well as pass medical and legal exams.
The world has been confronted at high speed with the dangers AI poses -- from turbo-charging disinformation online to well as the proliferation of manipulated videos and images.
But it has also become clear that generative AI -- which also includes Google's chatbot Bard -- unleashes huge new opportunities that Europe wants to exploit.
Germany hailed the agreement. Economy Minister Robert Habeck said Berlin would focus on the "ease of innovation, legal clarity for businesses and necessary light and unbureaucratic structures" when implementing the law.
Germany's Digital Minister Volker Wissing congratulated himself earlier this week on "improvements" to the text "for small and medium-sized enterprises" that would "avert disproportionate requirements and ensure that we remain internationally competitive".
France also had concerns over copyright and generative AI, but an EU diplomat told AFP the text struck the right "balance between protecting copyright and trade secrets".

Warnings from industry

The European Parliament is due to vote on the text in March or April, before it becomes law. Lawmakers said they were confident the text would pass without any issues.
It should then be formally approved in May.
The law will not enter into force immediately, however. Some rules will apply within six months while other elements will kick in two years later.
The Computer and Communications Industry Association (CCIA), one of the main tech lobbying groups, said Friday's approval was an "important step" for the text's formal adoption but remained cautious.
"Despite efforts to improve the final text, after 'victory' was prematurely declared back in December, many of the new AI rules remain unclear and could slow down the development and roll-out of innovative AI applications in Europe," CCIA Europe's senior policy manager, Boniface de Champris, said.

Abu Dhabi AIATC

As part of streamlining the artificial intelligence and technology sector, the legislation to establish the AIATC was enacted by His Highness Sheikh Mohamed bin Zayed Al Nahyan, the President of the UAE, on January 22.
This council is tasked with formulating and executing policies and strategies pertaining to research, infrastructure and investments in the realms of artificial intelligence and advanced technology within Abu Dhabi.
His Highness Sheikh Mohamed has also issued a resolution outlining the composition of the newly-formed council. According to the resolution, His Highness Sheikh Tahnoun bin Zayed Al Nahyan has been appointed as the Chairman of the AIATC, with His Highness Sheikh Khaled bin Mohamed bin Zayed Al Nahyan appointed as the Vice-Chairman. Additional appointments include Khaldoon Khalifa Al Mubarak, Jassem Mohamed Bu Ataba Al Zaabi, Faisal Abdulaziz Al Bannai, and Peng Xiao as members of the council.
The establishment of the AIATC underscores a steadfast commitment to technological leadership in shaping the future economy.
The council will collaborate with local and global partners to develop plans and research programmes, aiming to elevate Abu Dhabi's standing in the realms of artificial intelligence and advanced technology.

With Agency Inputs.

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Alabama Nitrogen Gas Execution Sparks Intense Debate

The age-old debate surrounding capital punishment procedures has once again taken a dramatic turn in Alabama, United States, where the state has captured national attention by executing Kenneth Smith using nitrogen gas last Thursday.

The contentious issue of execution methods has long been a global concern, triggering debates over human rights, ethics and the constitutional legitimacy of such practices.

Smith, convicted in a 1988 murder-for-hire case, had survived a botched lethal injection attempt in the past. His case became a flashpoint in the heated debate over the perceived cruelty of executing individuals with nitrogen gas, prompting last-minute legal challenges to halt the execution. Despite sincere efforts by Smith's legal team, including appeals to federal courts and the US Supreme Court, the execution proceeded as planned.

The decision to employ nitrogen gas as an execution method reflects the challenges faced by states in obtaining the drugs required for lethal injections, leading to a quest for alternative methods. Alabama, along with Oklahoma and Mississippi, has greenlit the use of nitrogen gas for capital punishment. However, the procedure's specifics remain in secrecy, with Alabama’s protocol containing redactions to maintain security.

Nitrogen gas execution involves administering a concentrated dose of the gas through a mask, replacing oxygen in the body, and inducing death by disabling the respiratory system. Proponents argue that this method is more humane compared to other execution methods, with the potential for a quicker loss of consciousness. However, critics voice concerns about potential complications, such as the risk of oxygen leakage, vomiting into the mask, and prolonged suffering.

 Convulsed for minutes

Breathing through a nitrogen-filled face mask that deprived him of oxygen, Smith convulsed in seizure-like spasms for at least two minutes of the 22-minute execution by nitrogen hypoxia, ABS News reported.
The force of his movements at times caused the gurney to visibly shake. That was followed by several minutes of gasping breathing until his breath was no longer perceptible.
Smith's supporters expressed alarm at how the execution played out, saying it was the antithesis of the state's promise of a quick and painless death. But Alabama's attorney general characterised the execution as “textbook” during a news conference.
“As of last night, nitrogen hypoxia as a means of execution is no longer an untested method. It is a proven one," Alabama Attorney General Steve Marshall said.

Asked about Smith’s shaking and convulsing on the gurney, Alabama Corrections Commissioner John Q. Hamm said they appeared to be involuntary movements.

“That was all expected and was in the side effects that we’ve seen or researched on nitrogen hypoxia,” Hamm said. “Nothing was out of the ordinary from what we were expecting."

Marshall said he anticipated Alabama "will definitely have more nitrogen hypoxia executions.” More than 40 death row inmates have selected nitrogen as their preferred execution method over lethal injection but did so at a time when the state hadn’t developed nitrogen procedures.

Attorneys for those inmates have asked the court to order Alabama to turn over records and information about Smith’s execution. Litigation will almost certainly focus on Smith’s convulsions and movements during the execution.

“The State promised the world the most humane method of execution known to man. Instead, Mr. Smith writhed and thrashed before he died. No further executions should take place by this method until the events of this evening are examined by an independent body,” Assistant Federal Defender John Palombi, who represents death row inmates who requested nitrogen, said in a statement.

Smith’s spiritual adviser, the Rev. Jeff Hood, agreed that the execution did not match the state attorney general’s prediction that Smith would lose consciousness in seconds followed by death within minutes.

“We didn’t see somebody go unconscious in 30 seconds. What we saw was minutes of someone struggling for their life,” said Hood, who attended the execution.

Dr Philip Nitschke, a euthanasia expert who designed a suicide pod using nitrogen gas and appeared as an expert witness for Smith, said the description of Smith's thrashing matches what he would expect to happen when nitrogen gas is used in a mask and someone holds their breath or takes the smallest possible breaths.

“I think this outcome is inevitable if the nitrogen gas is to be used in execution where people do not want to die and will not cooperate,” Nitschke said.

Concerns Mount

Kenneth Smith's execution has reignited questions about the constitutionality and ethical implications of nitrogen gas as a method of capital punishment. Human rights groups, legal experts, and United Nations officials have expressed concerns about the potential for torture and the risk of non-fatal injuries associated with this method. Additionally, the execution has triggered a broader debate over the use of capital punishment in the United States and its alignment with evolving standards of decency.

Beyond legal and ethical considerations, public opinion on social media has erupted with discussions about the morality of using nitrogen gas for executions. Many users have voiced outrage, labelling the method as inhumane and calling for a re-evaluation of capital punishment practices in the country.

Moreover, Alabama's embrace of nitrogen gas execution could have ripple effects beyond its borders, potentially setting a precedent for other states grappling with challenges in carrying out lethal injections. Adopting this method underscores the ongoing evolution of capital punishment practices and the complexities surrounding its implementation.

Alabama's use of nitrogen gas for executions introduces a new layer to the international discourse on human rights and the ethics of state-sanctioned executions. As the legal community grapples with the implications of the Alabama execution, the debate over controversial methods of capital punishment continues to evolve, reflecting broader societal attitudes towards inhuman punishment practices.

For any enquiries or information, contact ask@tlr.ae or call us on +971 52 644 3004Follow The Law Reporters on WhatsApp Channels.


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