It has been noted that the Gulf is a target for organized crime and that usually means a prevalence of money laundering will exist in that region as well. Iran and Iraq have both been noted as not having sufficient AML frameworks in place in order to identify and combat the illegal practice. In recent years, many countries in the region have seen significant growth in reporting of suspicious transactions.
Since 9/11, there has been an increased emphasis on fighting money laundering for the purpose of financing terrorism. Financial institutions have increased their vigilance towards complying with regulations, even though it is both time-consuming and expensive.
In 2014, the Basel AML Index Report published the names of the top 10 highest risk countries. Two Middle East countries were included in this list. These are Iran (ranked first) and Iraq (ranked sixth). Both countries are known to have an insufficient Counter Terrorist Financing (CTF) and Anti-Money Laundering (AML) framework.
Recently, a joint investigation was conducted by Bahrain and the UAE. This investigation revealed that, some of the funds that entered these countries were obtained through crime.
Often times the transactions involved false documentation or forged business records carrying names of ordinary people who knew nothing about the transactions.
Banker Fadel Al-Buainain said that, “Recently, Bahrain’s Money Laundering Cell together with three Gulf States conducted an investigation and more than four billion riyals in funds were confiscated. It proves that money laundering has turned into organized crime in the Gulf which calls for more caution.” Certified Anti-Money Laundering Specialist (CAMS) Laurie Gentz, Head of Compliance, BAE Systems Applied Intelligence, said that “the regulatory authorities have realized that in order for the financial markets in the Middle East to be attractive to foreign investment, they need to tighten up the AML/CFT laws and make them much more transparent, so foreign and domestic investors have the confidence to place their money in the region.”