Narcotics Control Strategy Report

Qatar
March 2006

Volume II: Money Laundering and Financial Crimes

Qatar has a relatively small population (approximately 850,000 residents), with a low rate of general and financial crime. The financial sector, though modern, is limited in size and subject to strict regulation by the Qatar Central Bank (QCB). There are 15 licensed banks, including two Islamic banks and a Qatar Industrial Development Bank. Qatar has 19 exchange houses, three investment companies and one commercial finance company. Although Qatar is a cash-intensive economy, cash placement by money launderers is believed by authorities to be a negligible risk due to the close-knit nature of the society in Qatar and the rigorous "know your customer" procedures required by Qatari law.

On September 11, 2002, the Emir of the State of Qatar signed the Anti-Money Laundering Law. According to Article 28 of the law, money laundering offenses involve the acquisition, holding, disposing of, managing, keeping, exchanging, depositing, investing, transferring, or converting of funds from illegal proceeds. The law imposes penalties of imprisonment of five to seven years, in addition to fines. The law expanded the powers of confiscation of proceeds gained from the commission of a crime, and instrumentalities used to commit a crime, to include the identification and freezing of assets as well as the ultimate confiscation of the illegal proceeds upon conviction of the defendant for money laundering.

The law requires all financial institutions to report suspicious transactions to the QCB and retain records for up to 15 years. The law also gives the QCB greater powers to inspect suspicious bank accounts, and grants the authorities the right to confiscate money in illegal transactions. Article 17 permits Qatar to extradite convicted criminals in accordance with international or bilateral treaties.

The Anti-Money Laundering Law established the National Anti-Money Laundering Committee (NAMLC) to oversee and coordinate money laundering combating efforts. It is chaired by the Deputy Governor of the Qatar Central Bank, in addition to ten other members from the Ministries of Interior, Civil Service Affairs and Housing, Economy and Commerce, Finance, Justice, QCB, Customs and Ports Authority, and the State Security Bureau.

In February 2004, the Government of Qatar passed the Combating Terrorism Law. According to Article Four of the law, any individual or entity that provides financial or logistical support, or raises money for activities considered terrorist crimes, is subject to punishment. The punishments are listed in Article Two of the law, which include the death penalty, life imprisonment, and 10 or 15 year jail sentences, depending on the nature of the crime.

The Qatari Financial Intelligence Unit (FIU) was established in October 2004. The FIU is responsible for reviewing all financial transaction reports, identifying suspicious transactions and financial activities of concern, ensuring that all government ministries and agencies have procedures and standards to ensure proper oversight of financial transactions, and recommending actions to be taken by the NAMLC if suspicious transactions or financial activities of concern are identified. The FIU is coordinating closely with the Doha Securities Market (DSM) to establish procedures and standards to monitor all financial activities that occur in Qatar’s stock market. In November 2004, the FIU established monitoring standards in coordination with the National Post Office to ensure that post offices throughout the country monitor carefully all cash transfers. The FIU is also taking steps to monitor financial activities that take place in the Ministry of Justice’s Registration Department and Qatar’s camel market. Qatar’s FIU became a full member of the Egmont Group in June 2005.

In addition to reporting suspicious transactions, all financial institutions (including businesses conducting hawala transactions) must report transactions of Qatari riyals (QR) 100,000 (approximately $33,000) or above to the QCB. Any repeated cash transactions of QR 30,000 (approximately $10,000) or higher made by an individual or entity must be reported. Any transaction of QR 100,000 or higher and repeated transactions of QR 30,000 or higher will be investigated by the FIU in coordination with the Ministries of Justice and Interior. Exchange houses must report any transaction of QR 40,000 (approximately $13,330) or higher. All financial institutions also must identify the person entering into a business relationship or conducting a transaction. In December 2004, QCB installed a central reporting system to assist the FIU in monitoring all financial transactions made by banks.

Only Qatari citizens, legal foreign residents, and citizens of other Gulf Cooperation Council (GCC) states are permitted to open bank accounts. All accounts must be opened in person. In January 2002, QCB issued Circular Number 9 regarding the Combat of Money Laundering and Financing of Terrorism. This circular was designed to increase the awareness of all banks operating in Qatar with respect to anti-money laundering and counterterrorist financing, by explaining money laundering and terrorist finance schemes and monitoring suspicious activities.

In addition to Circular Number 9, Qatar has taken other steps to combat the financing of terrorism, including requiring banks to freeze the assets of suspected terrorists and terrorist organizations on the UN 1267 Sanctions Committee’s consolidated list. In 2002, the GOQ established a national committee to review the UN 1267 Sanctions Committee’s consolidated list and recommend any necessary actions against individuals or entities found in Qatar. On August 24, 2003, the Anti-Money Laundering law was amended (Amendment 21/2003) and published in the official gazette. Amendment 21 revised three articles in the anti-money laundering law. Article 2 was amended to broaden the definition for money laundering to include any activities related to terrorist financing. Article 8 added the customs and ports authority to the NAMLC. Article 12 authorized the Central Bank governor to freeze suspicious accounts up to ten days and to inform the attorney general within three days of any action taken. The Attorney General may renew or nullify the freeze order for a period of up to three months. After this process, a freeze order may not be renewed unless authorized by court order.

The QCB, Public Prosecutor, and the Criminal Investigation Division (CID) of the Ministry of Interior are the principal entities that have responsibility for investigating and prosecuting money laundering cases. The FIU receives all suspicious transaction reports and conducts an initial analysis. The FIU also obtains additional information from the banks and other government ministries before determining whether to forward the suspicious transaction report to the Ministry of Interior. The Public Prosecutor and CID work closely on all criminal cases, although in financial cases they often seek the assistance of the QCB. There are no specialized units within the Public Prosecutor or CID’s offices that initiate or investigate financial crimes.

On January 12, 2005, the Government of Qatar announced plans for the establishment of the Qatar Financial Centre (QFC), an international financial center to lure major international financial institutions and corporations to set up their offices in the country. The center began operating on May 1, 2005. The QFC is a totally independent body, managed by the QFC authority. The authority oversees business conduct and grants licenses to operate in the center. All companies setting up their offices at QFC are entitled to a three-year tax exemption, full repatriation of profits and 100 percent foreign ownership. At the end of three years they will be subject to a relatively low tax rate on profits.

In March 2004, the Government of Qatar passed a law to establish the Qatar Authority for Charitable Works, which monitors all charitable activity in and outside of Qatar. This law incorporates the Charitable Societies Law (Law No. 8/1998), which details the monitoring and supervision of Qatar’s charities. The Secretary General of the Authority approves all international fund transfers by the charities. The Authority has primary responsibility for monitoring overseas charitable, development, and humanitarian projects that were previously under the oversight of several government agencies such as the Ministry of Foreign Affairs, the Ministry of Finance and the Ministry of Economy and Commerce. Overseas activities must be undertaken in collaboration with a non-governmental organization (NGO) that is legally registered in the receiving country. The Authority prepares an annual report on the status of all projects and submits the report to relevant ministries. The Authority is in the process of developing concrete measures to exert more control over domestic charity collection.

Article 37 of Law Number 8 of 1998, concerning the establishment and governance of private associations and institutions, stipulates that the Ministry of Awqaf (Endowments) and Islamic Affairs shall oversee and monitor all the activities of private institutions within the boundaries that are regulated by executive provisions. The Ministry may examine the institution’s books, records, and documents that are related to its activities and it may amend its bylaws. The institution shall provide the Ministry with any information, documents, or other data it requests. According to Article 1 of Law 15 of 1993, banks with offshore business shall be formed either as joint stock companies having their head offices in the State of Qatar or as branches of Qatari or foreign banks.

Qatar does not yet have any cross-border reporting requirements for financial transactions. Immigration and customs authorities are reviewing this policy and are increasingly interested in expanding their ability to detect trade-based money laundering. The Government of Qatar has established a subcommittee under the NAMLC to implement cross-border reporting requirements. The subcommittee is composed of the QCB, Customs Authority, FIU, and members of the NAMLC.

Qatar is a party to the 1988 UN Drug Convention but not the UN Convention for the Suppression of the Financing of Terrorism or the UN Convention against Transnational Organized Crime. Qatar is a member of the Middle East and North Africa Financial Action Task Force (MENAFATF), a FATF-style regional body that promotes best practices to combat money laundering and terrorist financing in the region that was established in November 2004.

Qatar has demonstrated a willingness to fight financial crimes, including terrorist financing, and to work cooperatively with other countries in doing so. Implementation and enforcement of the new law and regulations are essential to the success of Qatar’s efforts. Qatar should continue to work to ensure that law enforcement, prosecutors, and customs authorities receive the necessary training to improve their capabilities in recognizing and pursuing various forms of terrorist financing, money laundering and other financial crimes. Qatar should institute cross-border cash reporting requirements. Qatar should become a party to the UN International Convention for the Suppression of the Financing of Terrorism and the UN Convention against Transnational Organized Crime.