Money Laundering: Saudi Threat

Saudi Arabia: Money laundering and threat of terror funding – Need to strengthen domestic institutions

Money laundering is becoming a serious issue, which has implications for security of Saudi Arabia because of the possible use of money laundering for terrorist funding. Research indicates that there is a positive link between money laundering and organised crime and terrorism as money laundering can almost certainly be used to finance terror attacks through surreptitious channels of money transactions for facilitation of such crimes. Addressing these concerns, particularly through legal frameworks, underscores the need for comprehensive law dissertation help to explore and mitigate these threats effectively.

Money laundering is a threat to Saudi Arabia, because it is capable of being used for facilitating serious crimes like terrorism, which pose serious threats to national security, health and safety. Therefore, transnational terrorism is a threat to security of Saudi Arabia and the safety of its people, and money laundering as a route to funnelling money for facilitating terrorism, is something that the Saudi Arabian government should look closely into.

The government should also look into money laundering and respond to it effectively because it is linked to threats to the production and consumption, business activities, employment, and growth In Saudi Arabia. Other impacts of money laundering that pose threat to the security of Saudi Arabia include increased crime, corruption, and contamination of legal activities. Money laundering can also have political impacts because it can be used to fund subversive activities against the established government in Saudi Arabia. Due to these reasons, it can be stated that it is almost certain that money laundering is a serious issue and the government of Saudi Arabia needs to respond to this issue.

It is highly likely that if money laundering is not adequately responded to, it may be used as a means for terror funding, which has ramifications for security. Money laundering is generally a transnational activity, involving banks and global financial systems, which enemies of Saudi Arabia may use for supporting anti-state terror activities in Saudi Arabia.

Some responses to money laundering have already been made in Saudi Arabia. In 2003, Saudi Arabia adopted a number of draft laws and regulations as a response to money laundering. The principal legislation in this context is the Money Laundering (Prevention) Act 2003. One of the reasons for adopting the money laundering legislation was to provide an effective response to terrorist financing. Saudi Arabia has also passed laws to stop unlicensed money exchanges.

Saudi Arabia has also formed a joint task force with the United States as a step towards strengthening a transnational response with the United States to money laundering. (Blanchard & Prados, 2007). Saudi Arabia is also a part of the Middle East and North Africa Financial Action Task Force (MENAFATF) and as per its obligations under the MENAFATF, it has implemented anti-money laundering and counter- terrorist financing standards designed by FATF. The above measures undertaken by Saudi Arabia imply that it takes money laundering and its possible use for terror related activities seriously. However, the actual low figures of prosecution under these laws suggest that it is highly likely that these laws will remain incapable of bringing effective response to money laundering and terror financing.

It is suggested that only if Saudi Arabia strengthens its prosecution system against money launderers can it provide an almost certain effective response to the crime of money laundering. Research does indicate that prosecution of money launderers is the most effective methods of deterrence to those who commit this crime.

FATF-GAFI has already pointed out that there is a significant risk of terrorist financing in Saudi Arabia, due to the presence of cells of certain terror organisations in the country. The extent of the rise of financial investigations into terror activities is an indication of how serious this problem is becoming in Saudi Arabia. There have been 1700 investigations on terrorist financing in Saudi Arabia between 2013 and 2018. Considering this, it can be said that it is highly likely that terrorist financing will become a major threat to Saudi Arabia, especially from enemy nations, who may use the loopholes in the investigative processes in Saudi Arabia or weaknesses in the law and prosecution mechanisms for money laundering to facilitate subversive activities in Saudi Arabia.

The steps that Saudi Arabia can take to correct the situation can be summarised as follows.

• Saudi Arabia can consider ways of providing more regulatory control over the alternate banks that are based on Islamic banking. At this time, the presence of alternate banking systems has made it difficult to apply traditional investigative mechanisms. Regulatory mechanisms that absent or may be weak with respect to Islamic banks may be tightened and brought at par with conventional banks.
• It is highly likely that Saudi Arabia will be able to improve its prosecution system against money launderers if it is able to improve the access to information on databases, tax forms and disclosures by public officials and corporates. In the majority of the cases, prosecutors are almost certainly not able to conduct a successful prosecution because of lack of access to or lack of information and systems of financial investigation into the cases of money laundering.
• Saudi Arabia may establish special courts for prosecuting money laundering cases. This can be useful in speeding up and responding effectively to the prosecution of money laundering. The establishment of such a court in Uganda where an Anti-Corruption Division within the High Court has been established suggests that much can be gained by simplifying the procedure and speeding the process of courts in cases involving money laundering. It is highly likely that establishment of such a court in Saudi Arabia would lead to quicker processing of money laundering cases, which is most likely to make the money laundering laws more effective in providing deterrence.

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If the above steps are applied in Saudi Arabia, it is almost certain that Saudi Arabia would be able to improve its effectiveness of the money laundering laws and provide deterrence to those who commit these crimes. Control of money laundering is highly likely to also lead to check over terror financing.

Bibliography

Books

• Blanchard CM and Prados AB, Saudi Arabia: Terrorist Financing Issues (Washington DC: CRS Report for Congress 2007).
• Kruty Y, ‘How to conduct successful financial investigations: tracing the movement of money and 24 other assets in criminal cases’ in Investigation and Prosecution of Corruption: Financial Investigations and Links with Money Laundering (Kyiv, Ukraine 2011)
• Lilley P, Dirty dealing: the untold truth about global money laundering, international crime and terrorism (Kogan Page Publishers 2003).
• Moodley MS, Money laundering and countermeasures: a comparative security analysis of selected case studies with specific reference to South Africa (University of Pretoria 2008).
• Unger B and Busuioc EM, The scale and impacts of money laundering (Edward Elgar Publishing 2007).

Journals

• Altbeker A, ‘Justice through specialisation? The case of the Specialised Commercial Crime Court’ (2003) Institute for Security Studies Monographs 76.
• Carson L, ‘Institutional specialisation in the battle against corruption: Uganda’s Anti-Corruption Court’ (2015) About the issue 13.
• Zagaris B, ‘Problems applying traditional anti-money laundering procedures to non-financial transactions,“parallel banking systems” and Islamic financial systems’ (2007) 10 (2) Journal of money laundering control 157.

Websites