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Qatar

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International Monetary Fund
Published Date:
October 2008
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DETAILED ASSESSMENT REPORT

1 General

1.1 General Information on Qatar

48. The State of Qatar is a peninsula located halfway along the west coast of the Persian Gulf covering an area of 11,521 square kilometers. It shares a 60 km land border with the Kingdom of Saudi Arabia to the south, where the peninsula connects to the mainland. It also has maritime borders with Iran from the north and east, Bahrain from the west, and the United Arab Emirates from the south east.

49. The population was estimated at 838,000 inhabitants in mid-2007 compared to 744,000 inhabitants in 2004. More than 45 percent live in the capital, Doha City, and its suburbs. Foreign workers comprise 52 percent of the total population and make up about 89 percent of the total labor force. Most are from South Asia and the Arab countries (in particular, Egyptians, Jordanians, Syrians, Lebanese, and Palestinians). The population has a literacy rate of 89 percent and the life expectancy averages 74 years. Islam is the official religion of Qatar, and Arabic is the official language.

50. Qatar remained a British protectorate until 1971 when Britain withdrew from the Persian Gulf area. In 1970, Qatar adopted a provisional constitution declaring it an independent Arab country. The Al Thani family formally became the ruling dynasty. The provisional constitution was replaced by a new constitution (the permanent constitution) which was approved by referendum in 2003. The new constitution differs significantly from the previous document in that it grants new rights and freedoms to the citizens and increases their participation in the government of the country. Similar to the previous constitution, the new constitution declares Qatar to be an independent and sovereign state with executive powers vested in the Emir. The Emir is the head of state and the minister of defense. He appoints the prime minister and the cabinet. The Advisory Council (Al-Shoura) has been an appointed body since 1970, but the new constitution envisions elections for two-thirds of its members. The Emir selects the crown prince from among his sons. The 2003 constitution specifies that the system of government is based on the separation of powers: Executive power rests with the Emir and the council of ministers; Legislative authority belongs to the elected Advisory Council (Al-Shoura); and judicial authority is exercised independently by the courts in the name of the Emir. At the time of the assessment, the (new) Al-Shoura had not been elected. According to article 150 of the 2003 constitution, the provisions in the 1972 constitution pertaining to the Al-Shoura remain in force until the new council is elected. The current Al-Shoura is composed of 35 members appointed by Emiri decision on the basis of the former Constitution.

51. Under the permanent Constitution the Council of Ministers, “in its capacity as the highest executive organ, is empowered to propose draft laws and decrees to Al-Shoura Council, approve regulations and decisions prepared by the ministries and other government organs and supervise the implementation of laws, decrees, regulations and resolutions (Article 121 para. 1 to 3 of the Constitution). Any draft law passed by Al-Shoura Council must then be referred to the Emir for ratification (Articles 67 para. 2 and 106 para. 1 of the Constitution). To date, however and as mentioned above, the new Al-Shoura Council has not been established. Legislations are adopted by the Council of Ministers then ratified by the Emir. For the purpose of this assessment, the assessors considered that the laws issued by the Council of Ministers and enacted by the Emir constitute primary legislation and that only the regulations adopted by the Council of Ministers or its members individually in accordance with the delegation provided in the primary law could constitute secondary legislation.

52. The judiciary system in Qatar is divided into the Sharia courts and the civil system. The 1999 Law governing the organization of the judiciary provides for a three-tiered judicial system. The Courts of Justice and the Sharia Courts of First Instance occupy the base of the structure. The Courts of Justice are empowered to hear civil, criminal, and commercial matters. The Sharia courts administer Islamic laws. Their role is generally limited to the adjudication of disputes relating to personal status matters (such as marriages, divorce, inheritance, custody cases and child support) and certain criminal cases. Decisions made in these first instance courts may be appealed to the Appeal Court of Justice and the Sharia Court of Appeal. The Court of Cassation is the third tier of the judicial system. In hearing criminal cases, both the Sharia and the criminal courts employ practices and procedures similar to those employed in common and civil law courts. A public prosecutor presents the case on behalf of the State, the accused is allowed legal representation, the accused is presumed innocent until proven guilty, and, generally, trials are open to the public. Decisions of the Qatari courts are not published and there is no doctrine of binding precedent under Qatari law, although, in practice, courts of first instance usually follow decisions of the courts of appeal.

53. The State of Qatar is a member of the Gulf Cooperation Council (GCC) which also includes Bahrain, Kuwait, the United Arab Emirates, Oman, and Saudi Arabia. Qatar is also a member of the League of Arab States, the Organization of Petroleum Exporting Countries (OPEC), the United Nations (UN), the Organization of the Islamic Conference (OIC), the Non-Aligned Movement, and the World Trade Organization (WTO), among other regional and international organizations. The State of Qatar was elected a non-permanent member of the United Nations Security Council for the term 2006–2007. The country has signed defense pacts with the United States (US), the United Kingdom (UK), and France and hosts the U.S. Central Command (CENTCOM) Forward Headquarters. Qatar is home to the satellite television station, Al-Jazeera.

54. Oil and gas resources form the cornerstone of Qatar’s economy. In total, they account for 62 percent of the GDP and 65 percent of the state revenues. Qatar has the third largest proven reserves of gas in the world and exports liquefied gas to Asia, Europe and the United States. Qatar’s production of liquefied gas reached 30 million tons in 2007 and is expected to increase to 77 million tons by 2012 making Qatar the main world gas exporter. As a result of the constant development in producing and exporting gas and the increase in the gas prices worldwide, Qatar’s nominal GDP per capita was expected to reach US$70,000 in 2007, one of the highest levels in the world. In 2006, real GDP growth was over 7 percent and the current account surplus reached US$ 9.5 billion.

55. The non-oil and gas sector accounts for less than 40 percent of the GDP. The finance, insurance and real estate sector is the second largest contributor to the GDP with around 8 percent in 2006. Qatar is currently trying to attract foreign investment in the development of its non-energy projects by further liberalizing the economy. Over the next six years, over US$130 billion in investments are planned in the emirate. Qatar riyal is pegged to the U.S. dollar at QR3.64: US$1, with a consumer price inflation above 6 percent every year since 2004. In 2005, Japan, South Korea, and Singapore were the main destinations of exports, whereas France, Japan and the United States were the main sources of imports.

56. Concerning governance, Qatar ranks in the world top third according to the World Bank Worldwide Governance Indicators, covering 213 countries and territories. These indicators measure six dimensions of governance: voice and accountability, political stability, and absence of violence, government effectiveness, regulatory quality, rule of law, and control of corruption. Qatar only lags behind for the ‘voice and accountability’ indicator but the situation has been improving over the years. For all indicators, but regulatory quality, Qatar is above the GCC countries’ average ranking.

Table 1.World Bank Worldwide Governance Indicators 1 - 2005(213 jurisdictions covered)
IndicatorQatar RankingGCC Average Ranking
Voice and Accountability151161
Political Stability5598
Government Effectiveness6477
Regulatory Quality8276
Rule of Law4264
Control of Corruption4552

For more details see World Bank website: www.worldbank.org/wbi/governance.

For more details see World Bank website: www.worldbank.org/wbi/governance.

1.2 General Situation of Money Laundering and Financing of Terrorism

Money Laundering

57. Although the offense of money laundering has now been in place for a few years, the dispositions of the AML Law remain untested by the courts. One prosecution has been conducted on the basis of the AML Law in 2006, but was subsequently abandoned when it was established that the source of the funds was legitimate.

58. The Qatari FIU classifies STRs according to their typologies. Three main typologies of STRs have been identified: the transfer of large amounts of money abroad through exchange houses, the deposit of large amounts of money in an account in a manner that is not proportional to the individual’s monthly income, and the inflow of financial remittances from abroad through a bank from an unknown source.

59. While there is currently no evidence of significant ML in the country, it should be noted that Qatar’s financial sector was, between 2002 and 2006, the fastest growing of the GCC region in terms of banking sector assets. Qatar is now, after the UAE, the most financially developed economy in the region and has the highest banking sector assets per inhabitant. The development of the financial sector is associated to a boom in the real estate sector and the precious stones and metals trade. These developments have the potential of creating a suitable environment for money launderers seeking to exploit these conditions to exercise their illegitimate activities.

Predicate Offenses

60. The level of predicate offenses appears very low in Qatar in comparison to other countries. According to statistics issued by the United Nations,2 the total crimes recorded in Qatar were 9.9 per 1,000 populations to compare to an average of 33.7 per 1,000 for the 92 countries surveyed. Sanctions appear to be tougher in Qatar as prisoners account for 1 percent of the population as compared to 1.51 percent for the average of countries surveyed. There was no specific mention of Qatar in the UN International Narcotic Control Board and UN World Drug 2006 reports. According to several reports, Qatar ranks among the less corrupted countries in the region. Qatar was listed as a ‘medium’ human trafficking destination country by the UN in the 2006 report on human trafficking.

61. More crime statistics were provided to the mission by the Public Prosecutor’s Office. They confirm the low rate of proceeds-generating crimes in the country. A total of 33 prosecutions were conducted in 2006 for bribery and embezzlement and 249 prosecutions for drug-related crimes. It should be noted that alcohol trafficking is included in the “drug-related crimes” and that two-thirds of the prosecutions are related to the possession of drugs (including alcohol). Counterfeiting of currency and trafficking of counterfeited currency accounted for 16 prosecutions during the same year. Other proceeds generating crimes mentioned by the authorities are credit card fraud, corruption, piracy of goods, insider trading, and market manipulation. The authorities are unaware of the presence of serious organized or transnational crime in the country.

Terrorist Financing

62. No prosecution has ever been led on terrorist financing and the FIU has not received any suspicious transaction report (STR) related to terrorist financing so far.

Terrorist Activities

63. No major terrorist activity has been recorded in the country. But less serious terrorist activity has been noted. Among the most relevant events, a suicide car bombing directed against UK interests and claimed by an Islamic group took place in 2005. Eight prosecutions related to terrorist activities were conducted in 2006. Four cases involved the constitution of a group intending to commit terrorist acts against the State of Qatar. Other cases included manufacturing of and training in explosives, possession of arms, and hijacking.

1.3 Overview of the Financial Sector

64. Qatar has adopted an open economy policy and attracted significant foreign investments to the different sectors of the country such as the real estate and securities sectors. In doing so, Qatar issued legislations and facilitated procedures for investors. This has had a very positive impact on the national economy. In the past few years, Qatar has become one of the developed countries in terms of attracting foreign investments. To accompany its open economy policy, Qatar has adopted a number of AML/CFT control policies.

65. The Qatari financial system is comprised of two sectors: Domestic - which includes the financial institutions under the responsibility and supervision of the QCB, the MEC and the DSM; and the QFC which was established in 2005 and includes international financial services firms.

66. Domestic Sector: The Qatari banking and financial system, excluding the QFC entities, is comprised of banks, including Islamic banks, investment companies, exchanges houses, finance companies, insurance companies, and brokerage firms.

67. There are 17 banks (9 Qatari, 8 foreign), 3 investment companies, 19 exchange houses, 1 finance company, 8 insurance companies, and 7 brokerage firms operating in Qatar. Based on QCB information in 2005, total assets of banking institutions amounted to QR 127,934 million (approximately US $35,147 million) or 83 percent of GDP. The largest three banks in Qatar accounted for approximately 68 percent of total banking assets. No other financial information for the DSM and the MEC was provided by the authorities.

68. The table below reflects the breakdown for each type of financial institution, permitted activities, and competent authority responsible for AML/CFT supervision.

Table 2.Financial Institutions and Supervisory Authority—Domestic Sector
Type of

Institution
Permitted ActivityCompetent Supervisory

Authority
BanksAcceptance of deposits, granting credit facilities, discount, purchase or sale of negotiable instruments, trading in foreign exchange instruments and precious metals, issuance of checks and other payment instruments, issuance of bond, liabilities and any other activities specified by a decision from the QCB.QCB
Investment CompaniesInvestment on behalf of third parties, performance of mediation activity and financial agency, organization of public underwriting, providing preservation and safety services, contribution in share issuance and other securities, providing advices regarding capital markets and services connected to amalgamation, sale and purchase of companies and establishments, management of investment funds, trading in money instruments and market foreign exchange and precious metals, and any other activities decided by the QCB.QCB
Exchange HousesChanging and trading in different currencies and travelers′ checks, and ingots of previous metals and issuance and acceptance of remittances from licensed correspondents.QCB
Finance CompaniesGranting credits or any specialized lending activities decided by the QCB.QCB
Brokerage CompaniesEngaging directly or indirectly in the business of offering, selling, buying or otherwise dealing or trading in securities.DSM
Insurance CompaniesInsurance coverage against accidents and fire, marine and land insurance, health insurance and others.MEC

69. QFC: The QFC was established in 2005 under Law No. 7 of 2005. The QFC is not an offshore center. It was created to provide both a venue for financial services firms to establish themselves within a designated zone in the State of Qatar and to undertake and provide a broad range of activities, services, and products. Companies licensed by the QFC can operate in local and other currencies. The QFC allows for 100 percent ownership by foreign companies and all profits can be remitted outside Qatar. The QFC is currently a tax free zone until April 2008. Article 17 of the QFC Law provides that after April 2008, the Regulations may provide for the imposition, administration, and collection of all kinds of taxes and duties within the QFC including without limitation taxes in relation to entities, individuals and corporate bodies as well as businesses operating in the QFC and the wages, salaries, and benefits of employees working in the QFC, and to set from time to time the level and method of calculation thereof and to provide exemptions therefrom for such periods as may be deemed appropriate.

70. The legal and regulatory system of the QFC is implemented and administered by the following QFC institutions:

  • The QFC Regulatory Authority (QFCRA) which is the unitary financial services regulator of the QFC;
  • The QFC Authority (QFCA) which is responsible for developing the commercial strategy of the QFC, is also responsible for supervising unregulated activities and establishing relationships with the global financial community;
  • The Appeals Body which is an independent body established to hear appeals against decisions of the Regulatory Authority;
  • The Tribunal (Civil and Commercial Court) which solves disputes relating to QFC activities or events occurring in the QFC; and
  • The CRO which is responsible for the incorporation and registration of companies and other entities carrying on business in the QFC.

71. The QFCRA is responsible for the authorization of firms seeking to conduct Regulated Activities in the QFC and for the on going supervision of those firms to ensure they remain in compliance with the various QFC requirements, including AML/CFT requirements. The QFCRA as an independent body also has power to discipline those firms and individuals that fail to comply with QFC requirements.

72. Within the QFC, there are two categories of Permitted Activities categorized as either Regulated Activities or Non-Regulated Activities. The Permitted Activities as defined in Schedule 3 of the QFC Law, which are also considered Regulated Activities, are as follows: (i) financial business, banking business of whatever nature, and investment business, including (without limit) all business activities that are customarily provided by investment, corporate and wholesale financing banks, as well as Islamic and electronic banking business;(ii) insurance and reinsurance business of all categories;(iii) money market, stock exchange and commodity market business of all categories, including trading in and dealing in precious metals, stocks, bonds, securities, and other financial activities derived therefrom, or associated therewith; (iv) money and asset management business, investment fund business, the provision of project finance and corporate finance in all business fields and Islamic banking and financing business; (v) funds administration, fund advisory and fiduciary business of all kinds; (vi) pension fund business and the business of credit companies; (vii) the business of insurance broking, stock broking, and all other financial brokerage business; (viii) financial agency business and the business of provision of corporate finance and other financial advice, investment advice and investment services of all kinds; and (ix) the provision of financial custodian services and the business of acting as legal trustees.

73. The distinction between regulated activities and non-regulated activities is significant in that firms conducting Regulated Activities require a license from the QFC Authority and authorization from the QFCRA whereas firms conducting solely Non Regulated Activities only need a license from the QFC Authority.

74. Permitted activities as defined in Schedule 3 of the QFC Law, which are not considered Regulated Activities are as follows: (i) the business of ship broking and shipping agents; (ii) the business of provision of classification services and investment grading and other grading services; (iii) business activities of company headquarters, management offices and treasury operations and other related functions for all kinds of businesses, and the administration of companies generally; (iv) the business of providing professional services including but not limited to audit, accounting, tax, consulting, and legal services; (v) business activities of holding companies, and the provision, formation, operation, and administration of trusts and similar arrangements of all kinds; and (vi) the business of provision, formation, operation and administration of companies.

75. A person who carries on any Regulated Activities and/or a person who conducts, and in so far as they conduct, any of the following activities is considered a relevant person: (i) providing auditing, accounting, tax consulting, legal, and notarization services; (ii) providing trust services by way of the provision, formation, operation, and administration of trusts and similar arrangements; and (iii) providing company services by way of the provision, formation, operation, and management of companies.

76. Any financial institution conducting financial activities in or from the QFC must be authorized by the QFCRA. As of the mission date, there were 12 firms authorized and regulated by the QFCRA.

77. Although the majority of the regulated institutions have been authorized, only two have commenced operations.

1.4 Overview of the DNFBP Sector

78. Casinos: Gambling is prohibited in Qatar and sanctioned under Article 275 of the Penal code. According to Article 274 of the Penal code, gambling is “any game in which the probability of gain and loss depends on luck and not on controlled factors and each party agrees to give the amount of money, in case of loss, to the winning party”. Even if prices for the winners of camel and horse races are significant, it is not considered as gambling because there is no betting on a winning party. Casinos or gambling are not included in the activities permitted in the QFC according to the Schedule 3 of the QFC Law No. 7 of 2005.

79. Real Estate Agents: There are 970 companies acting in the real estate sector registered at the Qatari Chamber of Commerce. The exercise of the profession of real estate agent is subject to the provisions of the law on real estate brokerage. Real estate agents are licensed and monitored by the MEC and have to be authorized by the real estate registration department of the MOJ. Buying or selling real estate is not included in the activities permitted in the QFC according to Schedule 3 of the QFC Law No. 7 of 2005, but it may be performed on an ancillary basis by professionals performing other activities. The real estate sector is growing rapidly and the recent possibility offered to foreigners to buy property in some designated areas in Qatar constitutes a major development that will contribute to changing its structure and functioning. Unless measures are taken, it may increase the risk of being abused by criminal elements.

80. Dealers in precious metals and stones: There are 22 shops selling gold and 197 jewelers, all licensed and supervised by the MEC. The 19 exchange houses licensed and supervised by the QCB are also permitted to engage in the purchase or sale of precious metals and gold bullions. Concerning gold, exchange houses may act as wholesalers for jewelers. Schedule 3 of the QFC Law No. 7 of 2005 provides for dealing in precious metals as a permitted activity which, subject to the provisions of the QFC Regulations shall be regulated activities. However, the QFC Financial Services Regulations do not identify dealing in precious metals as a regulated activity despite the possibility offered by the Law. Dealing in precious stones is therefore not identified as a permitted activity in the QFC. Consequently, neither dealing in precious metals nor dealing in precious stones can be conducted in the QFC.

81. Lawyers: They are approved by the lawyer’s registration committee. The legal profession is organized pursuant to the Law No. 23 of 2006 on Lawyers. There is no bar association, but there is an association of lawyers with voluntary, but wide, membership. Pursuant to a resolution issued by the MOJ, branches of international law firms may be authorized to work in Qatar. Their staff is constituted of lawyers and legal advisers. Only Qatari citizens may be lawyers. Foreign citizens may act as legal advisers. The division of disciplinary cases at the MOJ is competent to apply sanctions to the legal profession. There are eight firms licensed by the QFCA that provide legal services.

82. Notaries: In Qatar, the notaries are civil servants, working for the MOJ, in charge of the certification of real estate transactions. A total of nine notaries are working in the MOJ. Schedule 3 of the QFC Law No. 7 of 2005 does not list notaries as a permitted activity in the QFC. Accordingly, the profession of notary as defined by the glossary to the FATF 40 Recommendations does not apply in Qatar.

83. Accountants: They are registered and monitored pursuant to law No. 30 of 2004 by the legal affairs department of the MEC. According to Article 5 of this law, an accountant should work in the review of accounts at one of the accounting offices and practice main work in accounting or monitoring accounts or inspection of accounts at one of the ministries or institutions, public or private authorities, or companies. The business of providing professional services including audit and accounting is a permitted activity in the QFC. There are two firms licensed by the QFCA to conduct auditing and accounting services in the QFC.

84. Trust and company service providers (TCSP): In Qatar, trust and company service providers are not registered as an identified business or profession. Although the authorities were not aware of the presence of TCSP in the country, the mission found out, however, that there were several recently established. Lawyers, accountants, and private companies may provide trust and company services. The following table summarizes the activities performed by each profession. TCSP and accountants are subject to the monitoring of the MEC. Lawyers and legal advisers are subject to the sanctions of the division of disciplinary cases of the MOJ. All activities performed by trust and company service providers are permitted under Part 2 of Schedule 3 of the QFC Law and are not activities regulated by the QFCRA, other than in respect of AML/CFT requirements. The following table summarizes the professions that currently accomplish the different trust and company services.

Table 3.Professions Engaged in Trust and Company Services
Type of trust or company serviceProfession that prepares or carries out this service
Acting as a formation agent of legal personsLawyers and Accountants (domestic sector)

Non-regulated activity (QFC)
Acting as (or arranging for another person to act as) a director or secretary of a company, a partner of a partnership, or a similar position in relation to other legal persons;Lawyers

Non-regulated activity (QFC)
Providing a registered office; business address or accommodation, correspondence or administrative address for a company, a partnership or any other legal person or arrangement;Companies and Lawyers (domestic sector)

Non-regulated activity (QFC)
Acting as (or arranging for another person to act as) a trustee of an express trust;Lawyers (domestic sector)

Non-regulated activity (QFC)
Acting as (or arranging for another person to act as) a nominee shareholder for another person.Lawyers (domestic sector)

Non-regulated activity (QFC)

85. The following table summarizes the licensing and AML supervision process of the DNFBPs present in Qatar:

Table 4.Licensing and AML supervision process of the DNFBPs
DNFBPLicensing/AuthorizationSupervision or Monitoring/Sanction
Real estate agentsMECMEC
MOJMOJ
Dealers in precious stonesMECMEC
Dealers in precious metalsMECMEC
QCBQCB
LawyersLawyer’s registration committee (MOJ)Division of disciplinary cases (MOJ)
QFCAQFCRA (in respect of AML/CFT requirements)
Legal advisersMOJ (Authorization of a foreign law firm and its staff).Division of disciplinary cases (MOJ)
AccountantsMECMEC
QFCAQFCRA (in respect of AML/CFT requirements)
Trust and company service providersMECMEC
QFCAQFCRA (in respect of AML/CFT requirements)

1.5 Overview of Commercial Laws and Mechanisms Governing Legal Persons and Arrangements

86. Domestic Sector: Commerce in Qatar is regulated by the Commercial Companies Law (CCL) No. (5) of 2002 amended by Law No. (16) of year 2006. Companies are created under the CCL on the basis of a Memorandum of Agreement, which must contain, inter alia, the company name, address, names of the partners/promoters, the object (activities to be conducted); and capital.

87. The CCL provides for the following seven types of companies: (i) partnership company; (ii) limited partnership; (iii) particular partnership; (iv) joint-stock company; (v) limited partnership by shares; (vi) limited liability company; and (vi) individual company.

88. Bearer shares: Bearer shares are explicitly prohibited in Qatar pursuant to the CCL. The MEC, which is in charge of the corporate registry, indicates however that it does not allow companies to issue these instruments.

89. Beneficial Right Owner: In undertaking its due diligence, the MEC requires applicants to produce personal identification documents and evidence of beneficial ownership.

90. Registration of companies in Qatar: The MEC is responsible for the registration of all business in Qatar. Businesses are required to be registered in the commercial registry. MEC reports that, in practice, businesses are registered prior to commencing operations and taking up occupation of premises. This makes the ministry an important first line of defense in the fight against money laundering and terrorist financing.

91. Trusts in domestic sector: The Qatari legislation does not provide for the creation of trusts or other similar legal arrangements. At the time of the assessment, there was no information available that would indicate that the private sector holds funds under foreign trusts and/or provides other trust services.

Table 5.Number of Companies Registered in the Domestic Sector
Type of registerNumberNature of company
Main197Partnership
Affiliate276Partnership
Main39Limited Partnership
Affiliate121Limited Partnership
Main11,325Joint-stock company
Affiliate12,476Joint-stock company
Main389Foreign Company
Affiliate15Foreign Company
Main4Individual Company
Main2Holding
Main9,861Foreign Company
Affiliate10,560Foreign Company
Main47Partnership limited by shares
Affiliate45Partnership limited by shares
45,357
Source: MEC, February 2007.
Source: MEC, February 2007.

92. QFC: The QFC was established in 2005. It aims to provide a financial and business center to attract international financial services institutions and multinational corporations wishing to participate in Qatar’s growing economy

93. Article 11 of the QFC Law provides that corporations, individuals, businesses and other entities may be approved, authorized or licensed to incorporate or establish in the QFC and to carry out permitted activities in or from the QFC.

94. Article 27 of the Financial Services Regulations (FSR) provides that an application for authorization to conduct regulated activities in the QFC may be made by a body corporate; a partnership; or an unincorporated association

95. Similarly, Article 19 of the QFC Authority Regulations provides that the same type of entities may apply for a license to conduct permitted activities in the QFC.

96. QFCRA Public Registers: The QFCRA Public Registers are a public record of previous and current authorized firms, approved individuals or Waiver and Modification Notices

97. The Public Registers are provided online to enable users to conduct searches and print information. The following QFC Authority Public Registers are also maintained on the QFC Website: (i) licensed Firms; (ii) Companies Registration Office and (iii) approved auditors.

98. Trusts in QFC: The QFCA has issued Regulation No. 12, dated February 28, 2007, which enables the creation of trusts under the QFC laws (the QFC trusts). The regulation defines trusts as “a right, enforceable solely in equity, to the beneficial enjoyment of property to which another person holds the legal title” and is applicable to express trusts, charitable trusts, non-charitable trusts and trusts created pursuant to law or judgment that requires the trust to be administered in the manner of an express trust. There is no registration of trusts in the QFC.

1.6 Overview of Strategy to Prevent Money Laundering and Terrorist Financing

AML/CFT Strategies and Priorities

99. The Qatari authorities are very conscious of the potential reputational risk to Qatar posed by money laundering and the financing of terrorism. Public officials and the private sector alike realize that disreputable business leading to investigations and negative press would be damaging for Qatar. Domestic cooperation on AML/CFT issues is facilitated by the NAMLC. Nevertheless, there is currently no overall government policy on AML/CFT matters.

The Institutional Framework for Combating Money Laundering and Terrorist Financing Ministries, Committees or other bodies to coordinate AML/CFT action

100. National Anti-Money Laundering Committee (NAMLC). It is the competent government authority in charge of drawing the AML/CFT policy of the State of Qatar. The NAMLC was established in 2002 under the presidency of the Deputy Governor of the QCB to ensure coordination amongst the authorities involved in AML. In accordance with Article 8 of the AML Law, it comprises two representatives of the MOI, including the director of the General Administration of Passports (Vice President of the NAMLC), a representative of the Ministries of Civil Service Affairs and Housing, MEC, Finance and Justice, as well as an additional representative of the QCB and of the Customs and Ports General Authority. Although not specified in the AML Law, the State Security Bureau (which is an independent body that reports directly to the Emir) is also represented in the NAMLC. The statutory functions of NAMLC are the following: to prepare, adopt, and follow-up the implementation of AML plans and programs; to ensure coordination among the competent entities in order to implement the provisions of the legislation and agreements related to AML issues; to follow international ML trends; propose the necessary measures in this regard; and prepare the necessary reports, statistics and data on AML efforts (Art. 9 of the AML Law).

101. Coordination committees for the fight against terrorism. A first coordination committee was established in January 2002 in the form of an interdepartmental committee for the coordination of the implementation of the UN resolutions on the fight against terrorism. It comprised representatives from the Ministries of Civil Service Affairs and Housing, Finance, Economy and Commerce, Interior, and Justice, as well as representatives from the Ministry of Awqaf and Islamic Affairs, the QCB (which is represented by the FIU), and the Chamber of Commerce and Industry. The original mandate of the first coordination committee covered the implementation of UNSCR 1373. It was subsequently enlarged in order to encompass coordination in the implementation of all UN resolutions on terrorism (Council of Ministers’ decisions of January 12, July 7, and July 21, 2002). In 2007, the committee was replaced by a new one, the National Committee for Fighting Terrorism (NCT), by decision of the Council of Ministers dated March 26, 2007. The NCT is composed of representatives from the MOI, the Qatar Armed Forces, the State Security Bureau, the Internal Security Force, the Ministry of Civil Service and Housing Affairs, the Ministry of Finance, the MEC, the MOJ, the Ministry of Endowment and Islamic Affairs, the General Secretariat of the Council of Ministers, the QCB, the General Authority of Customs and Ports, and of the Qatar Chambers of Commerce and Industry (Article 1 of the abovementioned decision). Its main functions are to make plans and programs to fight terrorism, to coordinate national efforts in the implementation of the obligations arising from UNSCR 1373, and to take action to implement the obligations set out in the international conventions against terrorism to which Qatar is a party (Article 3 of the same decision). The implementation of other relevant UN resolutions, and in particular of UNSCR 1267 and its successor resolutions, does not fall within the remit of the new NCT and is currently unaddressed.

102. MOI: According to Article 20 of the AML Law, the Minister of Interior, in coordination with the Governor of the QCB and on the basis of a proposal by the NAMLC, shall issue the executive resolutions of the provisions of this law. The ECPD is the department within the MOI in charge of ML investigations. The ministry has other functions that have impact on the AML/CFT framework, including the issuance of residence/work permit to every foreigner residing in Qatar, the issuance of a personal identification number to both foreign national and Qatari citizens, and the authorization to sell gold.

103. Ministry of Civil Service Affairs and Housing. The ministry houses the Coordination Committee on the implementation of the UN resolutions on the fight against terrorism. It is also in charge of the regulation of private institutions and associations. As registration authority, the Ministry of Civil Service Affairs and Housing has information on the general evolution and size of the NPO sector.

104. MOJ. The real estate registration department of the MOJ is competent for the authorization of real estate agents. Certification of real estate transactions is done by notaries, which are civil servants, working for the MOJ. Another department of the ministry, the lawyer’s registration committee, is in charge of approving lawyers and authorizing branches of international law firms and their staff of legal advisers to work in Qatar. The division of disciplinary cases at the MOJ is the competent authority which applies sanctions to the legal profession.

105. MEC. Is in charge of the supervision of insurance companies and agents, all DNFBPs active in Qatar except lawyers and legal advisers, as well as all other types of companies in the domestic sector. The Minister is empowered to enact all regulations (or amendments, modifications to, or repeal of existing regulations) submitted to him by the QFC Authority, the QFC Regulatory Authority, and the QFC Appeals Body.

106. Ministry of Foreign Affairs (MOFA). The ministry is the recipient of the UNSCR 1267 lists and the 1373 requests which it forwards to the coordination committee on the implementation of the UN resolutions on the fight against terrorism.

Law enforcement, criminal justice, and operational agencies

107. PPO: The principal authority in the investigation of ML/FT cases is the public prosecutor’s office. It controls the primary conduct of ML/FT investigations and confiscation actions. Investigation officers act under the supervision of the General Prosecutor. They have broad powers to investigate crimes, search the perpetrators and collect all the necessary evidence.

108. ECPD (MOI): The work of the ECPD is regulated by Resolution No. 29 of 2004 issued by the MOI affairs on July 28, 2004. The ECPD, affiliated with the director of criminal investigation department, is specialized in the investigation of ML and other offenses such as e-crimes, counterfeiting, and falsification of currency.

109. Department of International Cooperation (MOI). The department of international cooperation receives and requests police information from its foreign counterparts. Its other functions include preparing and participating in local, regional and international conferences, implementing, in coordination with other competent authorities, international resolutions and recommendations, as well as developing and enhancing the cooperation with regional and international organizations.

110. SSB. It is an independent body established in 2003 that reports directly to the Emir. The SSB is in charge of the investigation into terrorism and financing of terrorism offenses.

111. General Directorate for Customs and Ports (GDCP): It is an independent agency responsible for monitoring for economic and excise purposes the national territory and borders of Qatar. It includes monitoring the movement of currency at borders (land, ports, and airports).

112. FIU. The Qatari FIU is an administrative unit established pursuant to Resolution 1 of 2004 issued on August 8, 2004 on “the creation of the Financial Information Unit and the approval of its organizational structure” by the President of the NAMLC. The AML Law gives the coordinator of the NAMLC the competence to receive reports related to suspicions of money laundering crimes from the competent parties and taking the legal measures pertaining to them and to follow up on the measures of tracking, collecting information, and investigations carried out by the competent parties.

Financial Sector Bodies

113. QCB. The QCB establishes the licensing requirements for banks, investment companies, finance companies and exchange houses. It is also empowered with the responsibility to supervise and control said institutions, including with respect to ML. The Governor of the QCB has the power to freeze accounts, assets, and properties suspected of or linked to money laundering offenses. The Deputy Governor of the QCB is the president of the NAMLC. The QCB also houses the FIU. Access to all information covered by the banking secrecy requires a prior authorization of the Governor of the QCB, except to those institutions authorized and operating out of the QFC, where their own banking secrecy requirements apply.

114. DSM. The commission is the supervisor for the brokerage companies within the Doha Securities Market, which is the principal stock market of Qatar. The market was founded in 1997 by the decree law.

115. QFCA. The QFCA is responsible for developing the commercial strategy of the QFC and establishing relationships with the global financial community. It proposes regulations for enactment by the MEC. The QFCA is responsible for the licensing process of firms conducting non regulated activities in the QFC.

116. QFCRA. The QFCRA is the unitary financial services regulator of the QFC. It is responsible for the authorization of firms seeking to conduct Regulated Activities in the QFC and for the ongoing supervision of those firms to ensure they remain in compliance with the various QFC requirements, including regulating licensed firms in respect to AML/CFT requirements. The QFCRA as an independent body has power to discipline those firms and individuals that fail to comply with QFC requirements. The QFCRA is also able to propose regulations for enactment by the minister of economy and commerce.

Non-Profit Organizations

117. Qatar Authority for Charitable Activities (QACA). This organization was created in 2004. It is the authorizing and supervisory authority for the charities in the domestic sector.

Approach Concerning Risk

118. Qatar has not adopted an overall risk-based approach to its AML or CFT framework and the authorities have not conducted an overall assessment of the ML and TF risks that exist in Qatar. The current AML/CFT legal and supervisory framework has, therefore, been developed without considering ML/FT risks.

119. In the domestic sector, the QCB is the only supervisory authority that has adopted a risk-based approach to both prudential and AML/CFT supervision which was at a very early stage of implementation at the time of the on-site visit. The new approach had been implemented only once. Supervisory authorities like the DSM and the MEC have not established a risk-based approach to AML/CFT supervision. There are no reduced or simplified customer due diligence measures in place for financial institutions in the domestic sector.

120. The QFC AML Regulations have been drafted in accordance with a risk-based approach and proportionate anti-money laundering systems and controls. Article 15 of the QFC AML Regulations specifically requires that a relevant person must ensure that it adequately addresses the specific money laundering risks which it faces taking into account the vulnerabilities of its products, services, and customers. Enhanced due diligence is required for higher-risk areas of money laundering as detailed in Appendix 2 of the AML Rulebook.

Progress since the last IMF/WB assessment or mutual evaluation

121. Qatar underwent a mutual evaluation by the FATF/GCC in 2001. The evaluation team visited Qatar from May 21–23, 2001. The mutual evaluation was based on the then existing FATF 40 Recommendations. The Special Recommendations on Terrorist Financing had not been adopted by the time of the on-site visit and the mutual evaluation also pre-dated the adoption by the FATF, IMF and the World Bank of a methodology for assessing compliance with the FATF 40+9. Qatar’s Mutual Evaluation Report was adopted by FATF in June 2002.

122. The main deficiencies identified in the Mutual Evaluation Report were as follows:

  • Legislation: There was no specific money laundering offense in the Qatari Penal Code. Moreover, the existing legislation on confiscation and provisional measures was inadequate for dealing with money laundering. Article 43 of the Narcotic Drugs Law No. 9 of 1987 only dealt with narcotics-related funding and failed to cover individuals, other than the perpetrator or his family, who may have acquired, transferred, or retained such funds. With regard to freezing or seizing of funds or property, the QCB was the only authority with the power to take such an action.
  • Financial sector: Anti-money laundering measures for the financial sector were essentially based on requirements imposed by the QCB through Circular No. 33 of 1999. Customer identification provisions did not require financial institutions to take steps to determine the true identity of persons on whose behalf a transaction was conducted when there were doubts as to whether a customer was acting on his own or another’s behalf. The Department of Commercial Affairs of the Ministry of Finance, Economy and Commerce had implemented certain anti-money laundering measures regarding insurance and securities, although those for securities were less comprehensive than those contained in QCB regulations.
  • Reporting of STRs: There were also several weaknesses in the obligation for reporting suspicious transactions. The QCB reporting requirement was weak in that it required reporting only when the institution detected “crime or money laundering attempts rather than suspicions of money laundering. The configuration of the reporting chain was also a potential weakness. The fact that the QCB received the report and passed it to the MOI seemed to be an additional layer in the reporting chain that did not improve the overall efficiency of the system.

123. International cooperation: Extradition for money laundering was not possible and the Qatari authorities were not permitted to honor foreign requests for imposition of provisional measures against funds or property located in Qatar. Authorities were also not allowed to provide information on suspicious transactions to foreign requesters.

124. Since last evaluation, several laws and regulations have been amended or enacted, in particular the AML Law and the CT Law which also incriminates, to a certain extent the financing of terrorism. However, the FATF standard has undergone significant changes since Qatar was last assessed and the AML Law was enacted. Moreover, the FATF standard now requires that key measures be contained in laws, regulations, or other enforceable instruments and that the effective implementation of the measures in place also be assessed. Accordingly, the progress made by the authorities since the last assessment has been over-shadowed in many areas by the stricter requirements of the new standard.

2 Legal System and Related Institutional Measures

2.1 Criminalization of Money Laundering (R.1 & 2)

2.1.1 Description and Analysis

125. Qatar criminalized money laundering in 2002 with the adoption of Law (28) of 2002 (the AML Law). It amended the money laundering offense in 2003 through Decree Law (21) of 2003 in order inter alia to include terrorist crimes in the list of predicate offenses.

126. The provisions of the AML Law remain untested by the courts. One prosecution has been conducted on the basis of the AML Law in 2006 but was subsequently abandoned when it was established that the source of the funds was legitimate.

127. In some instances, the text of the law is vague both in the original Arabic version and in the English translation (see for example the exact scope of the ML offense). As it is not a common legislative practice in Qatar to supplement draft laws with any type of explanation or guidance, there is no explanatory note that would assist the assessors and the authorities in understanding the ratio legis of the dispositions of the AML Law. Since the courts have not yet applied the AML Law, there is no case law either that would clarify the possibilities offered and boundaries imposed by the law in money laundering prosecutions and trials.

128. Criminalization of Money Laundering (c. 1.1 - Physical and Material Elements of the Offense). Qatar has ratified the 1988 United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (the Vienna Convention) on May 4, 1990. It criminalized illicit traffic in narcotic drugs through Law (9) of 1987 (as amended by Law (7) of 1998 and subsequent laws) which pertains to combating drugs and psychotropic substances, and regulates their use and trade. The latest amendment to the law limited the illicit drug trafficking offense to “dangerous” drugs. The purpose of this amendment was to exclude from the scope of the law the latest medicinal drugs that may contain extracts of the substances covered by the law. This amendment was reflected in the AML Law, where the word “dangerous” was added to the predicate offense dealing with illicit drug trafficking.

129. Qatar has not ratified the 2001 United Nations Convention against Transnational Organized Crime (the Palermo Convention) but the ratification process was underway at the time of the assessment. Organized crime, domestic and/or transnational, is not an offense under the Qatari legislation unless its purpose is to commit a terrorist crime (Articles 3 and 7 of the Law (3) of 2004 on combating terrorism).

130. Articles 3(1)(b) and (c) of the Vienna Convention and 6(1) of the Palermo Convention require countries to establish as a criminal offense the following intentional acts (material elements): the conversion or transfer of proceeds; the concealment or disguise of the true nature, source, location, disposition, movement or ownership of, or rights with respect to proceeds; and, subject to the fundamental or constitutional principles and basic concepts of the country’s legal system (Article 2(1) of the Vienna Convention and Article 6(1) of the Palermo Convention), the acquisition, possession or use of criminal proceeds (Article 3(1)(b) (i)–(ii) of the Vienna Convention and Article 6(1)(a)(i)–(ii) of the Palermo Convention). They furthermore require participation in, association with or conspiracy to commit, attempts to commit, and aiding, abetting, facilitating and counseling the commission of any of the foregoing to be included in the offense (Article 6(1)(b)(iii) Palermo).

131. The English version of Article 2 of the AML Law (as amended by Article 1 of the Decree Law (21) of 2003) provides that “he who commits any of the following acts shall commit a money laundering crime: Any person who earns, possesses, disposes of, manages, exchanges, deposits, adds, invests, transports, or transfers funds obtained from the crimes of drugs and dangerous psychotropic substance; extortion and looting; forgery, counterfeiting and imitation of notes and coins; illegal trafficking in weapons, ammunitions and explosives; crimes related to environment protection; or the crimes of trafficking in women and children; or the crimes considered by law as terrorist crimes, with the intention of hiding the real sources of the funds and show that their source is legal. Any employee in the financial institutions who receives cash amounts or securities, transfers or employs such amounts in financial or banking transactions, knowing or having a reason to believe that such amounts resulted from one of the crimes stipulated in the previous paragraph.”

132. By providing that the money laundering offenses applies to any person who earns, possesses, disposes of, manages, exchanges, deposits, adds, invests, transports, or transfers funds obtained from the predicate crimes, the law covers a broad range of material elements.

133. However, the material application of the offense is narrowed down by the mental prerequisite: the money laundering offense only applies to the acts conducted with the intention of “hiding the real sources of the funds and show[ing] that their source” is legitimate. While one could argue that this also captures the concealment or disguise of the true nature of the funds, one cannot infer from the text of the law that the money laundering offense extends to acts aimed at concealing or disguising the location, the disposition and movement of the funds, nor their ownership. Accordingly, the acts carried out with the intention of hiding the location of the funds and/or the way that they were disposed of, as well as those carried out with a view to helping a person (the author of and/or any participant in the predicate offense) evade criminal liability for the crime that generated the proceeds would not fall within the scope of the money laundering offense if they do not also serve the purpose of concealing the illegitimate source of the funds. Consequently, the scope of the money laundering offense is too limited to address all the aspects covered in the Vienna and Palermo Conventions.

134. It is unclear whether the legislator intended to limit the scope of the offense in such a way or whether this is merely the result of unfortunate legal drafting. Discussions with the law enforcement agencies to establish whether, notwithstanding the text of the law, the authorities would prosecute acts aimed, for example, solely at protecting the persons involved in the crime from criminal liability, but proved inconclusive. These discussions also revealed that the authorities’ understanding of the requirements set out in the Vienna and Palermo Conventions was limited. There is, therefore, a risk that the authorities would apply Article 2 of the AML Law stricto sensu and that they would consider that intentional acts aimed at concealing aspects other than the illegitimate source of the funds do not constitute money laundering.

135. The Laundered Property (c. 1.2). Article 2 of the AML Law refers to “proceeds” of the listed predicate crimes, which are defined as “any funds or property earned directly or indirectly by committing one of the crimes stipulated in this law” (Article 1 of the AML Law). 3 This definition is broad enough to cover all types of property listed in the Vienna and Palermo Conventions. It was also confirmed during discussions with the relevant authorities (and with the public prosecution in particular) that, although this definition has not been tested in court, the authorities’ interpretation of the AML Law and their understanding of “proceeds” in the general context of the Qatari criminal laws is that it covers all assets derived directly or indirectly from crime, including assets of every kind, whether corporeal or incorporeal, movable or immovable, tangible or intangible, and legal documents or instruments evidencing title to, or interest in, such assets.

136. Proving Property is the Proceeds of Crime (c. 1.2.1). Article 11 of the AML Law provides that the investigation of a money laundering offense may be conducted independently from the investigation of the predicate offense. No mention is made of the need, or lack thereof, for a conviction for the predicate offense to secure a conviction for money laundering. When questioned whether the distinction between the two crimes could extend beyond the investigation stage and enable the prosecution of money laundering independently from that of the predicate offense, the public prosecutors and judges responded that while investigations may be conducted separately and independently, a clear link has to be established at the prosecutorial stage between the two crimes. The initial discussions revealed some level of confusion as to whether a conviction for the predicate offense was the only means by which the necessary link could be established, but further discussions suggested that this was not the case. Indeed, the authorities maintain that a conviction for money laundering is possible even in the absence of a prior conviction for the predicate offense and that circumstantial evidence that assets have been criminally acquired would be sufficient to apply the money laundering offense.

137. The Scope of the Predicate Offenses (c. 1.3). Qatar adopted a list approach by enumerating, in Article 2 of the AML Law (as amended in 2003), the predicate offenses to money laundering. The list contains only seven predicates and therefore does not cover all the categories of offenses designated in the FATF Glossary. The predicate offenses listed and the legal basis for their criminalization are:

  • Crimes of drugs and dangerous psychotropic substances: Law No. 9 of 1987 (as amended by Law (7) of 1998) pertaining to combating drugs and psychotropic substances and regulating their use and trade. The term “dangerous” was added both in the AML Law and the Law (9) of 1987 in order and exclude from the scope of both laws medicinal substances that include some amount of “drugs” in their composition.
  • Forgery, counterfeiting and imitation of notes and coins: Article 218–226 of the Criminal Code. The standard sanctions vary between five and fifteen years of imprisonment and a fine but may go up to life imprisonment if the offense resulted in a reduction of the national currency rate.
  • Illegal trafficking in weapons, ammunitions, and explosives: Articles 38–54 of Law (14) of 1999 on weapons, ammunition, and explosives. The sanctions applicable range from several months imprisonment and a fine to several years of imprisonment and a fine.
  • Terrorist crimes: Article 1 and following of Law No. 3 of 2004 on Combating Terrorism (CT Law). According to the authorities, the notion of “terrorist crimes” under Article 2 of the AML Law covers all the crimes listed in the CT Law, including the terrorist financing offense of Article 4 of the CT Law, and not only those that are specifically referred to as “terrorist crimes” under Article 1 of the CT Law.
  • Extortion and looting: Article 352 of the Criminal Code. The basic sanction is imprisonment for up to three years.

138. The choice of predicate offenses in the AML Law appears somewhat arbitrary in the sense that it does not reflect all the main proceeds generating crimes that occur in Qatar. While the authorities did not provide the assessors with comprehensive statistical information on the types of crimes investigated, prosecuted, and sentenced in Qatar, they did mention on a number of occasions that the most frequent proceeds generating crimes are drug trafficking, credit card fraud and corruption, counterfeiting of currency and counterfeiting and piracy of goods, insider trading and market manipulation. Article 2 of the AML Law covers drug trafficking and counterfeiting of currency, but it does not cover fraud, corruption, counterfeiting and piracy of goods, insider trading and market manipulation. This proved too limitative in practice: the public prosecutor’s office received six potential money laundering cases from 2002 to 2006 but had to abandon five of them because the underlying offense was not listed under Article 2 of the AML Law.

139. In addition to the offenses listed above, Article 2 of the AML Law also mentions crimes related to the protection of the environment and trafficking in women and children as predicate offenses, but neither of these conducts is criminalized under Qatari laws. Without clear criminalization and definition of the material and mental elements of these conducts, their inclusion in the list of predicate offenses to money laundering is pointless.

140. The following categories of offenses designated by FATF are not included in the Qatari AML framework: (i) murder and grievous bodily injury; (ii) participation in an organized criminal group and racketeering; (iii) trafficking in human beings and migrant smuggling; (iv) sexual exploitation, including sexual exploitation of children; (v) illicit trafficking in stolen and other goods; (vi) corruption and bribery; (vii) fraud; (viii) counterfeiting (other than that of currency)and piracy of products; (ix) environmental crime; (x) kidnapping, illegal restraint and hostage-taking; (xi) robbery or theft; (xii) smuggling; (xiii) forgery; (xiv) piracy; and (xv) insider trading and market manipulation.

141. The limited list of predicate offenses entails that the Qatari authorities are not in a position to prosecute and sanction money laundering cases to the extent required by the standard.

142. Threshold Approach for Predicate Offenses (c. 1.4): This criterion is not applicable since the Qatari authorities opted for a list approach.

143. Extraterritorially Committed Predicate Offenses (c. 1.5): Unless a person was already convicted or acquitted for the same facts by a foreign state, the Qatari courts maintain their jurisdictions over crimes committed abroad in a number of circumstances: when the crime occurred partially or totally in Qatar; when a crime or a felony (or misdemeanor) was committed in Qatar but occurred partially or totally outside Qatar and is criminalized in both countries; when the crime was directed against the internal or external security of the State of Qatar or in case of falsification and imitation of Qatari official documents, seals, marks, stamps and currency of the State of Qatar and possession or promotion of these falsified currencies; when a person committed or participated in drug trafficking, trafficking of human beings, piracy or international terrorism (Articles 16, 17 and 18 of the Criminal Code).

144. Consequently, crimes other than those directed against the security of the State, falsification of official documents and currency, possession or promotion of falsified documents and currency, drug trafficking, trafficking in human beings, piracy and international terrorism have to occur or be committed, at least partially, in Qatar. The authorities have no jurisdiction over predicate offenses that were entirely committed in another country, even if there is dual criminality.

145. In the absence of dual criminality on the predicate offense, money laundering charges cannot be brought before the Qatari courts. Considering the limited number of predicate offenses under Qatari law, this severely limits the authorities’ ability to investigate and prosecute money laundering cases.

146. Laundering One’s Own Illicit Funds (c. 1.6). The AML Law does not distinguish self-laundering from third party laundering and there appears to be no constitutional or fundamental principle of Qatari law that would preclude the application of the money laundering offense to the person who committed the predicate crime. This view was shared by the authorities during the on-site visit: Representatives from the public prosecutor’s office and the courts maintain that self-laundering may be prosecuted to the same extent as third-party laundering. In the absence of any specific impediments to prosecute self-laundering, this approach is fully in line with the standard.

147. Ancillary Offenses (c. 1.7). The Criminal Code addresses the ancillary offenses in a comprehensive way by providing for several forms of participation that are applicable to all crimes, including money laundering. It distinguishes the “committer” of an offense from the “participant.” The “committer” of a crime is the person who: conducted one or all of the acts constituting the crime; provided assistance in the execution of the crime and was present at the moment of the crime; or “used other persons by any means to execute” the crime (Article 38 of the Criminal Code). The “participant” in a crime is whoever “prompted another person to commit” a crime and had a direct effect on the commission of the crime, “agreed with another person to commit the crime which was carried out on the basis of this agreement, as well as whoever intentionally gave the perpetrator “a weapon, machines, or anything else used in committing the crime,” or helped him in any other way to prepare, facilitate or complete the commission of the crime (Article 39 of the Criminal Code). According to the authorities, conspiracy and counseling are covered respectively by the notions of “agreement to commit a crime” and “help in any other way.” The authorities took a tough stance on participation with the recent amendment to the Criminal Code which provides that, unless a specific law mentions otherwise (which the AML Law does not), the participants in a crime are subject to the same penalties as the main authors of the crime (Article 40 of the Criminal Code).

148. With respect to money laundering, Article 3 of the AML Law specifically provides that any person who, by virtue of his professional position, obtains information related to a money laundering crime and does not take the legal measures prescribed by the law commits a “crime related to the money laundering crime.”

149. The attempt to commit a felony (i.e., a crime punished by death, life imprisonment, or a maximum imprisonment sentence of more than three years; Article 22 of the Criminal Code) or misdemeanor (i.e., a crime punished by a maximum imprisonment sentence of three years at the most and/or a fine of no more than one thousand Riyals; Article 23 of the Criminal Code) is also an offense. The notion of attempts covers situations where a person started an act with the intention to commit a felony or a misdemeanor, but then brought his or her action to an end, or was stopped against his or her will (Article 28 of the Criminal Code). The sanctions applicable to the attempt to commit a felony are: life imprisonment when the penalty of the crime is a death sentence; imprisonment for a period between five and fifteen years, if the penalty for the completed crime is life imprisonment; and imprisonment for not more than half the imprisonment sentence applicable to the completed crime (Article 29 of the Criminal Code). The law also specifies the cases where the attempt to commit a misdemeanor is sanctioned as well as the applicable penalty (Article 30 of the Criminal Code). The mere intention to commit a felony or misdemeanor is not sanctioned (Article 28 of the Criminal Code).

150. The provisions of the Criminal Code on the attempt and the various levels of participation are sufficiently broad to cover all the aspects required by the standard and to ensure that all persons involved in a money laundering crime may be prosecuted.

151. Additional Element (c.1.8). The Criminal Code requires dual criminality for the underlying offenses in all cases (Articles 16 and 18 of the Criminal Code). Consequently, the money laundering offense does not apply when the proceeds derive from a conduct that occurred in another country if it is not an offense in the other country, even if it would have constituted a money laundering offense had the predicate crime occurred in Qatar.

152. Liability of Natural Persons (c. 2.1). The money laundering offense applies to natural persons who intentionally engage in money laundering activities. The Criminal Code provides that the moral element of an offense consists of the intent and the “fault”, which it defines as follows: the intent is the will of the committer to commit an act or abstain therefrom, in order to produce the result which is subject to penalty; the fault is available when the result sanctioned by the law “happens because of the fault of the committer, whether this error was due to negligence, carelessness, [lack of caution], rashness or non-complying with the law of the lists”. It also specifies that the “committer shall be asked for the crime whether committed on purpose or by error, if the law [did not] stipulate the intent openly” (Article 32 of the Criminal Code). This last part would tend to indicate that, in the case of money laundering, where Article 2 of the AML Law specifically refers to the intention of concealing the source of funds, the “fault”, or recklessness, would not be sanctioned. From the explanations provided during the on-site visit, it also appeared that, regardless of the wording of the money laundering offense, only the actual knowledge is sanctioned and it does not extend the dolus eventualis. This, however, is not required by the standard. It results from the above that the Qatari Criminal Code and AML Law are in line with the standard on this point.

153. The Mental Element of the ML Offense (c. 2.2). Pursuant to Article 232 of the Criminal Procedure Code, the principle of free evaluation of the evidence applies. The prosecution does not have to bear the burden of demonstrating actual knowledge of the illicit nature of the proceeds; the judges may freely appreciate the evidence before them and may infer the mental element of the offense from objective factual circumstances.

154. Liability of Legal Persons (c. 2.3). The Criminal Code provides that legal persons may be held liable for the crimes committed by their representatives, managers and agents acting in their name (Article 37). Article 14 of the AML Law also explicitly extends the criminal liability for money laundering to legal persons by providing that the legal person “shall be fined an amount not less than the value of the instrumentalities, returns and proceeds of the crime” and that an order may be issued to cancel or suspend the legal person’s license. While Article 14 of the AML Law has not been tested before the courts, legal entities have been sanctioned for other crimes under the general provisions of the Criminal Code, which indicates that the prosecution and the criminal courts are, in practice, familiar with the concept of corporate liability.

155. Liability of Legal Persons should not preclude possible parallel criminal, civil or administrative proceedings (c. 2.4). Article 14 of the AML Law clearly specifies that sanctioning the legal entity does not prevent the authorities from sanctioning the individual who committed the crime. According to the authorities, parallel administrative or civil sanctions against the corporate entity may also be applied.

156. Sanctions for ML (c. 2.5). Pursuant to Article 13 of the AML Law, the money laundering offense is sanctioned by imprisonment of no more than seven years and by a fine of no less than fifty thousand Qatari Riyals (approximately US$13,700) and no more than the value of funds, subject of the crime. As mentioned above, the same sanctions apply to the participant in a money laundering offense. The law also provides that the person who obtains information related to a money laundering crime by virtue of his profession and does not take the legal measures prescribed by the AML Law shall be punished by imprisonment of no more than three years and by a fine of no more than ten thousand Qatari Riyals (Articles 3 and 13 of the AML Law). In both cases, the sanctions shall be doubled if the crime is committed by two or more persons acting in collaboration as well as in case of recidivism. A person is considered a recidivist if he or she commits a similar crime “within five years before the end of term of the sanction or before the prescription of this sanction.” The sanctions set out in the AML Law appear to be dissuasive and proportionate. It is also specified that, in any event, and without prejudice to the rights of bona fide third parties, the Court shall order the confiscation of the instrumentalities and proceeds of the crime.

157. Effectiveness and Statistics. Between 2004 and 2006, a total of 82 investigations into potential ML cases were led by the ECPD. All cases resulted from STRs, as indicated in the table below. In all cases, the investigations indicated that the origin of the funds was legitimate.

Table 6.ML Investigations Conducted by the ECPD
Reporting entity and case descriptionNumber of cases
Banks200420052006
1.Inflow of large financial remittances which are transferred abroad after dividing them into small amounts.1--
2.Transfer of large amounts of money abroad through the bank without knowing their source1--
3.Deposit of large amounts of money in the account in a manner that is not proportional to the individual’s monthly income9109
4.Inflow of financial remittances from abroad through the bank without knowing their source154
Exchange Houses
5.Transfer of large amounts of money abroad through Exchange Houses5208
6.Inflow of financial remittances from abroad through Exchange Houses Outlets--1
7.Seizure of large amounts of money possessed by people trying to leave the country-41
Other methods
8.Request the opening of an account at the Bank in order to transfer large amounts of money1--
9.Attempting to convince someone of receiving the remittance and transferring it again-11
Total184024

158. The PPO led the inquiry into a ML case on one occasion but it was then established that there was no money laundering activity and the case was therefore closed. The prosecution received five further cases of potential money laundering, but was unable to start an inquiry because the underlying crimes were not listed as predicate offense to money laundering under Article 2 of the AML Law.

159. The following information pertains to the prosecutions conducted in 2006 with respect to the money laundering offense and the (FATF) predicate offenses (without a money laundering component):

Table 7.Prosecutions Conducted in 2006
Type of offenseNumberAction take/outcome
Bribery, Embezzlement - Total: 33
Money Laundering1Nolle prosequi
Bribery4Nolle prosequi
6Transfer to Criminal courts
2In process
Embezzlement of Public funds6Nolle prosequi
5Transfer to Criminal courts
6In process
Embezzlement & BriberyNolle prosequi
1Transfer to Criminal courts
1In process
Breach of Contract1In process
Environmental Crimes - Total: 370
Passing in restricted places15Nolle prosequi
Throwing litters88Transfer to Criminal courts
Hunting in public places267In process
Drugs 4-Total: 249
Possession166Transfer to Criminal courts
Trafficking83Transfer to Criminal courts
Explosives: Total: 1; Suspect unknown
Offense against the security of the State: Total: 8
Terrorist Act: Explosives1In process
Manufacturing explosives and1In process
training someone to use it
Constitution of a group intending to3In process
commit terrorist acts against the1Incrimination: 10 years of imprisonment
State of Qatar
Possession of arms intending to1Incrimination: 2 years
commit terrorist act
Unlawful seizure of an aircraft1In court
Illegal possession of Guns and weapons–Total 22
Total6Nolle prosequi
12Transfer to Criminal courts
4In process
Traffic of Counterfeited currency - Total 11
Total5Nolle prosequi
1Transfer
5In process
Counterfeited currency - Total 5
Total3Nolle prosequi
1Transfer
1In process

160. No similar statistics were provided for the previous years, but, as mentioned above, the assessment team was informed that the (unsuccessful) prosecution for money laundering indicated in the table, was the only led so far. Consequently, even though the money laundering offense has been in force since 2002, and despite the occurrence of several of the predicate offenses in the State of Qatar, no money laundering charges have been brought before the courts.

161. As mentioned above, the money laundering offense only applies to a limited number of predicate offenses. This (and the fact that the source of the funds may indeed have been legitimate) explains the low number of investigations and prosecutions for money laundering but only partially: the assessment team found that, despite their willingness to fight money laundering effectively, the law enforcement authorities, as is often the case in countries which, like Qatar, have a recent AML/CFT system in place, lack sufficient understanding of the money laundering typologies and of the AML Law to be in a position to use the tools at their disposition to the fullest extent.

2.1.2 Recommendations and Comments

162. The AML Law provides for the basic elements of the money laundering offense but still suffers from major shortcomings, in particular with respect to the limited number of predicate offenses, and does not enable the authorities to prosecute money laundering in a fully effective way.

163. The authorities are recommended to:

  • Amend the AML Law to clarify and extend the scope of the money laundering offense in order to cover all intentional acts aiming to conceal or disguise not only the source of the funds but also the true nature, location, disposition, movement, or ownership of or rights with respect to proceeds of crime. This could be achieved either by clearly specifying the purpose in the AML or by deleting altogether the intended purpose.
  • Criminalize, where necessary, the following conducts and add them to the list of predicate offenses in the AML Law: participation in an organized (non terrorist) criminal group and racketeering; trafficking in human beings and migrant smuggling; sexual exploitation, including sexual exploitation of children; illicit trafficking in stolen and other goods; corruption and bribery; fraud; counterfeiting and piracy of products; environmental crime; murder, grievous bodily injury; kidnapping, illegal restraint and hostage-taking; robbery or theft; smuggling; forgery; piracy; and insider trading and market manipulation.
  • Ensure that predicate offenses for money laundering all extend to conduct that occurred in another country when there is dual criminality.
  • Provide in-depth training to the law enforcement agencies on the AML Law and on money laundering trends and typologies, as well as training on investigations into and prosecutions of money laundering offenses.
  • Although the authorities maintain that the terrorist financing offense is covered by the notion of the “terrorist crimes” that appears in Article 2 of the AML Law, it is also recommended, for the sake of clarity, to specifically mention the terrorist financing offense in the list of predicate offenses.

2.1.3 Compliance with Recommendations 1 & 2

RatingSummary of factors underlying rating
R.1PC
  • The mental element of the ML offense does not cover acts conducted with a view to conceal the true nature, location, disposition, movement, or ownership of or rights with respect to proceeds.
  • The list of predicate offenses is incomplete with only seven of the FATF designated categories of offenses being covered.
  • With a few exceptions, the authorities have no jurisdiction over predicate offenses that were entirely committed in another country, even if there is dual criminality.
  • Lack of evidence on the effectiveness of the law.
R.2LC
  • Lack of evidence on the effectiveness of the law.

2.2 Criminalization of Terrorist Financing (SR.II)

2.2.1 Description and Analysis

164. Qatar took legislative measures to counter terrorism in 2004 with the issuance of the CT Law.

165. Criminalization of Financing of Terrorism (c. II.1). Article 1 of the CT Law provides an extensive definition of terrorist crimes: 5 all crimes are terrorist crimes when the motive behind the use of force or violence or the threat thereof is to undermine the provisions of the Qatari Constitution or the Qatari law, to breach the public order, to jeopardize the safety and security of the society, to undermine the national unity in a way that can harm or terrorize people, to put their lives or freedom in danger, to harm the environment or public health, to weaken the national economy, to cause damage to annexes, installations, public or private properties, to hinder the performance of their work or to prevent or hinder the public authorities from doing their work. This provision is broad enough to cover all forms of terrorist acts pursuant to the 1999 International Convention for the Suppression of the Financing of Terrorism (ICSFT) Article 2 para. 1 (b). However, the motive required under the law is not in line with the treaties mentioned in Article 2 para. 1 (a) of the ICSFT (see in particular the unlawful seizure of an aircraft with no intention to terrorize, cause harm, death or material damage and with no political motives: it would not be considered as a terrorist act under the CT Law).

166. With the exception of the 1997 International Convention for the Suppression of Terrorist Bombings and the 1999 International Convention for the Suppression of the Financing of Terrorism,6 all the UN Conventions and Protocols against terrorism have been ratified by Qatar,7 and the relevant acts criminalized in the Qatari legislation.

167. The CT Law establishes in Articles 2 to 13 the sanctions applicable to the terrorist acts listed in Article 1 and to various forms of participation or assistance. 8

168. Article 4 sets out the terrorist financing offense. 9 It may be summarized as follows (highlights made by the assessment team):

  • Any person who supplies weapons or explosives to a group or organization formed with a view to commit a terrorist crime shall be punished with life imprisonment;
  • The same sanction will apply to any person who supplies the groups or organization mentioned in the previous paragraph in full knowledge of their purpose with weapons, ammunitions, technical information, material or financial assistance, information, tasks or machines, or anyone who sends supplies to such groups or collects financial assistance10 for them, or offers a shelter, a place to meet or other facilities to their members.

169. The full text of Article 4 clearly links the terrorist financing offense to the terrorist acts defined under Article 1. The terrorist financing offense, therefore, suffers from the same shortcomings as the terrorist crimes in the sense that it would not apply to the acts mentioned in Article 2 para. 1 (a) of the ICSFT when the motive set out in Article 1 of the CT has not been established.

170. Criterion II.1 (a): The law does not specify whether the provision and collection of the financial assistance and money must be direct and/or indirect for the offense to be committed. This would suggest that the means by which the funds are provided or collected is irrelevant and that both the direct and indirect provision and collection are covered by the law. The authorities share this view.

171. While the law specifically mentions terrorist groups and organizations, it does not extend the terrorist financing offense to the collection and provision of funds to individual terrorists and for terrorist acts.

172. The CT Law does not define “material or financial assistance” and no explanatory note or case law provides further guidance on the parameters of these terms. According to the authorities, the terrorist financing offense was deliberately drafted in broad terms in order to cover all forms of financing. On the basis of the text of the law and the discussions held with the authorities, the assessment team was satisfied that the notion of “material and financial assistance” is sufficiently broad to cover all the funds as defined in the ICSFT (i.e. “assets of every kind, whether tangible or intangible, movable or immovable, however acquired, and legal documents or instruments in any form, including electronics or digital, evidencing title to, or interest in, such assets, including but not limited to bank credits, travelers checks, bank checks, money orders, shares, securities, bonds, drafts, letters of credit”).

173. Criterion II. 1 (b): The law does not make reference to the source (either legitimate or illegitimate) of the “financial assistance.” The absence of a reference to a criminal source would tend to indicate that no limitation applies and that the offense covers the collection and provision of financial assistance whether from legitimate or illegitimate source. This view was shared by the authorities during the on-site visit.

174. Criterion II. 1 (c): According to the authorities, the terrorist financing offense does not require that the funds were actually used to carry out or attempt a terrorist act, or be linked to a specific terrorist act.

175. Criterion II. 1 (d): The attempt to commit the terrorist financing offense is not specifically addressed in the CT Law. It is nevertheless punishable under the general dispositions of the Criminal Code. The financial support and the other acts of assistance listed under Article 4 of the CT Law constitute felonies (Article 21 of the Criminal Code). The attempts to commit these crimes is, therefore, an offense punishable with imprisonment for a period between five to fifteen years (Article 29 of the Criminal Code).

176. Criterion II.1 (e): The CT Law addresses in detail various levels of participation in the terrorist crimes listed under Article 1 but participation in, organization of, and contribution to the terrorist financing offense is not specifically addressed. These acts are nevertheless punishable by application of the general dispositions of the Criminal Code (Articles 38, 39 and 40).

177. Predicate Offense for Money Laundering (c. II.2). Qatar amended the AML Law in 2003 in order to add “terrorist crimes” to the list of predicate offenses to money laundering (Article 2 of the AML Law as amended by Article 1 of the Decree Law No. (21) of 2003). According to the authorities, this includes all the crimes listed in the CT Law, including the terrorist financing offense.

178. Jurisdiction for Terrorist Financing Offense (c. II.3): The CT Law does not specify whether it would apply to the author of the terrorist financing offense who is not in the same country as the organization he or she assisted or intended to assist and/or the country where the terrorist acts has or would have occurred. The Criminal Code is more precise in the sense that it explicitly provides that its provisions applies to anyone who has committed or participated in a crime, outside Qatar, against “the internal and external security” of the State of Qatar as well as to anyone who, although in Qatar, committed or participated in “international terrorism” abroad (Articles 16 and 17 of the Penal Code). Because it addresses both the commission of and the participation in international terrorism without requiring a geographical link between them, the Qatari legislation complies with the standard on this point.

179. The Mental Element of the TF Offense (applying c. 2.2 in R.2): The CT Law refers to supplying financial assistance to a terrorist group or organization knowing its purpose beforehand (Article 4) thus requiring an intentional element. As for money laundering, the principle of free appreciation of the evidence applies to terrorist financing proceeding and the intentional element of the offense may be inferred from objective factual circumstances.

180. Liability of Legal Persons (applying c. 2.3 & c. 2.4 in R.2): According to the authorities, although it is not specified in the CT Law, the criminal liability of legal persons envisaged under Article 37 of the Criminal Code is applicable to those that collect or provide financial support to terrorist groups, without precluding parallel civil or administrative proceedings.

181. Sanctions for FT (applying c. 2.5 in R.2): The sanction applicable to the persons who collect any form of material and/or financial assistance for terrorist groups or organizations and/ or provide material and/or financial assistance is life imprisonment (Article 4 of the CT Law). The law also provides that the perpetrator of “a crime” (which, according to the authorities includes the terrorist financing offense) will be exempted from all penalties if he or she informs the competent authorities before the beginning of the execution of the crime (Article 14 of the CT Law). This disposition mirrors the general exemption clause provided in the Criminal Code. According to the representatives of the Public Prosecutor’s Office, it is only applicable when the information given is sufficiently comprehensive and timely to enable the authorities to prevent the commission of the terrorist acts. Exemption of all penalty may also be possible if the informer enables the authorities to arrest the other perpetrators (Article 14 of the CT Law). However, the sanction may not be reduced on the sole basis that the circumstances of the crimes or the personal situation of the perpetrator of these crimes call for mercy (Article 92 of the Criminal Code). The law also allows for the confiscation of “the seized things, assets, weapons and machines resulting from or used in or that could be used in” a terrorist act (Article 15 of the CT Law; see under SR III for further details). As an exception to the general criminal procedure rules, no statute of limitations applies to the offenses and the penalties provided in the CT Law.

182. Effectiveness: Overall, the terrorist financing offense meets most of the requirements set out in the ICSFT. However, several shortcomings remain: the coverage of terrorist acts is not sufficiently broad to be fully in line with the standard (for example, unlawful seizure of an aircraft is not considered a terrorist act in the absence of an intention to cause harm, death, terror or damage); this also limits the notion of terrorist groups or organizations; and the law does not cover the collection and provision of funds when there is no link to a terrorist group or organization. These shortcomings unduly limit the application of the terrorist financing offense.

183. The statistics provided by the public prosecutor’s office with respect to the predicate offense to money laundering (see under Recommendations 1 and 2) indicate that, in 2006, eight prosecutions have been, or were in the process of being conducted for various forms of terrorist crimes, but none related to the financing of terrorism. The police also confirmed that no investigation has been conducted since or before 2006 on the basis of Article 4 of the CT Law. This would indicate that while they investigate terrorist acts and terrorist organizations as such, the law enforcement authorities tend to disregard the financing of these acts and organizations. It further entails that the precise scope and limitations of the terrorist financing offense remain untested by the courts.

184. The Qatari anti-terrorism measures are, like in many other countries, counterbalanced by provisions that aim at ensuring the protection of freedom-fighters: the Qatari Constitution explicitly mentions that the foreign policy of the State of Qatar “shall support the right of peoples to self-determination” (Article 7); Qatar is also party to the 1998 Arab Convention for the Suppression of Terrorism, which provides a broad definition of terrorism of which the struggle, including armed struggle, against foreign occupation and aggression for liberation and self-determination is specifically excluded. While the right for self-determination is an undisputable principle of international law reflected in the UN Charter, it should not serve to undermine the fight against terrorism (and its financing) as defined by the UN counter-terrorism Conventions and Protocols. The authorities, in an effort to uphold the right for self-determination, refused to extradite a Chechen rebel who was suspected of having committed violent acts against civilians of a foreign country. The individual in question was the subject of an arrest warrant issued by Interpol in 2001 and was designated as a terrorist by the UN Security Council 1267 Committee in June 2003. His name was included in the 1267 consolidated list from June 2003 onwards. The process that led the authorities to refuse the extradition and the exact response given to the requesting state were not shared with the assessors. The authorities mentioned during the on-site visit that the purpose of their refusal was to ensure the protection of a freedom fighter. They also indicated that none of the measures called for under the UNSC Resolution 1267 were taken with respect to this particular individual. It is, therefore, clear that from moment of the designation by the UN Security Council 1267 Committee in June 2003, until the individual’s death in February 2004, the authorities provided him with a safe harbor and acted in violation of the UNSC Resolution 1267. In the circumstances, it would appear that there is a need for the authorities to reconsider how they strike the balance between an effective fight against terrorism and its financing, on the one hand, and the protection of the peoples’ right to self-determination, on the other, bearing in mind that the designations made under UNSCR 1267 afford no discretion: the measures called for in the resolution are mandatory and the principle of self-determination does not apply with respect to the designated persons.

2.2.2 Recommendations and Comments

185. It is recommended that the authorities:

  • Amend the CT Law to ensure that the acts covered by Article 2 Paragraph 1 (a) of the ICSFT are criminalized in line with the conventions and that the provision or collection of funds with the intention that they should be used, in full or in part, to commit any of the acts mentioned in Article 2 Paragraph 1 (a) of the ICSFT are considered as terrorist acts even when the motive mentioned in Article 1 of the CT Law is not established.
  • Amend the CT Law to ensure that the terrorist financing offense is considered to have been committed by any person who by any means, directly or indirectly, willfully, provides or collects funds, or attempts to do so, with the intention that they should be used or in the knowledge that they are to be used in full or in part to carry out a terrorist act; or by an individual terrorist.
  • Ensure that investigations into and prosecutions for terrorist crimes also cover the financing of these crimes.
  • Provide training to all relevant authorities on the fight against TF.

2.2.3 Compliance with Special Recommendation II

RatingSummary of factors underlying rating
SR.IIPC
  • The offense applies to all terrorist acts listed in Art. 2 para. 1 (b) of the ICSFT but the motive required in the CT Law is not in line with all the treaties mentioned in Art. 2 para.1 (a);
  • The provision/collection of funds to individual terrorists and/or for terrorist acts are not covered by the offense;
  • Lack of overall effectiveness: No investigations or prosecutions have been conducted despite the fact that several investigations and prosecutions have been/are being conducted for other terrorist crimes.

2.3 Confiscation, freezing, and seizing of proceeds of crime (R.3)

2.3.1 Description and Analysis

186. Confiscation of property related to ML, FT, or other predicate offenses including property of corresponding value (c. 3.1): The AML Law specifically provides that “in all cases, and without prejudice to the rights of the other bona fide parties, the court shall order the confiscation of the instrumentalities, proceeds and returns of the crime”(Article 13 paragraph 6). Instrumentalities are defined as “everything used or intended to be used for committing the money laundering crime.” Proceeds and returns cover “any funds or property earned directly or indirectly by committing one of the crimes stipulated in this law” (Article 1 of the AML Law). According to the authorities, these definitions cover all assets that have a link with the money laundering offense (or the predicate), whether movable or immovable, including income, profits, interests, and other benefits from crime. The only limitation to confiscation is the protection of thirds parties who hold the assets in good faith. The confiscation of instrumentalities used or intended to be used in the commission of the predicate crime (as opposed to the instrumentalities of the money laundering offense) is not specifically mentioned in the AML Law but is covered by Article 76 of the Criminal Code which provides for the confiscation of “things” that result from, or have been used in or that were intended to be used in the commission of a felony or a misdemeanor. This would apply to the instrumentalities of the following predicate offenses: drug-related crimes, illegal trafficking in weapons, ammunitions and explosives, forgery, counterfeiting and imitation of notes and coins; and terrorist crimes. Confiscation is a mandatory penalty which has to be ordered by the courts even when it has not been requested by the prosecutor.

187. Since no money laundering charges have been brought to court, no confiscation orders have been issued on the basis of the AML Law and Art 13 of the law remains untested. The authorities nevertheless established that they have experience in confiscating both the proceeds and the instrumentalities of other crimes.

188. Confiscation of Property Derived from Proceeds of Crime (c. 3.1.1 applying c. 3.1): Article 13 of the AML Law allows for the confiscation of the “proceeds and returns of the crime” as defined above “in all cases and without prejudice to the rights of other bona fide parties.”

189. Provisional Measures to Prevent Dealing in Property subject to Confiscation (c. 3.2): The Criminal Procedure Code sets out the general framework for the precautionary measures that the Public Prosecutor may take (Article 126–145) but is superseded by the AML Law which provides a specific framework for the provisional measures that may be taken in the case of suspicions of money laundering. Article 12 of AML Law (as amended by the Decree Law (21) of 2003) provides that the Governor of the QCB may order the freezing of funds or property when there are any concerns that they might be disposed of, for a period not to exceed ten days. The governor must, however, notify the Public Prosecutor of the freezing or seizing order within three days, otherwise the order will be deemed null. The Public Prosecutor is then entitled to cancel the order or renew it for a maximum period of three months. A further extension of the freezing or seizing period is possible, but only through an order from the Supreme Criminal Court acting at the request of the Public Prosecutor. The renewal can be made for the same period (s) until the criminal case is settled by a final judgment.

190. This procedure applies regardless of the nature of the property to be frozen or seized. For funds held by banks, the Governor of the QCB sends a letter to all the banks operating in Qatar, usually at the request of the FIU, with an order to freeze the accounts of a specific person in application of Article 12 of the AML Law. The facts that give rise to the freezing measures are kept within the FIU and the governor’s office, and only the name of the person or legal entity whose accounts must be frozen are provided to the banks, thus ensuring the confidentiality of the procedure. For property other than funds, the authorities informed the assessment team that the governor would apply a similar procedure by notifying the relevant authority, such as the registry for real estate in the case of immoveable property and the registry of commerce in the case of a company. This, however, has not been tested to date: only a few freezing orders have been issued and they all referred to bank accounts.

191. The governor is the sole initiator of the freezing or seizing measures under the AML Law in all cases, including when the funds or property are held by persons or institutions that fall within the remit of other supervisory bodies, such as the QFCRA. This is due to the fact that the AML Law and the freezing or seizing set out in Article 12 of the law are of a criminal nature, as opposed to a supervisory one, and, as such, apply to all the authorities in Qatar. 11

192. Ex Parte Application for Provisional Measures (c. 3.3): There are no provisions in the law that require the initial application of freezing or seizing measure applicable to property subject to confiscation to be carried out without prior notice to the owner of the assets. The authorities confirmed, however, that, in practice, all freezing or seizing measures are taken ex parte.

193. Identification and Tracing of Property subject to Confiscation (c. 3.4): Articles 27 to 36 of the Criminal Procedure Code define the officers in charge of criminal investigations and their powers. Members of both the Public Prosecutor’s office and the police are the “investigation officers” under the law (Article 27 of the Criminal Procedure Code). With Resolution (1) of 2005, the Public Prosecutor extended the list of investigation officers by granting the head of the FIU the capacity of a judicial police officer in the investigations led on the basis of the AML Law. Article 29 of the Criminal Procedure Code provides that the investigative officers “investigate crimes, search their perpetrators, and collect all necessary evidence for the investigation and the trial.” In doing so, they are entitled to make the necessary inspections, hear any person who has information on the crimes or their perpetrators and question the suspects (Article 34). The powers of the PPO in pre-trial investigations are further defined under Articles 63 to 145 of the Criminal Procedure Code and include summoning the defendant or placing him/her under arrest, searching properties, seizing of correspondence and parcels in the post office, wire tapping, and witness hearing. Access to information covered by the banking secrecy, however, requires the prosecutors to apply for a court order. According to the authorities, obtaining an order for the disclosure of banking records is straightforward and does not cause undue delay.

194. Protection of Bona Fide Third Parties (c. 3.5): Article 13 of the AML Law provides that any confiscation measures must be taken “without prejudice to the rights of the bona fide parties.” According to the authorities, should such a measure nevertheless infringe these rights, the bona fide third party may challenge the confiscation order before the ordinary courts of appeal.

195. Power to Void Actions (c. 3.6): Article 16 of the AML Law specifically provides that “without prejudice to the rights of bona fide third parties, the contract in which one of the parties or all of them know or have reason to believe that the objective of the contract is to prevent the confiscation of the instrumentalities, revenues or proceeds related to the money laundering crime, shall be deemed null and void.” Actions other than contractual that have been conducted with the intention of avoiding the recovery of property of criminal origin may be defeated by the general confiscation measures as described above.

196. Additional Elements (Rec. 3)—Provision for a) Confiscation of assets from organizations principally criminal in nature; b) Civil forfeiture; and, c) Confiscation of Property which Reverses Burden of Proof (c. 3.7): There are no specific provisions dealing with the confiscation of criminal organizations, civil forfeiture, or the reversal of the burden of proof.

2.3.2 Recommendations and Comments

197. Overall, the AML Law and the Criminal Procedure Code enable the authorities to confiscate all assets linked to a money laundering crime.

198. While not technically at odds with the standard, the fact that the provisional measures set out in the AML Law are issued by a supervisory body seems to disregard the fact these measures are of a criminal nature. It would seem to be more appropriate to grant the initial powers to freeze and seize to the public prosecutors, who are more familiar with criminal proceedings, or even the FIU, which is more familiar with the facts of the case and which usually must pursue its analysis of the STR during the duration of the freezing/seizing measure. It may, therefore, be worthwhile to reconsider the Governor of the QCB’s role in and the overall effectiveness of the current AML framework for freezing and seizing.

199. As mentioned above, only a few provisional measures have been taken in application of Article 12 of the AML Law. This and the lack of confiscation measures ordered in a trial for money laundering prevented the assessors from establishing whether the framework set out in the AML Law is fully effective. Furthermore, the lack of comprehensive statistical information on the provisional and confiscation measures ordered in other types of investigation and prosecutions also prevented the assessors from having a general idea of how the authorities apply these measures in the broader context.

200. Considering the above, it is recommended that the authorities:

  • Reconsider the role of the Governor of the QCB in the application of provisional measures under the AML Law.
  • Maintain comprehensive statistics on the freezing, seizing, and confiscation measures ordered.

2.3.3 Compliance with Recommendation 3

RatingSummary of factors underlying rating
R.3LC• Lack of evidence of the effectiveness of the AML confiscation framework.

2.4 Freezing of Funds Used for Terrorist Financing (SR.III)

2.4.1 Description and Analysis

201. Under Special Recommendation III, countries should have laws and other procedures in place that enable them to freeze without delay funds and other assets of persons designated pursuant to UNSCR 1267 and 1373. Laws and other measures should also provide for provisional measures, including the freezing and/or seizing of property, to prevent any dealing, transfer or disposal of property subject to confiscation. Such freezing should take place without delay and without prior notice to the designated persons involved. In practice, countries should designate a specific authority responsible for receiving and disseminating the UNSCR 1267 lists and the requests made under UNSCR 1373.

202. On January 16, 2002, the Council of Ministers established an interdepartmental Committee charged with the implementation of UNSCR 1373 (the Coordination Committee). 12 It subsequently extended the Committee’s mandate to the implementation of all UN Resolutions dealing with the fight against terrorism, including UNSCR 1267 and its successors, and enlarged the permanent membership of the Coordination Committee (Council of Ministers decisions of July 7 and July 21, 2002, respectively, forwarded to the Ministry of Civil Service Affairs and Housing on July 13 and 21, 2002). On March 26, 2007, the Council of Ministers replaced the Coordination Committee with a new one, the National Committee for Fighting Terrorism (NCT). The main functions of the NCT are to make plans and programs to fight terrorism, to coordinate national efforts in the implementation of the obligations arising from UNSCR 1373, and to take action to implement the obligations set out in the international conventions against terrorism to which Qatar is a party (Article 3 of the Council of Ministers’ decision of March 26, 2007). The implementation of other relevant UNSCR, and in particular of UNSCR 1267 and its successor resolutions, however, does not fall within the remit of the NCT and remains unaddressed since.

203. The NCT is composed of representatives from the MOI, the Qatar Armed Forces, the State Security Bureau, the Internal Security Force, the Ministry of Civil Service and Housing Affairs, the Ministry of Finance, the MEC, the MOJ, the Ministry of Endowment and Islamic Affairs, the General Secretariat of the Council of Ministers, the QCB, the General Authority of Customs and Ports, and the Qatar Chambers of Commerce and Industry (Article 1 of the abovementioned decision). The MOFA is not a permanent member of the NCT (nor was it a member of the previous committee) but is in most cases invited to attend the meetings. The supervisory or monitoring authorities of the relevant financial institutions and DNFBPs are all represented in the Coordination Committee (either directly or by their respective ministry), with the notable exception of the QFC (which was established as an independent body in 2005). The committee is chaired by the representative of the MOI. Meetings are held every two weeks or more often if necessary. Pursuant to Article 6 of the Council of Ministers’ decision, the NCT may request information pertaining to its functions from any authority.

204. Freezing Assets under S/Res/1267 (c. III.1) and Freezing Assets under S/Res/1373 (c. III.2): From the establishment of the former Coordination Committee, in 2002, until its dissolution, in March 2007, both the UNSCR 1267 lists, on the one hand, and the notifications and request made under UNSCR 1373, on the other, were dealt with in a similar way: they were sent to the MOFA which forwarded them to the Coordination Committee, whose main functions were to coordinate the implementation of all UNSC resolutions dealing with the fight against terrorism. The president of the Committee would then forward the designations to all members of the Committee and to the QFC. The authorities established that some of the updates to the 1267 list were forwarded to the private sector but it also transpired that this only occurred in a limited number of instances. The QCB has, on a few occasions, sent the consolidated lists to the domestic banks with a request to freeze the accounts and inform the QCB within 3 days in case of a positive match. The QFCRA has sent a few emails to the institutions operating in or from the QFC with a link to the UNSC website requesting the QFC institutions to check the updates. It is unclear whether the DSM and other relevant authorities have sent any designations at all.

205. This mechanism was the result of the practice, rather than of a clear procedure set out in the 2002 decision (which established the former Coordination Committee). This decision provided the general legal basis for the coordination of the implementation of both UNSC resolutions from 2002 until March 2007 but it did not grant the Coordination Committee the authority (or any other authority) to designate terrorists, nor did it provide a specific legal basis for the issuance of freezing orders.

206. The 2007 decision (which established the current NCT) provides a similar legal basis for the coordination of the implementation of the relevant Conventions and of UNSCR 1373, but it is silent as far as other relevant UNSCR, and 1267 in particular, are concerned. As was the case under the previous Committee, the NCT is not empowered with the authority to take position on the request made and, if necessary, designate terrorists (nor is any other Qatari authority), and there are no legal basis and no clear mechanisms in place to ensure the freezing of funds and other assets without delay outside criminal proceedings. With the establishment of the new NCT, the mechanism that previously dealt with the reception and dissemination of the updates to the UNSCR 1267 consolidated list has been abolished. No alternative mechanism has been created.

207. No specific reason was mentioned as to why the functions of the NCT do not cover the implementation of all relevant UNSCR and it would appear that this was the result of an oversight rather than a deliberate omission. The fact nevertheless remains that there is currently no mechanism in place dealing with the implementation of UNSCR 1267 and no legal basis to require the freezing of assets as set out under SR III.

208. In 2006, the QCB issued the AML/CFT instructions for the banking and financial institutions under its supervision that require the latter to freeze funds or assets belonging to terrorists and persons who finance terrorism and terrorist organizations “according to court judgments or instructions issued by the Governor [of the QCB]” (Article 8 paragraph 3). The instructions are, however, only enforceable within the QCB’s purview and do not apply to other financial institutions, such as those that act in or from the QFC in particular. Furthermore, no court judgment has been passed on this issue and no further instructions (that would include the name of the persons whose funds and assets should be frozen) have been published. The requirement set out in the instructions, therefore, remains an empty shell.

209. On a first reading, several other dispositions of the Qatari legislation could apply to all the financial institutions and provide a legal basis for the freezing mechanism, but fail to do so on further analysis;

  • Article 21 of the CT Law enables the public prosecutor to “provisionally” issue an order preventing the accused from disposing of or managing his assets on condition that sufficient evidence is provided on the seriousness of the accusation. The Prosecutor’s decision may extend to the assets of the spouse or minor children of the accused, if it is proven that “these assets were possessed from him.” However, the authorities confirmed that this disposition refers only to cases where criminal proceedings have been initiated.
  • Article 12 of the AML Law, as amended by Article 1 of the Decree Law No. (21) of 2001, enables the Governor of the QCB to freeze “funds or properties” for a period of ten days when there are any concerns that their owner might dispose of them, and enables the Public Prosecutor, in a first stage, and the Supreme Criminal Court, in a second stage, to extend the freezing order (see write-up on Recommendation 3). However, this disposition only applies when there are suspicions of money laundering, not terrorist financing.
  • Article 126 of the Criminal Procedure Code also enables the Public Prosecutor to freeze assets 13 under certain circumstances, but it only applies within the ambit of criminal proceedings for crimes other than terrorist financing (and money laundering).

210. It results from the above that there are no effective laws and regulations in place in Qatar to freeze terrorist funds or other assets without delay and without prior notice in accordance with UNSCR 1267 and 1373.

211. The fact that the QFC and DSM are not members of the Coordination Committee entails that they are not immediately and directly informed of the actions taken by the Committee. The authorities established that, in practice, the QFC is informed of the decisions taken by the NCT (and its predecessor). It is unclear, however, to the assessors whether the fact that the information is not provided to the QFC at the same time as the members of the NCT, and the fact that the QFC is not in a position to provide its input in the NCT discussions hinder the swift implementation of the UNSC Resolutions within the QFC. No information was provided with respect to the communication (or absence thereof) with the DSM.

212. The Qatari authorities provided safe harbor to a foreign individual who was designated by the UNSC 1267 Committee in June 2003 as an individual having links with Al Qaeda, Usama bin Laden and/or the Talibans, from a date unknown until the individual’s death in February 2004. No action has been taken to trace and freeze this individual’s assets.

213. Freezing Actions Taken by Other Countries (c. III.3). Pursuant to the Council of Minister’s decision of January 2002, the Coordination Committee was responsible for the coordination of the implementation of the relevant UNSC resolutions. Acting on this basis, the Committee examined the actions initiated under the freezing mechanisms of other countries. The authorities informed the assessment team that, where necessary, the Chairman of the Committee requested the initiating State to provide more detailed information (such as, for example, the precise names of the persons subject to the freezing mechanisms) and, when satisfied with the information received, forwarded the lists to all the relevant agencies and the private sector. However, no indication was provided on the level of detail that is required before the names may be forwarded, and on what would constitute reasonable grounds or a reasonable basis to initiate the freezing mechanism in Qatar. The procedure in place since the establishment of the NCT in March 2007 is supposedly the same. In all events, the problems raised above remain: no authority has been given the powers to take a view on the requests made and if necessary, designate terrorists, and there is no legal basis to require the freezing of funds outside criminal proceedings.

214. Extension of c. III.1–III.3 to funds or assets controlled by designated persons (c. III.4). In the absence of clear freezing orders, it has not been established that the reporting entities are requested to freeze funds or other assets owned or controlled by designated persons, terrorists and those who finance terrorism or terrorist organizations, as well as funds or other assets are derived or generated from funds or other assets owned or controlled by these same persons and entities.

215. Communication to the Financial Sector (c. III.5). Although they established that some updates to the UNSCR 1267 consolidated list have been disseminated to the private sector, the authorities failed to establish that this was the case with respect to all updates and all requests made by another country.

216. Guidance to Financial Institutions (c. III.6). No freezing mechanism is in place. Consequently, no guidance is provided to the financial institutions and other persons or entities that may hold targeted funds or other assets that should be subject to freezing.

217. De-Listing Requests and Unfreezing Funds of De-Listed Persons (c. III.7). There are no publicly-known procedures for considering de-listing requests and for unfreezing the funds or other assets of de-listed persons.

218. Unfreezing Procedures of Funds of Persons Inadvertently Affected by Freezing Mechanism (c. III.8). The authorities mentioned that they found a positive match with one of the names listed under UNSCR 1267 and that one bank account was frozen as a result. Further investigations were conducted and revealed that the individual in question was not the suspect mentioned in the 1267 list but a homonym (“false positive”). The authorities, therefore, ordered the lift of the freezing measures. While this case illustrates the authorities’ willingness to comply with the requirements of UNSCR 1267 as well as their capacity to investigate, freeze and if necessary unfreeze the funds, it does not allow the assessors to ascertain whether these measures were taken in a timely fashion.

219. There are no publicly-known procedures for unfreezing, in a timely manner, the funds or other assets of persons or entities inadvertently affected by a freezing mechanism.

220. Access to frozen funds for expenses and other purposes (c. III.9). Similarly, there are no procedures in place to authorize access to funds and other assets that have been frozen and that are necessary for basic expenses (nor are there any procedures for determining the funds that are necessary to cover the basic expenses) in accordance with UNSCR 1452. No request to authorize access to the funds was made in the case of the “false positive” mentioned above. The authorities, therefore, have no practical experience in this matter.

221. Review of Freezing Decisions (c. III.10). No procedures have been issued to enable a person or entity whose funds or other assets have been frozen to challenge these measures.

222. Freezing, Seizing and Confiscation in Other Circumstances (applying c. 3.1–3.4 and 3.6 in R.3, c. III.11). In the case of terrorist acts, provisional measures are possible as follows: Article 21 of the CT Law provides that “If enough evidence is given about the gravity of the accusation, in the crimes provided for in this Law, the Public Prosecutor may temporarily order the accused to stop disposing of or managing his assets, in addition to other provisional measures. This decision may extend to cover the assets of the spouse or minor children of the accused, if these assets are established to be assigned to them through accusations. This also applies to the management of assets.”

223. The law allows for the confiscation of “the seized things, assets, weapons and machines resulting from or used in or that could be used in” a terrorist act (Article 15 of the CT Law). “Things” are not defined in the law. According to the authorities, the term is generally used in a broad sense and covers “anything that might be used or becomes the proceeds of any terrorism or terrorism financing crime.”

224. Protection of Rights of Third Parties (c. III.12). There is a legal requirement in the CT Law to take the rights of bona fide parties into consideration before ordering the confiscation of assets (Article 15). The Criminal Procedure Code specifies the measures that may be taken by bona fide parties. Article 127 stipulates that “any concerned person may appeal against the issued order of the said prohibition in the previous article to the criminal court within six months from the date of issuance or notification, whichever is later. The court must decide on the appeal, within a period not exceeding thirty days from the report date.” Article 128 states that “the General Prosecutor may cancel or amend the prohibition order, unless the order is issued by the court or the case is referred to it.” Article 129 further provides that “the competent court may, upon considering the case, on its own or on the basis of the general prosecution request or the concerned persons, decide the cancellation or amendment of the prohibition issued order.”

225. Enforcing the Obligations under SR III (c. III.13). Qatar has not implemented an appropriate legal mechanism to freeze assets in accordance with SR III and, consequently, has not established measures to monitor the compliance with the obligations under SR III.

226. Additional Elements (SR III)—Implementation of Measures in Best Practices Paper for SR III (c. III.14) and Implementation of Procedures to Access Frozen Funds (c. III.15). None of the measures set out in the FATF Best Practice Paper for SR III have been implemented and no procedure has been adopted to authorize access to funds and other assets that have been frozen to cover the necessary basic expenses.

2.4.2 Recommendations and Comments

227. The Council of Ministers’ decision to establish a Coordination Committee for the implementation of the UN counter-terrorism resolutions was timely and provided a useful platform reuniting all the relevant authorities at the time. The current NCT provides an equally useful platform but could have proven more so if the QFC and other authorities (such as the public prosecutor’s office and the supervisory authority for capital markets) were also included. Although the previous framework enabled the authorities to circulate the UNSCR 1267 list among them, as well as to discuss the requests received from foreign countries under UNSCR 1373, there is currently no mechanism in place to deal with the implementation of UNSCR 1267. Furthermore, the existing framework does not provide for a formal and mandatory freezing mechanism. The framework should be expounded upon by any legal measures necessary to enable the authorities to designate suspected terrorists and freeze their assets in compliance with both UNSCR 1267 and 1373.

228. The authorities should take the necessary measures to enable them to comply with SR III. They are in particular recommended to:

  • Designate an authority responsible for analyzing the requests made under UNSCR 1373 and for the designation of terrorists.
  • Designate an authority responsible for receiving and disseminating the updates to the consolidated list established pursuant to UNSCR 1267.
  • Include the QFC and consider including the PPO and the DSM in the NCT.
  • Establish the necessary legal basis for the issuance by a competent authority of mandatory freezing orders of funds or other assets owned or controlled by designated persons, terrorists and those who finance terrorism or terrorist organizations, as well as funds or other assets that are derived or generated from funds or other assets owned or controlled by these same persons and entities.
  • Establish an effective mechanism for the dissemination of UNSCR 1267 lists and actions taken under UNSCR 1373 to the financial institutions and DNFBPs immediately upon receipt of the lists and upon taking decisions under UNSCR 1373.
  • Provide guidance to the financial institutions and DNFBPs regarding their obligations in taking action in the freezing mechanisms.
  • Issue effective and publicly-known procedures for considering de-listing requests and unfreezing the funds and other assets of de-listed persons or entities in a timely manner.
  • Issue effective and publicly-known procedures for unfreezing in a timely manner the funds and other assets of persons or entities inadvertently affected by the freezing mechanisms upon verification that that person or entity is not the designated person.
  • Issue appropriate procedures for determining upon request the funds needed to cover basic expenses and for authorizing access to the funds or other assets frozen pursuant to UNSCR 1267 and that have been determined to be necessary to cover basic expenses.
  • Establish the legal basis for ordering the necessary provisional measures.
  • Establish appropriate procedures for challenging the freezing measures before the courts.
  • Define the funds and other assets that may be confiscated in a manner consistent with the international standard.
  • Establish an effective mechanism to monitor compliance with the relevant laws and regulations governing the freezing mechanisms under UNSCR 1267 and 1373.

2.4.3 Compliance with Special Recommendation III

RatingSummary of factors underlying rating
SR.IIINC
  • No coordination mechanism in place for the implementation of UNSCR 1267.
  • There is no authority responsible for the designations, disseminations and no legal basis for the freezing/seizing orders.
  • With the exception of the protection of the rights of bona fide third parties, none of the measures provided under SR III have been adopted.
  • No funds have been frozen under UNSCR 1267, despite the presence in Qatar for several months of a person designated by the UNSCR 1267 Committee, or under UNSCR 1373.

2.5 The Financial Intelligence Unit and its Functions (R.26)

2.5.1 Description and Analysis

229. Establishment of FIU as National Center (c. 26.1). Article 10 of the AML Law states that the coordinator of NAMLC is competent to receive reports related to suspicion of money laundering crimes from the competent parties and to take the legal measures pertaining to them. Article 20 provides that the minister of interior, in coordination with the Governor of QCB shall, based on a proposal by the NAMLC, issue the executive resolutions of the provisions of the AML Law. In 2004, the President of NAMLC issued Administrative Order No. 1 of 2004 with the aim of establishing the FIU. The Administrative Order further describes the powers, functions, and structure of the FIU. In practice, the FIU has been established and operates on the basis of the Administrative Order. However, the president of NAMLC did not have the power to issue such Administrative Order. The latter, therefore, has no legal basis. Furthermore, in establishing the FIU, the Administrative Order is inconsistent with the text of the AML Law which gave the coordinator of NAMLC the power to receive, analyze, and disseminate STRs.

230. Notwithstanding the conflict between the powers and functions of the coordinator of the NAMLC and the FIU, as established under the Administrative Order, the FIU became operational on October 16, 2004. It functions as an administrative unit and its mandate covers fighting money laundering and combating the financing of terrorism.

231. Pursuant to the Administrative Order, the FIU has the following powers and responsibilities:

  • receiving suspicious transaction reports related to money laundering and terrorism financing directly from all concerned entities in Qatar (including all financial and non financial institutions and law enforcement agencies);
  • analyzing suspicious transaction reports and taking appropriate decisions thereon;
  • filing suspicious transaction reports proved not to be suspicious and forwarding the ones it deems suspicious to law enforcement agencies and the Public Prosecution. The unit may request further information from all law enforcement agencies regarding suspicious transaction reports; and
  • exchanging information with counterpart financial intelligence units and international bodies and organizations, in accordance with the provisions of the AML Law and its amendments and the principles of exchanging information issued by the Egmont Group.

232. In practice, the FIU serves as a national centre for analyzing STRs. Such analysis is conducted by monitoring the STRs that are submitted, conducting databases checks and disseminating them to the PPO, as necessary. The FIU sometimes requests additional information from available databases such as real estate registration, authentication register, financial instruments register for the purpose of analysis but it does not do so in all cases where this would be necessary. Apart from a few cases, the FIU has not requested any additional information from the reporting entities and the ECPD. The CRS is a system established by QCB to inspect banks and financial institutions under its supervision remotely in addition to the on-site visits. The system enables the direct access to customer accounts, including the movement of accounts, transactional information, as well as all personal information received through application of Customer Due Diligence. The FIU is, in practice, is not using the Central Reports System (CRS).

233. Article 8 of the AML Regulations imposes obligations on authorized persons to ensure that the Money Laundering Reporting Officer (MLRO) receive internal STRs from employees. It further provides that the MLRO investigate the circumstances of the internal STR and that the MLRO files an external STR to the FIU in accordance with the AML Law requirements. The QFCRA disseminated letters to DNFBPs that include information on regulatory reporting requirements. The letters state that relevant persons are subject to certain mandatory reporting requirements under the QFC Anti Money Laundering Regulations. These include providing the QFCRA with a copy of the required annual MLRO to senior management; notifying the QFCRA of any STRs made to the local FIU, and notifying the QFCRA of any suspicions of money laundering notwithstanding that an STR has not been filed with the local FIU.

234. Guidelines to Financial Institutions on Reporting STR (c. 26.2). A standard form for STRs has been developed by the FIU and was transmitted to reporting entities. Although the FIU encourages reporting entities to use this form. STRs submitted in other forms are accepted.

235. The assessors were informed that the FIU has met with representatives of the financial institutions, DNFBPs, and NPOs and provided them with informal “verbal” guidance. The FIU has not yet issued any written guidelines to financial institutions, DNFBPs, NPOs or other reporting entities. Representatives of the FIU stated that the reason for which guidelines had not yet been developed was the reliance on personal relationships, which they have fostered with banking personnel, compliance officers working in DNFBPs and other reporting entities. The lack of written guidelines and guidance accessible to all precludes the reporting entities from having a common understanding of the reporting requirements.

236. Access to Information on Timely Basis by FIU (c. 26.3). The FIU has direct/indirect access to some databases:

  • The employees of the FIU have access to the FIU’s own database that includes all information related to suspicious transaction reports. The FIU’s database consists of an electronic archive that includes all correspondence and documents issued to or by the FIU.
  • Pursuant to Article 3 of the Administrative Order, the FIU may request further investigations from law enforcement agencies regarding information contained in STRs. The FIU cooperate with the ECPD to benefit from administrative or law enforcement information. The ECPD access the databases of the MOI which include the personal details of citizens and residents, car numbers and owners, their sale and export, companies and institutions systems and activities, register of entering and leaving the country, visa system, telephone numbers, and the geographical locations guideline of the ministry. Furthermore, the Criminal records department, which includes a database of suspects, names of previous criminals and their criminal practices, is part of the MOI and can be accessed by the ECPD.

237. The FIU is also developing links to other databases:

  • The QCB developed a link with the commercial register, which will be accessible to the FIU in the near future. The commercial register is a system of central registration where the main ownership and control details for all companies registered in the domestic sector are maintained.
  • A secure online submission system is currently being developed and should become operational in the near future.
  • The CRS system enables direct access to customer’s accounts, including the movement of accounts, transactional information, as well as all personal information received through application of CDD. Although the CRS may provide the FIU with information regarding all the bank accounts, the STR form also must spell out the obligation of reporting entities to provide all necessary information when filing an STR.
  • The accounts of the financial institutions operating in the QFC will not be accessible through the CRS. Article 8(6) of the AML Regulations provides that the FIU has direct access to relevant persons and is able to get information in a timely manner. More specifically, Article 8(6) requires a relevant person to ensure that its MLRO is responsible for acting as a point of contact within the firm for the FIU, other competent Qatar authorities and the QFCRA regarding Money Laundering issues. A relevant person must respond promptly to any request made by the FIU, the QFC Authority, the QFCRA or other competent state authorities.

238. Additional information from reporting parties (c.26.4). Pursuant to Article 6 of the Administrative Order, the FIU is empowered to ask financial institutions whether they have conducted transactions with a person subject of an STR, or to request additional information/documentation. However, it is not empowered to make such requests to DNFBPs. In practice, the FIU has requested additional information from reporting entities operating within the domestic sector but has not done so with regard to financial institutions operating in QFC.

239. Dissemination of Information (c. 26.5). Pursuant to Article 3 of the Administrative Order the FIU is empowered to forward STRs to law enforcement agencies and the PPO. To date, the FIU has not determined any objective criteria to disseminate reports. The head of the FIU decides to file or to disseminate the cases to the PPO. The practice is to forward cases, which are still deemed suspicious after analysis, to the PPO who then either continues the judicial investigation or commences criminal proceedings. Only one ML case was deemed suspicious and has been forwarded to the Public Prosecutor who then determined that there was no basis to proceed further. No STRs regarding terrorist financing have been disseminated to the PPO.

Figure 1.Information flows to and from the FIU

240. Operational Independence (c. 26.6). Article 1 of the Administrative Order provides the legal basis for the FIU’s operational independence. However, as outlined above, the Administrative Order appears to be inconsistent with the provisions of the AML Law which gave the powers to receive, analyze and disseminate STRs to the coordinator of NAMLC rather than the FIU. This inconsistency may undermine the FIU independence.

241. Article 2 of the Administrative Order states that “the president of NAMLC shall issue a decree nominating the head of the unit and approving its organizational structure and financial budget.” With the exception of freezing orders, in practice the head of the FIU has a broad range of competencies ensuring the operational independence and autonomy of the FIU.

242. Protection of Information Held by FIU (c. 26.7). The authorities believe that the information received by the FIU staff is subject to the provisions on the protection of information provided in various laws such as Article 5 of the AML Law, the provisions on confidentiality of banking transactions pursuant to Law (33) of 2006 and Article 332 of the Penal Code that sanctions the violation of professional secrecy. However, the assessment team’s view is that there is some uncertainty surrounding the provisions mentioned above and that these provisions are not sufficient to protect the information held by the FIU. In practice, the STRs and related information held by the FIU are entered into the database. There is no log history to record all the queries made by FIU employees. The authorities state that only FIU staff and relevant IT department staff are permitted access.

243. Publication of Annual Reports (c. 26.8). The FIU has not yet released any statistics, trends analysis, and/or typologies concerning its activities. An annual report was published in 2006 which consisted of the AML/CFT laws and regulations in force in Qatar. The FIU manages its own website that contains information on the AML/CFT regulations and the 40+9 FATF recommendations.

244. Membership of Egmont Group (c. 26.9). The FIU was recognized as an Egmont Group member in July 2005 and has recently joined the Egmont IT Working Group.

245. Egmont Principles of Exchange of Information among FIUs (c. 26.10). Pursuant to Article 3 of the Administrative Order, the FIU should exchange information with foreign FIUs according to Egmont principles. According to the authorities, the FIU takes account of the Egmont principles in practice when exchanging information with its overseas counterparts. It requested information from other FIUs in 4 cases, one of them through the Egmont Secure Web. Qatar’s FIU did not sign any bilateral or multilateral MOUs for cooperation with other foreign FIUs. The FIU received only two requests from foreign counterparts.

246. Adequacy of Resources to FIU (c. 30.1). The FIU has 10 full-time staff: In addition to the head of the Unit, the staff comprises 1 Analyst, 1 researcher, 2 IT/analysis specialists, 2 for secretariat services and 2 for administrative support, one part-time legal advisor and 2 part-time IT experts.

Figure 2.FIU Organizational Structure

247. The structure of the FIU comprises the three following specialized operational divisions:

  • Analysis and Dissemination Division: Specialized in receiving suspicious transactions reports from all parties, analyzing and disseminating STRs, and distributing the warnings that the FIU receives from security authorities.
  • Studies and Follow-up Division: Specialized in carrying out studies and research, preparing AML/CFT reports, keeping abreast of international and regional developments in this regard, and monitoring compliance of reporting entities.
  • I.T. and International Cooperation Division: Specialized in fulfilling all technical duties related to computer issues, database, and exchange of information with foreign counterparts. The FIU manages its own website that contains information on the AML/CFT regulations and the 40+9 FATF recommendations.

248. The FIU currently has one staff (head of the financial analysis and dissemination division) in charge of monitoring the STRs that are submitted; he conducts database checks and analysis and disseminates STRs, as necessary.

Table 8.Budget of the FIU
Qatari RiyalsUS$
20041,173,280325,911
20055,537,0001,538,055
200611,142,5003,095,138
200712,386,0003,440,555

249. The 2007 Budget contains the following provisions: (i) 100,000 Riyals: subscription in Reuters, Telerate, Swift and press agencies; (ii) 50.000 Riyals: connection to internet; (iii) 50,000 Riyals: development of electronic archive. The amounts assigned for analysis represent only1.6 percent of the FIU budget (QR 200,000/12,386,000).

250. Overall, the FIU does not appear to have the appropriate level of human resources to properly undertake its functions. In particular, the resources allocated to the analysis of STRs are insufficient and does not reflect the importance that should be devoted to this function.

251. Integrity of FIU Authorities (c. 30.2). All FIU incoming employees undergo background checks and a security clearance which includes criminal record checks and interviews to ensure that the appropriate security measures are in place to maintain the integrity of the FIU operations.

252. Training for FIU Staff (c. 30.3). Although some staff have received training and have provided some training for private sector entities as well as the concerned authorities, additional specialized and practical in-depth training would be highly beneficial.

253. Statistics (applying R.32 to FIU). The FIU keeps an electronic database (and a manual database), which stores the STRs received by the FIU since October 2004, the date the FIU became operational. It classifies them by entities sending the information.

254. The total number of STRs and other information sent by concerned authorities in the database from January 1, 2002 to December 31, 2006 is 266. Before the FIU became operational, STRs were filed with a specialized department at QCB.

Table 9.STR and Other Relevant Information Received by the FIU
Source of “STR”20022003200420052006Total
Internal
Banks81113212780
Exchange Houses31227141690
MOI323102359
QCB7815
DSM66
SSB123
Customs11
Post Office22
Individual11
Real Estate Register11
Brokerage Firms44
External
FIU123
Total3943446772265
Total of STR

received from

Financial

Institutions and

DNFBPs
3933203543170

(approximately

80 STR

received by the

FIU since its

establishment)

255. The FIU receives ML and TF related information from other sources that are considered an STR and recorded as such. No statistics are kept on the number of referrals made by the FIU to national authorities. Only one case was transmitted to the PPO. The FIU has not received any STR related to FT. It requested information from other FIUs in 4 cases, one of them through the Egmont Secure Web. The FIU does not review periodically the effectiveness of the system to combat ML and FT.

2.5.2 Recommendations and Comments

256. The authorities are recommended to:

  • Address the legal basis that established the FIU as a national centre for receiving, analyzing and disseminating disclosures of STRs and other relevant information concerning suspected ML or FT activities. While the FIU appears to operate in practice, it should be grounded on a sound legal basis.
  • Ensure that the QFCRA removes the third point from the letters disseminated to DNFBPs that includes the obligation to notify QFCRA of any suspicion of ML notwithstanding that an STR has not been made to the local FIU.
  • Ensure that the FIU provides financial institutions and other reporting parties with guidance regarding the manner of reporting, including the procedures to be followed when reporting.
  • Ensure that the FIU (i) enhances the depth and quality of its STRs analysis, in particular by accessing the CRS and requesting on a regular basis additional information from reporting entities and the ECPD; (ii) uses, when necessary, the CRS, the link to the commercial register developed by the QCB, the real estate register and all available databases to enhance its STR analysis; (iii) undertakes a study focusing specifically on the risks of ML and FT associated with certain businesses.
  • Ensure that the FIU establishes mechanisms for cooperation with regulators, supervisors, reporting entities and law enforcement authorities to optimize its analysis and establishes an information flow that protects confidentiality while enhancing its analysis capacity.
  • Grant the FIU the power to ask the DNFBPs whether they have had transactions with a person who was the subject of an STR, or to demand additional information from them.
  • Ensure that the FIU periodically reviews the effectiveness of the system to combat ML and FT and improves its collection of statistics
  • Ensure that the FIU publishes periodically annual reports, typologies and trends of ML/FT.
  • Ensure that the FIU provides additional specialized and practical in-depth training to its employees. This training should cover, for example, the scope of predicate offenses, analysis and investigation techniques and familiarization with prosecution of ML/FT techniques, and other areas relevant to the execution of the FIU staff functions.

2.5.3 Compliance with Recommendation 26

RatingSummary of factors relevant to s.2.5 underlying overall rating
R.26LC
  • Absence of a clear legal basis for establishing the FIU and providing it with its powers and functions.
  • Absence of a legal basis to request additional information from DNFBPs.
  • Poor quality of and insufficient resources allocated to STRs analysis.
  • No guidance on filing STRs has been issued by the FIU.
  • Inadequate protection of information and premises.
  • No periodic review of system’s effectiveness in combating ML and FT.

2.6 Law enforcement, prosecution and other competent authorities—the framework for the investigation and prosecution of offenses, and for confiscation and freezing (R.27, and 28)

2.6.1 Description and Analysis

257. Designation of Authorities ML/FT investigations (c. 27.1). The investigation officers are: (i) Members of the PPO; (ii) Members of the Police Force; (iii) Members of the SSB; (iv) Members of Customs; and (v) the head of the FIU with respect to any crimes committed under the AML Law.

258. Qatar separates the authorities in charge of investigations and the legal authorities in charge of the judgment of criminal offenses. The authorities in charge of AML/CFT investigations operate independently and are mainly the responsibility of four separate authorities: (i) the ECPD (ECPD) within the MOI; (ii) the General Prosecutor; (iii) the SSB; and (iv) the customs.

259. Investigation officers are subject to the Public Prosecutor’s supervision with respect to criminal investigations (Article 8 of CPC). They investigate crimes, search for their perpetrators, and collect all necessary evidence for the investigation and the trial (Article 29 of the CPC). Investigation officers have the mandate to collect all necessary clarifications to facilitate investigations of received or otherwise known facts, and undertake all security preserving measures to conserve the evidence. (Article 31 of CPC)

260. The work of the ECPD is regulated by Resolution No.(29) of 2004, issued by the MOI on July 28, 2004. The ECPD is affiliated to the director of the criminal investigation department. The ECPD is specialized in the investigations of ML, e-crimes and counterfeiting and falsification of currency and is further responsible to investigate crimes concerning the protection of copyright and neighboring rights. The ECPD works in collaboration and coordination with the FIU and the PPO.

Figure 3:Structure of the Economic Crimes Prevention Unit

Figure 4:Structure of the Criminal Investigation Department

261. The Fighting Money Laundering Unit is the designated law enforcement agency for AML investigations, while CFT investigations are the sole responsibility of the SSB.

262. The ECPD receives requests for information from the FIU, and carries out the necessary investigations to identify the suspect’s transactions, relations, commercial activities, real estate properties and the persons with whom the suspect is dealing as well as the extent of their participation in the ML offence. The Division collects information in cooperation with other departments at the MOI, then notifies the FIU of the investigation’s findings and if the ML offence or an attempt has been established, it refers the suspect to the PPO.

263. The PPO is headed by the General Prosecutor. Its functions and jurisdiction are regulated by law No.(10) of 2002 that established the PPO. The General Prosecutor is assisted by two senior Advocates-General and three District Prosecutors. In total, the PPO consists of 145 members. At the time of the assessment, the PPO had received, investigated one case of ML forwarded by the FIU.

264. The SSB has been a separate bureau with a direct reporting line to the Emir since its establishment pursuant to No. 5 of 2003. The powers of the SSB regarding the investigation into ML/TF crimes are set out in Article 2 of Law No.5 of 2003 as follows: (i) safeguarding the regime of the State and its constitutional bodies; (ii) safeguarding the State and its safety and protecting its national unity from any destructive or vandalistic activities or actions inside it or abroad; (iii) combating activities harmful to the safety, stability and status of the State and its ties with other countries; (iv) protecting the political, economical, social and religious values of the State; (v) combating the activities harmful to the economy of the State and its revenues and (vi) combating espionage. According to the SSB, it has the mandate to use its powers with respect to ML/FT crimes based on paragraphs 4 and 5 of Article 2.

265. Pursuant to article 3 of Law No. (5) of 2003, the SSB have the authority of surveillance and investigation through different technical and professional means. The SSB enjoys large competences, it has the power to carry out investigations and collect evidence of crimes. The SSB, FIU and PPO cooperate through NAMLC. According to the authorities, a copy of all STRs and related documents is usually sent by the FIU to the SSB to perform investigations about suspects. The SSB has the discretion to decide on whether to investigate cases depending on the seriousness of the crime suspected. Since the SSB has the exclusive authority over any other law enforcement authority, conflicts of authorities and overlap in investigations between the SSB and other law enforcement authorities may arise in certain circumstances.

266. Law No. (40) of 2002 regulates the work of the customs. They have the usual customs investigating powers, including the right to stop people and goods at the border, and to check for, search, and seize restricted and prohibited goods.

267. Ability to Postpone / Waive Arrest of Suspects or Seizure of Property (c. 27.2). Postponing arrests or seizures for investigative and identification of suspects persons is considered to be within the investigation officer’s police powers, although this assertion is not supported by any formal legal text. The PPO is using his discretionary power to undertake action to arrest a suspect, to seize property or to postpone such actions.

268. Additional Element—Ability to Use Special Investigative Techniques (c. 27.3). Telephone tapping of conversations occurring in private places is allowed pursuant to Article 77 of the CPC in fighting (i) crimes committed against the internal and external national security (ii) illicit trafficking in narcotic drugs and psychotropic substances and (iii) illicit arm trafficking. In these cases, the telephone tapping may be conducted by members of the PPO based on a written order by the Public Prosecutor. Otherwise and in all other crimes, the written order must be issued by any of the judges of the competent court of first instance. The measure must not exceed a period of thirty days and is renewable for a similar period or periods as long as the initial reason for its issuance remains.

269. Additional Element - Use of Special Investigative Techniques for ML/FT Techniques (c. 27.4). The ECPD and the SSB which are the competent authorities in investigating and collecting information related to ML and FT offences respectively reported that they make regular use of telephone tapping in conducting the investigations. To this end, technologies are used, such as listening devices, cameras, computer verification and e-mail tracking.

270. Additional Element—Specialized Investigation Groups & Conducting Multi-National Cooperative Investigations (c. 27.5). The SSB is competent to investigate FT offenses and within the MOI, the ECPD investigates ML offenses. To date, authorities have not considered putting in place specialized investigation groups or conducting multi-national cooperative investigations.

271. Additional Elements—Review of ML & FT Trends by law enforcement authorities (c. 27.6). ML methods, techniques and trends are not reviewed by law enforcement authorities on a regular, interagency basis. No analysis or studies are conducted or disseminated.

272. Ability to Compel Production of and Searches for Documents and Information (c. 28.1). According to Article 75–77 of the CPC, law enforcement agencies have the powers to be able to compel production of documents, search persons or premises and seize and obtain documents. Such powers are exercised when written permission are obtained from the PPO. The SSB has the power to carry out investigations and collect evidence about crimes that fall under its powers or which are submitted to it by the Emir (Article 6 of the SSB Law). It is not possible for any person or governmental or nongovernmental party to conceal any information or data that the president of the Service or the person whom he delegates for this purpose demands in writing.

273. Law enforcement authorities have full powers to compel production of bank account records, account files, business correspondence, and other records, documents or information, held or maintained by financial institutions and other businesses or persons. The FIU is also capable of obtaining transaction records and identification data through the CDD process from financial institutions. The CRS that enables direct access to customer’s accounts, including the movement of accounts, transactional information, as well as all personal information received through application of CDD should be available to the FIU’s access in the future.

274. Power to Take Witnesses’ Statement (c. 28.2). Article 84 of the CPC provides that PPO shall hear witnesses’ statements to establish or facilitate the establishment of the crime and the conditions thereof, to attribute the crime to the suspect, or declare him innocent. The PPO shall hear witnesses and those whom the accused and the victim request to be heard, unless otherwise decided by the prosecution member. Article 3 of the Law No.(5) of 2003 provides that the SSB shall have the authority of the police force as defined in the CPC. Therefore, both the PPO and the SSB have the power to take witnesses’ statement in ML/FT cases.

275. Adequacy of Resources to Law Enforcement (c. 30.1). The budget of the ECPD is decided by the minister of internal affairs. Currently, nine full time officers work at the ECPD. Three of them are appointed for full time job at the fighting ML Unit and six officers from other units can assist if necessary. In case the AML Law will be modified to include all “designated categories of offenses” the current staff at the ML Unit would not be able to deal with all requests for information forwarded from the FIU. The number of staff at the PPO seems to be sufficient but the level of specialized qualification/expertise does not appear to be adequate at this stage. Although the SSB indicated that they had adequate staff, the number was not revealed for national security reasons. The Customs Authority numbers approximately 1,350 officers.

276. Integrity of Competent Authorities (c. 30.2). Article (11) of the Police Law (23) of 1993 provides that officers shall be appointed as per an Emiri Resolution, at the suggestion of the Minister of Interior. Article (12) also provides that the officers should have a good conduct and good reputation; No judgment should have been rendered against them in a dishonorable crime or integrity crime, unless he was rehabilitated. They should not have been dismissed from public service pursuant to a final disciplinary judgment or decision due to serious violations of work duties. They should not be affiliated to any political party and should have graduated from a recognized police college or institute. According to Article 28 of the CPC, the PPO may request that a disciplinary action be taken against the officers without prejudice to the right to initiate a criminal prosecution. Prosecutors are appointed by the Emir and are subject to the legal profession disciplinary rules.

277. Training for Competent Authorities (c. 30.3): According to the authorities, the members of the ECPD were selected after personal interviews, an integrity check, and were provided with AML/CFT training sessions. Prosecutors have taken part in several training sessions related to fighting terrorism, money laundering and corruption. The PPO did not provide adequate and relevant training such as the scope of predicate offenses, ML and FT typologies, and techniques to investigate and prosecute these offenses. SSB conduct frequent internal training programs and has also received training from foreign intelligence agencies. Each customs officer receives 10 hours of training on AML matters when he is appointed as inspector. Nevertheless, the lack of trained customs officials constitutes a serious handicap.

278. Additional Element—Special Training for Judges (c. 30.4). Judges do not benefit from any special training or any educational programs concerning AML/CFT matters.

279. Statistics (applying R.32). The ECPD keep statistics on ML suspicious cases that were transmitted by the FIU. The PPO received only one case from the FIU where it considered that no offense was committed. No confiscations have been pronounced in ML/FT cases. Annual statistics are kept on the some crimes and judicial actions. The statistics provided did not, however, contain information on the amount of seized and confiscated criminal proceeds.

280. The customs do not use an electronic database to keep all statistics on crimes and trafficking. Therefore, the statistical and analytical tools are not available.

281. The investigative and prosecutorial authorities need to focus more on investigating and prosecuting of ML offence and not just on the predicate offenses. Considering the lack of comprehensive statistics (especially the number of investigations initiated in AML/CFT area and the percentage of total investigations solved), it is not possible to assess whether law enforcement and prosecution authorities effectively perform their functions.

2.6.2 Recommendations and Comments

282. The authorities are recommended to:

  • Ensure that law enforcement authorities keep statistics on the amount of criminal proceeds seized and confiscated and on the number of ML/TF investigations, prosecutions, and judgments to measure the effectiveness and competence of the AML/CFT system.
  • Provide additional specialized and practical training to law enforcement and prosecution personnel as well as to police officers and customs agents on the fight against ML/FT. This training should cover, for example, the scope of predicate offenses, ML and FT typologies, investigation techniques and familiarization with prosecution of ML/FT techniques and the use of information technology and other areas relevant to the execution of the law enforcement staff functions.
  • Take a more proactive approach to investigating and prosecuting ML/FT.

2.6.3 Compliance with Recommendations 27 and 28

RatingSummary of factors relevant to s.2.6 underlying overall rating
R.27PC
  • Overall, investigation and prosecution authorities do not appear to adequately pursue money laundering cases.
  • Shortage in evidence of effectiveness of law enforcement authorities and lack of statistics.
  • Lack of implementation of laws and use of law enforcement techniques in support of ML/FT investigations across various law enforcement agencies.
  • Inadequate AML/CFT training.
R.28C
  • This Recommendation is fully met.

2.7 Cross Border Declaration or Disclosure (SR.IX)

2.7.1 Description and Analysis

283. Mechanisms to Monitor Cross-border Physical Transportation of Currency (c. IX.1). The General Directorate for Customs and Ports (GDCP) is responsible for monitoring the national territory and borders of Qatar. Article 1 of Law No. 40 of 2002 (Customs Law) provides the GDCP with the authority to enforce the provisions of the Law on all territories, including the regional sea, that are subject to Qatar’s state sovereignty. The GDCP can carry out control, checks and inspections, so as to ensure the correct application of customs, taxes and foreign exchange regulations.

284. There is some inconsistency with the measures in place to detect physical cross-border transportation of currency and bearer negotiable instruments. Initially, the Administrative Circular No. 40 of 2001 concerning Money Laundering and Suspicious Operations (Circular 40-2001) adopted a system to control the transportation of cash by money changers and natural individuals and the transportation of gold and other metals. In 2005, a declaration system was adopted (Resolution 5-2005) and was replaced in 2006 by a disclosure system (Resolution 37-2006). Some provisions in the Resolution 5-2005 were amended by Resolution 37-2006 to reflect the change from a declaration system to a disclosure system but others were not. Consequently, in the current regulation (Resolution 5-2005 amended by Resolution 37-2006), some provisions mention “declaration” while others mention “disclosure”. 14

285. Article 5 of the Resolution 5-2005 requires travelers to declare cash and other bearer negotiable instruments (such as precious metals or documents) on the form prescribed for this purpose. Notwithstanding article 5, the threshold for declaration was never set and, in practice, the system was never implemented.

286. Article 5 of Resolution 5-2005 was replaced by a new article 5 of Resolution 37-2006 that adopted a disclosure system. The new Article 5 states that “the Customs Officer, in case of suspicion, shall request travelers to disclose any cash money or any negotiable financial instruments in their possession by filling out a form specifically designed for this purpose.” Even though Article 5 was amended to create a disclosure system, the other articles of Resolution 5-2005 amended by Resolution 37-2006 still mention the word “declaration” which might create a confusion as to the system established in Qatar. Moreover, the disclosure system set by the new Article 5 concerns the physical transportation of currency and bearer negotiable instruments and does not extend to the shipment of currency through containerized cargo and mailing of currency or bearer negotiable instruments.

287. In addition, the system adopted applies to incoming transportation of currency and bearer negotiable instruments and does not extend to outgoing transportation of currency and bearer negotiable instruments.

288. The cash and bearer’s negotiable financial instruments shall be disclosed by using the form prescribed for this purpose, stating: (i) the date, traveler’s name, nationality and number of passport/ID; (ii) travel statements and destination; (iii) the statement of money in local or foreign currencies; (iv) the type and sum of currency or negotiable financial instrument; (v) the purpose for carrying the money; and (vi) the address of the traveler in resident and destination country.

289. The assessment team observed that the current system for detecting and preventing cross-border movements of currency or bearer negotiable instruments related to money laundering or terrorist financing is neither implemented nor effective. The current wording of the regulation creates a high level of confusion as to what measures are in place to detect the physical cross-border transportation of currency and bearer negotiable instruments. Furthermore, the level of awareness across the operational customs units appears to be uneven.

290. Request Information on Origin and Use of Currency (c. IX.2). Pursuant to Article 6 of Resolution 5-2005, customs officials have the authority to request and obtain further information from the carrier regarding the origin and intended use of the currency or bearer instruments.

291. Restraint of Currency (c. IX.3). Resolution 5-2005 provides that the customs officials can request and obtain further information from the carrier with regard to the origin of the currency or bearer negotiable instruments and their intended use. However, customs officials may stop or restrain the currency or bearer negotiable instruments only in case of suspicion of both money laundering and terrorist financing. In addition, they do not appear to have any power to stop or restrain in cases of false disclosure. To date, no currency was retained by the customs authorities based on suspicion. Finally, the duration of restraining measures has not been determined.

292. Retention of Information of Currency and Identification Data by Authorities when appropriate (c. IX.4). Resolution 5-2005 amended by Resolution 37-2006 is silent with regard to the retention of the amount of currency or bearer negotiable instruments and of the identification data of the bearer (s). Circular No. 40-2001 provides that customs declarations made by individual persons shall be kept for a period of at least five years but it is not implemented in practice.

293. Access of Information to FIU (c. IX.5). There does not appear to be a system in place whereby the FIU is notified about suspicious cross-border transportation incidents or disclosure information directly available to the FIU. Only one case was transmitted to the FIU in 2006 through the representative of customs in NAMLC.

294. Domestic Cooperation between Customs, Immigration and Related Authorities (c. IX.6). An ongoing coordination and cooperation among customs authorities, other law enforcement authorities and the FIU to implement the general policy set by the NAMLC is in place. Nevertheless, no policies or procedures related to the implementation of SRIX were adopted or implemented to date.

295. International Cooperation between Competent Authorities relating to Cross-border Physical Transportation of Currency (c. IX.7). The organizational structure of the GDPC includes a special division in charge of exchanging information and reports, and cooperating with Customs Services in other countries. The assessors have been informed by the representatives of the GDPC that Qatari customs authorities engage in exchanges of information and reports about suspicious transactions and other aspects related to customs with other countries. To strengthen this international cooperation, Qatari authorities declared that they have entered into a number of agreements of bilateral cooperation with other agreements under negotiation. In addition, there is a project underway to create an automated connection for GCC countries to exchange information about customs statements. The assessors could not verify whether such international cooperation is effective in place.

296. Sanctions for Making False Declarations/Disclosures (applying c. 17.1–17.4 in R.17, c. IX.8). The customs officials do not appear to have any power to sanction for making false disclosure.

297. Confiscation of currency pursuant to UNSCRs: The representative of customs receives the UN lists through the representative of customs in the NCT. The assessors were informed that the list is disseminated to be used for checking against the passenger lists. However, it could not be verified that in practice the names of travelers are checked against the various UN terrorist lists.

298. Notification of Foreign Agency of Unusual Movement of Precious Metal and Stones (c. IX.12). Qatar does not appear to have a formal system in place for its customs services to notify their counterparts in other countries of unusual cross-border movements of gold, precious metals or precious stones. The mission was not able to determine whether the customs or other competent authorities have ever notified any country nor if they cooperate with a view toward establishing the source, destination, and the purpose of the movement of such items toward the taking of appropriate action.

299. Safeguards for Proper Use of Information (c. IX.13). According to circular 40-2001 information about individual suspected of ML should be treated as highly confidential. However, there are no special mechanisms for safeguarding such information or information related to cross-border transactions. Since only one case was transmitted to the FIU in 2006 through the representative of customs in NAMLC and the authorities did not retain the documentations in a database, the assessors were not able to determine if such provision are implemented.

300. Additional Element—Implementation of SR.IX Best Practices (c. IX.14). The authorities have not given consideration to the implementation of the measures set out in FATF International Best Practices Paper on Cross Border Transportation of Cash by Terrorists and other Criminals.

301. Additional Element—Computerization of Database and Accessible to Competent Authorities (c. IX.15). The customs authorities retain passenger and shipments records in hard copy. There is no online access to this information by other law enforcement authorities or the FIU.

2.7.2 Recommendations and Comments

302. The implementation of SR IX is based on mechanisms that are inconsistent and incomplete. The implementation of SRIX does not appear to be effective. The authorities should take the necessary measures to enable them to comply with SR. IX. They are in particular recommended to:

  • Adopt a national strategic approach to detect the physical cross-boarder transportation of currency and bearer negotiable instruments and amend Resolution 37-2006 to provide a clear legal basis for a disclosure system. An internally consistent regulation should be issued reflecting the following characteristics:
    • The system should apply to both incoming and outgoing transportation of currency and bearer negotiable instruments and extend to the shipment of currency through containerized cargo and mailing of currency or bearer negotiable instruments.
    • Article 6 of Resolution 5-2005 should be amended to give the power to customs to request and obtain further information from the carrier with regard to the origin of the currency or bearer negotiable instruments and their intended use in case of suspicion of money laundering or terrorist financing.
    • Customs should be able to stop or restrain cash or bearer negotiable instruments for a reasonable time in order to ascertain whether evidence of money laundering or terrorist financing may be found, where there is a suspicion of money laundering or terrorist financing; or where there is a false declaration or false disclosure.
  • Enhance exchange of information between the customs and the FIU and create a database at the customs to record all declared data related to currencies and bearer financial instruments.

2.7.3 Compliance with Special Recommendation IX

RatingSummary of factors relevant to s.2.7 underlying overall rating
SR.IXNC
  • Absence of implementation of the disclosure system for cross-border transportation of cash and bearer negotiable instruments.
  • Lack of retention of records.
  • Lack of trained customs officials.
  • Lack of clear sanctions for false disclosure, failure to disclose, or cross-border transportation for money laundering and financing of terrorism purposes.
  • Lack of clear safeguards to ensure proper use of disclosed information.
  • Insufficient statistics upon which to assess the effectiveness of the measures in place.

3 Preventive Measures—Financial Institutions

3.1 General

303. The Qatari financial system could be best described as a “dual onshore financial sector” where services provided by financial institutions are available to both residents and nonresidents. To ensure clarity and consistency within the report, reference will be made to the “Domestic sector” and QFC when describing financial institutions as follows:

  • Domestic sector: It comprises financial institutions under the supervision of QCB, MEC, and DSM. It consists of 17 banks, 3 investment companies, 19 exchanges houses, and 1 finance company (under the QCB); 8 insurance companies (under the MEC); and 7 brokerage firms (under the DSM).
  • QFC: Established in 2005 the QFC is a business and financial center located in Doha, providing legal and business infrastructure for financial services and designed to attract international financial and non-financial institutions. These institutions can establish their presence within the designated QFC zone to undertake and provide a broad range of activities, services and products available to both residents and nonresidents. As of the mission date, there were 12 firms registered within the QFC including commercial banks, funds managers, and other financial institutions. At the time of the visit only 2 firms were operational.

304. All financial institutions and other non-financial entities in both the domestic sector and the QFC are subject to the obligations imposed by the AML Law. Under the AML Law, financial institutions are defined as “any companies or institutions licensed to carry out banking or financial businesses such as banks, exchange bureaux, investment companies, finance companies, insurance companies, companies or professionals carrying out financial services, brokers of shares and securities, or any similar individuals or entities.” Although the definition covers a large number of financial institutions within the Qatari financial sector, it does not cover the full range of financial institutions listed in the FATF Glossary. The AML Law does not cover persons and institutions providing the following activities: financial leasing, issuance of traveler’s checks and money orders, safekeeping and administration of cash or liquid securities on behalf of other persons and participation in securities issues and the provision of financial services related to such issues.

305. Chapter 3 of the AML Law sets out, albeit in a very limited way, the duties of the financial institutions and the responsibilities of the competent entities: prohibition of tipping off ; obligation to report suspicious transactions to the FIU. The AML Law does not address customer identification and customer due diligence requirements. These are addressed (to some extent) in other texts (see below). The AML Law also sets out, in very broad terms, the legal basis for AML supervision.

306. The following gives an overview of the supervisory framework and of the enforceability of the texts issued within the remit of the respective supervisory authorities.

Domestic Sector. QCB: Articles 1 and 7 of the AML Law mentioned above clearly designate the QCB as the supervisory authority for AML issues on the financial institutions that it regulates. This is also mirrored in Article 5 paragraph 12 of the Law No. (33) of 2006 (QCB Law). In 2006, the QCB issued “Instructions of Combating Money Laundering and Terrorism Financing” to the banking and financial institutions under its responsibility (Chapter 6 of the “Instructions to Banks” as of March 2006; QCB AML/CFT Instructions). These instructions require the banking and financial institutions to: know their customers; develop AML/CFT programs including training; pay attention to extraordinary, complex, and large transactions; report suspicious transactions; avoid tipping off customers; maintain documents for at least 15 years; and freeze funds or assets suspected or linked to money laundering and terrorism financing. The first chapter of the Instructions is drafted in mandatory terms, while the second chapter, entitled “Guidelines” is mere guidance.

307. Enforceability of the QCB AML/CFT Instructions. The QCB is clearly empowered by law to issue AML/CFT measures and supervise their implementation (Article 5 paragraph 12 of the QCB law), as well as to sanction the non-compliance with its AML/CFT instructions (Article 58 of the QCB law and Paragraph 16 of the QCB AML/CFT instructions). The measures set out in Chapter 1 of the instructions are mandatory in their wording and enforceable. They may not be considered as “law or regulation” for the purpose of this assessment because they have not been issued by the Council of Ministers or one of its members (see write up under Section 1.1). While the Governor of the QCB holds the title of “minister”, he does not perform the functions of a government minister and is not a member of the Council of Ministers. Furthermore, the Instructions do not explicitly refer to the relevant dispositions of the AML Law and the QCB Law. Chapter 1 of the QCB AML/CFT Instructions may however be considered as “other enforceable means” for the purposes of this assessment because it sets out enforceable measures. Chapter 2 is drafted in broad, non-mandatory terms and is therefore regarded as pure guidance.

308. DSM: Article 11 of Law No. (14) of 1995 (DSM Law) empowers the DSM to oversee and regulate the activity of trading in securities. The authorities indicated that these powers extend to inspection of compliance with the AML Law. In its Decision No. (16/3) of 2005 (Decision 16/3), the DSM requires brokerage firms to: verify the customer’s identity and conduct due diligence; report cash transactions exceeding the established threshold; maintain documentation for at least 15 years and avail this information to the DSM, the FIU, and judicial authorities; establish internal restrictions, procedures, and rules to detect and report suspicious transactions; establish supervisory procedures and training programs; appoint a money laundering reporting (liaison) officer; and avoid tipping off.

309. Enforceability of the DSM Decision 16/3. It may not be considered as “law and regulation” because, like the QCB Instructions, it has not been issued by the executive body. Article 15 of the Decision refers to the sanctions mentioned under the AML Law (i.e. sanctions for money laundering activities and for “tipping-off”). The authorities informed the assessment team that this is not a limitative disposition and that noncompliance with the requirements of the Decision would be sanctioned under the general sanctioning powers granted to the DSM in Article 20 of the DSM Law. Issued pursuant to the powers given under the DSM Law, and drafted in mandatory terms, with sanctions for noncompliance with its requirements, the DSM Decision constitutes “other enforceable means” for the purpose of this assessment.

310. MEC: Unlike the QCB and the DSM, the MEC has not legal basis to conduct AML/CFT supervision. It is nevertheless acting as de facto supervisor for AML requirements and has issued AML measures in Circular No. (1) of 2007. The latter “requires” insurance companies to identify the customers and conduct due diligence; pay special attention to unusual transactions or companies in countries that do not apply or insufficiently apply the provisions; maintain documentation for at least five years; establish policies and plans to combat money laundering and terrorist financing including supervisory measures and training; appoint a money laundering reporting (follow-up) officer; report suspicious transactions to the FIU; and prohibition of tipping off. However, the measures listed in the Circular are not enforceable. They do not constitute law or regulation and cannot be considered as “other enforceable means” for the purpose of this assessment.

311. QFC. Article 3 of Law No. (7) of 2005 (the QFC Law) provides that the business of operating the QFC should be managed in accordance with its objectives in Article 5 by an authority known as the QFC Authority (QFCA). The QFCA should have an independent legal personality and full capacity to act as such in accordance with the QFC Law, and should have the financial and administrative independence from the State. Article 8 of the QFC Law establishes the QFC Regulatory Authority (QFCRA) for the purposes of regulating, licensing, and supervising the banking, financial and insurance-related businesses carried on in or from the QFC. It is the only QFC body with the powers to regulate, license, and supervise the activities listed under Schedule 3 of the QFC Law. It is also a body corporate owned by the State of Qatar. The QFC Authority, the QFC Regulatory Authority, and the QFC Appeals Body all have powers to prepare and submit to the MEC such regulations (or amendments, modifications to a repeal of existing regulations) as they deem appropriate to achieve their respective objectives, including in the “prohibition of money laundering and other financial improprieties” (Articles 9 and Schedule 2, paragraph 8 of the QFC Law). The criminal laws (including the AML Law) of the State of Qatar apply within the QFC. The civil laws, rules, and regulations of the State of Qatar also apply within the QFC, save to the extent that the QFC Regulations exclude them or conflict with them, in which case the QFC Regulations prevail (Article 18 of the QFC Law).

312. In September 2005, the Minister of Economy and Commerce enacted the QFC Anti-Money Laundering Regulations (QFC Regulation No. (3) of 2005, or QFC AML Regulations) under Article 9 of the QFC Law. These Regulations set out measures that are mandatory for all persons and institutions acting in or from the QFC. Pursuant to Schedule 2 of the QFC Financial Services Regulations, all duties, functions and powers relating to monitoring, supervision and investigation, enforcement and related powers in respect of the regulations enacted in relation to the prevention and detection of money laundering (including responsibility for overseeing compliance by persons to whom such Regulations apply) are vested in the QFC Regulatory Authority. Noncompliance with the requirements set out in the QFC AML Regulations may be sanctioned by the QFC Regulatory Authority by any of the disciplinary measures listed in Part 9 of the QFC Regulations No. (1) (QFC Financial Services Regulations).

313. Enforceability of the QFC AML Regulations. The QFC Regulations have been enacted by a Minister member of the Council of Ministers and have been forwarded to the entire Council. They are drafted in mandatory terms, carrying sanctions for noncompliance and make clear reference to the relevant laws (such as the QFC law) and the QFC’s powers to issue AML regulations. Considering in particular the fact that they have been enacted by a member of the executive body acting on a clear legal basis, the QFC AML Regulations may be considered as secondary legislation for the purpose of this assessment. It should nevertheless be mentioned from the outset that, at the time of the assessment, none of the measures contained in the regulations had been enforced. This was entirely due to the fact that., at the time of the onsite visit, most of the persons and institutions acting in or from the QFC were still setting up business, and none of the QFCRA’s decisions had been brought before the QFC Appeal Body.

314. In October 2005, the QFCRA issued the Anti-Money Laundering Rulebook (AML Rulebook) under the powers provided by Paragraph 2 of Schedule 2 of the QFC Financial Services Regulations. According to the preamble (“Background to the Rulebook”), the Rulebook “extends and clarifies the provisions of the AML Regulations.” It contains rules made and guidance issued by the QFC Regulatory Authority. The assessors consider that the Rulebook is of a dual nature: some of its provisions are drafted in mandatory terms and constitute clear requirements, while others, notably those that are preceded by the sub-title “Guidance,” are not mandatory. Noncompliance with the first set of dispositions would entail the application, by the QFC Regulatory Authority of the disciplinary sanctions listed in Part 9 of the QFC Financial Services Regulations. Non-compliance with the second set of dispositions is not enforceable. For the purpose of this assessment, the first category is considered to constitute “other enforceable means,” while the second category is viewed as non-binding guidance. While it appears where relevant in the description of the QFC AML/CFT framework, the non-binding guidance was not taken into account in the ratings. It is also worth noting that the write-up below often refers to the measures listed in the Appendix of the Rulebook. Although the wording of the Appendix is somewhat confusing in the sense that most of the measures listed appear under the sub-title “Guidance” which would suggest that they are not binding, Rule 3.8.4 of the Rulebook specifically refers to the measures contained in Appendix 1 as “rules” with which the financial institutions “must comply.” This would imply that noncompliance with these rules would be sanctioned as mentioned above. The assessors, therefore, consider that the full list of measures mentioned in Appendix 1 constitute “other enforceable means.” It must, however, also be noted that, as is the case for the AML Regulations, the QFC AML Rulebook had not been enforced at the time of the assessment given the recent establishment of the financial institutions within the QFC. While the QFC Regulations and Rulebook may not contradict the AML Law, they may go beyond the law. As a result, the businesses and activities carried out within or from the QFC may be subject to more stringent measures than their domestic counterparts.

3.2 Risk of Money Laundering or Terrorist Financing

315. Although the AML Law requires financial institutions to take certain actions to comply with the requirements of the law, these actions do not take into account the degree of money laundering or terrorist financing risk as required by the FATF Recommendations. The authorities have not yet conducted an assessment of potential money laundering and terrorist financing risks affecting the Qatari financial system and/or institutions within the system. Hence, the existing AML/CFT legal and supervisory frameworks have been developed without considering ML/FT risk level.

316. Domestic Sector: The QCB, the supervisor of banks, exchange houses, finance companies, and investment companies, is the only supervisory authority that has recently adopted and established a risk-based approach to supervision, both for prudential and AML/CFT matters. However, the new supervisory approach was adopted in November 2006 and had been implemented only once during a bank inspection that had not yet concluded as of the mission visit. Therefore, the mission could not reach a conclusion on the effectiveness of the QCB’s new risk-based supervisory approach.

317. The Doha Securities Market Commission (DSM) is the competent authority for supervision of securities brokerage firms and intermediaries as empowered by Law 14. The MEC (MEC) which has supervisory responsibility over insurance companies, does not have a risk-based approach to AML/CFT supervision that they conduct on a de facto basis.

318. QFC: The QFC Regulatory Authority (QFCRA) adopted a risk-based approach to supervision of authorized firms for both prudential and AML/CFT matters. This risk-based supervisory approach focuses on risk management measures that identify, assess, and mitigate those risks, including AML/CFT, arising within an authorized firm which present a risk to the objectives of the Regulatory Authority. Central to the risk-based approach is the process of assessing risks. For AML/CFT, the QFCRA utilizes a methodology which includes two broad categories—Business Risks and Control Structure Risks. The business risks category contains those AML/CFT risks arising from the type of business conducted by the authorized firm and is further broken down into the following risk groups: financial soundness, business strategy, market and operational, and organization and regulation. The control structure risks category refers to the internal structure of the authorized firm and is further broken down into the following risk groups: clients, conflicts management, management and control, financial crime, and human and technical resources.

319. In conducting the risk assessment, the QFCRA considers the nature and size of an authorized firm’s business and its internal structures against each of the risks specified above. The QFCRA then assesses and prioritizes each identified risk taking into account the probability of the risks occurring and the impact upon the QFCRA’s objectives. Finally, using this assessment tool, the QFCRA assigns every authorized firm an aggregate risk classification of low, medium, or high. The risk assessment is first undertaken during the initial authorization process, then shortly after the authorization and ongoing during the on-site visits.

3.3 Customer due diligence, including enhanced or reduced measures (R.5 to 8)

3.3.1 Description and Analysis

320. The AML Law is completely silent with respect to customer identification and the customer due diligence process. With the exception of the QFC Regulations, no other piece of primary or secondary legislation addresses the core obligations relating to customer identification.

321. The preventive measures issued by the Qatari supervision and control authorities, the QCB, DSM, MEC, and QCF Regulatory Authority have some of the elements required by the FATF recommendations; however, only the measures issued by the QCB and the QFC are enforceable.

322. The level of guidance provided significantly varies among supervisory authorities. In some cases, it is sufficiently detailed while in others it is too general or too vague and does not provide the financial institution with sufficient guidance to effectively implement the requirements.

323. Prohibition of Anonymous Accounts (c. 5.1). Domestic Sector: Within the Qatari domestic sector, there is no provision, legal or regulatory, that explicitly prohibits the opening of anonymous accounts or accounts in fictitious names.

324. The QCB instructions include customer identification requirements that could entail that anonymous or fictitious accounts are effectively prohibited. The following is a description of the QCB’s AML/CFT measures: In order to open an account, financial institutions must require as core documents the customer’s residence/work permit and personal identification number. The residence/work permit is issued by the MOI to every foreigner residing in Qatar. The personal identification number is also issued by the MOI to both foreigners and Qatari citizens. Other official papers and documents requested and obtained when establishing the account relationship include salary and introduction letters from the customer’s employer. All these documents need to be certified by governmental authorities in Qatar. All financial institutions operating in the State of Qatar must record the identification card number or personal identification number mentioned on the birth certificate, being the only proof of personal identity for all bank transactions and must not accept any other identification document. The DSM Decision 16/3 covers similar aspects of opening accounts/relationship under Article 6 (additional information is provided under criterion 5.2 of this report) with Article 7 providing that a securities account should not be opened if the customer fails to satisfy or provide the information required in Article 6 of the Decision. The QCB and DSM authorities indicated that given the existing controls and requirements in place, financial institutions are required to comply with the account opening requirements described above. Officials from financial institutions visited indicated that their institutions do not open anonymous accounts or accounts in fictitious names. All accounts opened need to comply with the instructions and decisions in place.

325. QFC: Article 12 of the QFC AML Regulations explicitly prohibits firms within the QFC from establishing or keeping anonymous accounts or accounts in false names but neither the QFC AML Regulations nor the QFC AML Rulebook have a specific provision prohibiting a relevant person to establish or keep numbered accounts. relevant person is defined as a person who carries on any regulated activities and/or a person who conducts, and in so far as they conduct, any of the following activities: a) the business of providing the professional services of audit, accounting, tax consulting, legal and notarization; b) the provision, formation, operation and administration of trusts and similar arrangements of all kinds; and c) company services including, the business of provision, formation, operation and management of companies.

326. Regulated activities are defined in Schedule 3 of the QFC Law as: a) financial business, banking business of whatever nature, and investment business, including (without limit) all business activities that are customarily provided by investment, corporate and wholesale financing banks, as well as Islamic and electronic banking business; b) insurance and reinsurance business on all categories; c) money market, stock exchange and commodity market business of all categories, including trading in and dealing in precious metals, stocks, bonds, securities, and other financial activities derived therefrom, or associated therewith; d) money and asset management business, investment fund business, the provision of project finance and corporate finance in all business fields and Islamic banking and financing business; e) funds administration, fund advisory and fiduciary business of all kinds; f) pension fund business and the business of credit companies; g) the business of insurance brokering, stock brokering, and all other financial brokerage business; h) financial agency business and the business of provision of corporate finance and other financial advice, investment advice and investment services of all kinds; and i) the provision of financial custodian services and the business of acting as legal trustees. Article 9 of the QFC AML Regulations imposes strict obligations upon all relevant persons to establish and verify the identity of any customer with or for whom a relevant person acts or proposes to act. The detailed procedures are set out in Appendix 1 of the QFC AML Rulebook. All relevant persons must follow these procedures to establish and verify the true identity of any customer with or for whom they act or proposes to act, regardless of whether the account is named or numbered. Failure to comply with the requirements of the Regulations and Appendix 1 of the Rulebook may be punished by the QFC Regulatory Authority using the powers vested by the Financial Services Regulations which include monitoring, supervision and investigation, and enforcement, including sanctions for noncompliance with the AML Regulations. Additional information addressing sanctioning powers is covered under Rec. 17.

327. When is CDD required (c. 5.2): As mentioned above, the AML Law does not address customer due diligence (CDD) requirements.

328. Domestic sector: No other law or regulation apply. Consequently, the obligation to identify customers is not established by primary or secondary legislation as required by the standard. The obligation is established by Instructions issued by the QCB and Decision issued by the DSM, which are considered as other enforceable means for purposes of this assessment.

329. The QCB 2006 Instructions on Combating Money Laundering and Terrorism Financing establish the obligation on banking and financial institutions under the supervision of the QCB to conduct due diligence when opening an account. Paragraph 1 of the instructions provides that for natural persons, banking and financial institutions should check the customer’s identity or the identity of their representatives by reviewing identification cards and keeping their personal data upon entering in any deals, or transactions with them, or providing services especially when opening accounts, contracting facilities contracts, financial transfers or managing their funds, whether in portfolios, shares in mutual funds, leasing trust funds, or any other banking and financial services.

330. For legal (“juridical”) persons, banking and financial institutions should check the customer’s name and legal status and institution/company’s articles of incorporation and executive regulations, verify the soundness of the information recorded in the documents obtained; check the customer’s legal status stated in the institution/company’s articles of incorporation the executive regulations, verify the soundness of the information recorded in the documents obtained; and in the case of any suspicion about the personal identification or the original country or official offices of customers who open accounts, or make transactions through other customers if there are doubts on customers who delegate others to make their transactions. For example, if the institution/company or any other entity does not exercise any commercial or industrial activities in the country where the main office is located.

331. Paragraph 1.3 of the Instructions also requires banking and financial institutions to undertake due diligence for any banking transaction, particularly those, that exceed 100,000 Qatari Riyals in the various banking activities that can be used for money laundering. It further requires banking and financial institutions to check any other banking and financial transactions suspected to be used in terrorism financing, regardless of the amount.

332. Additional guidance for opening personal deposit accounts is provided to banks and financial institutions under Chapter Three of the QCB Instructions, Second section. Under this section, the institutions must complete and maintain the information, contracts and documents for all types of personal deposit accounts for residents in Qatar or the non-residents, in line with the QCB Instructions.

333. For the brokerage firms, Article 6 of the DSM Decision (16/3) “requires” that customer due diligence be conducted when opening financial securities accounts. It provides guidance as follows: In opening accounts, all particulars of the identity of the customer, his agent or their representatives should be recorded and verified. The customer should submit copies of the required documentation whenever an amendment is made. A securities account should not be opened if the customer fails to satisfy or provide the documentation or information required.

334. Section 1 of Circular No. (1) of 2007 recently issued by the MEC, provides limited guidance to insurance companies with respect to CDD measures. Under this circular, insurance companies are required to conduct CDD for natural persons before executing any financial transaction. For legal persons, CDD is required before and during any insurance transaction. No further guidance is provided.

335. Regardless of the QCB and DSM requirements and the non enforceable nature of the MEC guidance for undertaking customer due diligence measures, for banking and financial institutions, brokerage firms and insurance companies fall short of including measures: when carrying out occasional transactions above a designated threshold both single or multiple operations; when carrying out occasional transactions that are wire transfers, when there is a suspicion of money laundering or terrorist financing; and when the financial institution has doubts about the veracity or adequacy of previously obtained customer identification data. Against this background, the current measures dealing with the timing of the CDD process appear inadequate and clearly not in line with the requirements of the standard.

336. QFC: Article 9 of the QFC AML Regulations sets out the customer identification requirements. It requires a relevant person to establish and verify the identity of any customer, including the beneficial owner with or for whom the relevant person “acts or proposes to act”. Accordingly, the CDD is required at the time of establishment of the relationship and prior to any transactions being undertaken. There are certain limited exceptions to the customer identification requirements contained in Rule 3.9 of the QFC AML Rulebook: a relevant person is not required to establish the identity of a customer if the customer is itself an Authorized firm or a relevant person in the QFC or is a regulated financial sector firm from a FATF Country. However, this exemption is not applicable when the relevant person: i) knows or suspects; or has reasonable grounds to know or suspect that a customer or a person on whose behalf he is acting (including any beneficial owner or other provider of relevant funds) is engaged in money laundering; and ii) will be taken to know or suspect or to have reasonable grounds to know or suspect if any employee handling the transaction or potential transaction or anyone managerially responsible for it knows or suspects or has reasonable grounds to know or suspect that a customer or a person on whose behalf he is acting (including beneficial owner or other provider of relevant funds) is engaged in money laundering.

337. The broad exemption from having to conduct identification requirements as contained in Rule 3.9 does not appear to be consistent with the FATF standard. The exemption as such assumes that if customers are an authorized firm or a relevant person in the QFC or a regulated financial sector firm from a FATF country, they pose a low risk of money laundering and terrorist financing. Although Rec. 5 requires financial institutions to apply identification and due diligence measures, it also gives the authorities the flexibility to determine the extent of these measures on a risk sensitive basis. However, there was no evidence that the authorities had conducted a risk sensitive assessment of such customers, nor FATF countries where such customers are located to determine compliance with and level of implementation of the recommendation. As such, this broad exemption does not appear to be consistent with the FATF Recommendation 5.

338. There is no designated threshold in place within the QFC to require relevant persons conducting due diligence on an occasional transaction. Article 9 of the QFC AML Regulations therefore applies to all transactions regardless of their amount. Consequently, the customer’s identity must be established and verified in all cases, even when occasional transactions are undertaken for small amounts.

339. Article 16 of the QFC AML Regulations addresses the requirements for transfer of funds. Under this Article, when a relevant person is a financial institution and makes a payment on behalf of a customer to another financial institution using an electronic payment and message system, it must include the customer’s name, address and either an account number or a unique reference number in the payment instruction. Also, for such a transaction to occur, the identity of the customer must already have been established and verified.

340. If at any time, a relevant person realizes that it lacks sufficient information or documentation concerning a customer identification, or develops a concern about the accuracy of its current information or documentation, he or she is required by Article 9 (11) of the QFC AML Regulation to obtain promptly all appropriate documentation necessary to verify the customer’s identity.

341. Although the requirements within this criterion are covered by the QFC AML Regulations and the AML Rulebook, the broad exemption from having to conduct identification requirements does not appear to be consistent with the FATF Recommendation 5, as the authorities were not able to demonstrate that a risk-sensitive assessment had been conducted of such customers and FATF countries determine compliance with and level of implementation with the recommendation.

342. Therefore, the QFC Regulation partially meets the standard on this point due to the shortcoming stated above.

343. Identification Measures and Verification Sources (c. 5.3). Domestic Sector: As is the case above, there are no measures in law or regulation that impose an obligation on financial institutions to identify the customer and verify his or her identity.

344. The QCB Instructions, although they are not primary or secondary legislation, nevertheless impose enforceable obligations on the financial institutions under the QCB’s authority. They require the banking and financial institutions to identify the customer both, natural and legal, by obtaining adequate documentation (Chapter VII, second section, 1-1/2) as follows.

345. For natural persons, the requirement is to obtain: (i) identification cards and personal data; (ii) customer’s full name as mentioned in the passport or the personal identification card for residents and Qatari citizens; (iii) passport or personal identification card number and its validity date; (iv) nationality; (v) place and date of birth; (vi) profession and work place; (vii) place of residence; (viii) postal address; (ix) customer’s signature or thumb print plus the identifier’s signature as in signature form; (x) name and address of the sponsor or the work entity for residents in Qatar; and (xi) copies of registers and signature and delegating letters from the account owner.

346. For legal persons, the instructions require documentation supporting; the corporate name and legal status; articles of incorporation; customer’s name and legal status; institution/company’s articles of incorporation and executive regulations; and customer’s legal status stated in the institution/company’s articles of incorporation and executive regulations.

347. The current measures for identifying legal persons are too limited as they do not require to identify the customer (whether occasional, and whether natural or legal persons or legal arrangements) and verify that customer’s identity using reliable, independent source documents, data or information (identification data). Furthermore, they do not address corporations/partnerships; mutual/friendly societies; cooperatives, charities, clubs and associations; trusts and foundations; and professional intermediaries. In view of the above, the Qatari framework would partially meet the standard on this point in the banking sector, but fails to do so because the requirements are not set in primary or secondary legislation.

348. DSM: Decision No. 16/3 requires the brokerage firms to obtain the following information for a natural person or agent: (i) full name; (ii) full address; (iii) nationality; (iv) profession; and (v) complete details of identity card or passport

349. With respect to verification measures, Article 8 requires brokerage firms to verify by reference to a valid official identity document the identity and address of the natural person. A copy of this official document should be attached to the application.

350. For legal persons, brokerage firms are required to obtain the following information: (i) name; (ii) legal form; (iii) commercial registration; (iv) objectives; (v) address of main office and branch, if any; (vi) particulars of the shareholders and main founders of the company; (vii) names of members of the Board of Directors; (viii) name and address of the legal representative of the company and details of his identity; (ix) names of the persons authorized to sign on behalf of the legal person and specimens of their signatures; (x) the memorandum and articles of incorporation authenticated by the concerned authority in the state.

351. Verification measures for legal persons include verifying the existence of the customer, its legal status and form and continuation of its business by way of official documents pertaining to the incorporation and licensing. There is also a recommendation to verify the existence of actual valid authorization of the person acting on behalf of the company/establishment and verification of the real owner, besides verification of the correctness of signatures of applicants and opening of bank accounts outside Qatar through attestation by banks, chambers of commerce or notary public outside Qatar besides legalization of these documents by the Qatar Embassy and MOFA or any other authority to be approved by the market for this purpose.

352. MEC: Verification measures under Circular No. 1 of 2007 call on financial institutions to conduct due diligence on the natural person or his representative based on obtaining an official ID document and registration of all ID details before executing any financial transaction with the natural person. For legal persons, this is limited to conducting due diligence of the customer’s activity process based on the commercial register and the license details, and verifying the actual status of the company representative’s authorization by checking the official documents and verifying the identity of the real owner. As mentioned above, the MEC circular is not mandatory and enforceable, and may only constitute guidance. Furthermore, this guidance is clearly not adequate as it fails to provide the financial institutions with specific types of customer information that should be obtained and the identification data that should be used to verify that information.

353. QFC: Article 9 of the QFC AML Regulations sets the primary obligation on all relevant persons to establish and verify the identity of any customer with or for whom a relevant person acts or proposes to act. The “customer” is defined as any person engaged in or who has had contact with a relevant person with a view to engaging in any transaction with a relevant person on his own behalf or as agent for or on behalf of another. Section 3.8 of the QFC AML Rulebook requires firms to comply with the customer identification requirements set out in Appendix 1 of the Rulebook. These requirements are extensive and include the use of independent source documents, data, and other relevant identification data in a way which is in line with the standard.

354. Identification of Legal Persons or Other Arrangements (c. 5.4). Domestic Sector: There is no requirement in law (primary or secondary) to verify that a person purporting to act on behalf of the customer is so authorized, and to identify and verify the identity of that person.

355. The requirement on identification of legal persons or other arrangements is established under Article 1, paragraph 1.2.3 of the QCB Instructions where financial institutions are obliged to obtain information when a suspicion arises about the personal identification or the original country or official offices of customers who, on behalf of their clients, open accounts, or make transactions through other customers if there are doubts on customers who delegate others to make their transactions. For example, financial institutions are required to identify and verify the identity of the person acting on behalf of the customer when an institution/company or any other entity does not exercise any commercial or industrial activities in the country where the main office is located. In addition, paragraphs 1.2.1 and 1.2.2 provide that financial institutions should check and verify the customer’s name and legal status and institution/company’s articles of incorporation and executive regulations, and verify the customer’s legal status stated in the institution/company’s articles of incorporation and the executive regulations, as well as verify the existence of the documents for the person acting on behalf of the customer and the accuracy of such documents and of the information recorded in the aforementioned documents. However, the requirement falls short of providing financial institutions with guidance on how the information should be verified and validated.

356. DSM: Article 6 of the Decision 16/3 requires all brokerage firms to record and verify all particulars of the identity of the customer, his agent or their representatives when opening securities accounts. This should be done in addition to obtaining and verifying the name; legal form; commercial registration; objectives; address of main office and branch, if any; particulars of the shareholders and main founders of the company; names of members of the Board of Directors; name and address of the legal representative of the company and details of his identity; names of the persons authorized to sign on behalf of the legal person and specimens of their signatures; and the Memorandum and Articles of incorporation authenticated by the concerned authority in the State.

357. MEC: Circular No. 1 calls on insurance companies to verify the actual status of the company representative’s authorization by checking the official documents and verifying the identity of the real owner. The MEC has not yet provided additional guidance to instruct insurance companies as to how to implement this circular. The domestic framework falls short of the standard on this point because the verification requirements are not set out in primary or secondary legislation and the MEC measures are not enforceable.

358. QFC: Section A 1.2 of Appendix 1 of the QFC AML Rulebook sets out the requirements with respect to the verification of the identity and authority of the person, including the beneficial owner, purporting to act on behalf of a legal person or arrangement. Specifically, where the customer is itself a relevant person or a public registered company, the relevant person is required to obtain a list of authorized signatories or satisfactory evidence that the individuals representing the company have the necessary authority to do so. Further, with respect to private companies, unincorporated businesses, partnerships, clubs, cooperatives, charitable, social, or professional societies, a relevant Person is required to identify the authorized signatories and obtain necessary documentation to establish and verify the identities of the signatories.

359. Verification procedures with respect to the legal status of legal persons or legal arrangements are established under Section A1.2 of the QFC AML Rulebook which requires the relevant persons to verify the legal status of a public registered company by obtaining copies of the following documents: (i) certificate of incorporation or extract from the relevant register or an enquiry search via a company enquiry agent; (ii) the latest reports and accounts; and (iii) satisfactory evidence that the individuals representing the company have the necessary signing authority to do so (e.g., list of authorized signatories).

360. When verifying the legal status of a private corporate entity, a relevant person is required to obtain the following documents: (i) registered corporate name and any trading names used; (ii) complete current registered address and any separate principal trading addresses, including all relevant details with regards to country of residence; (iii) telephone, fax number and email address; (iv) date and place of incorporation; (v) corporate registration number; (vi) fiscal residence; (vii) business activity; (viii) regulatory body, if applicable; (ix) name and address of group, if applicable; (x) legal form; (xi) name of the external auditor; (xii) information regarding the nature and level of the business to be conducted; (xiii) information regarding the origin of the funds; and (xiv) information regarding the source of wealth or income.

361. A relevant person is also required to record the name, country of residence, nationality of the directors or partners and members of the governing body and to obtain a certified copy of the list of authorized signatories specifying who is authorized to act on behalf of the company and of the relevant board resolution authorizing the signatories to act on behalf of the company. When dealing with unincorporated business or partnerships, a relevant person is required to obtain the latest annual report and accounts and a certified copy of the partnership deed. In relation to clubs, cooperative, charitable, social, or professional societies, a relevant person is required to obtain a certified copy of the constitution of the organization.

362. The QFC requirements for CDD measures with respect to legal persons or legal arrangements are extensive and include the use of independent source documents, data, and other relevant identification data, in a way which is in line with the standard.

363. Identification of Beneficial Owners (c. 5.5; 5.5.1 & 5.5.2). Domestic Sector: There are no requirements in law or regulation to identify the beneficial owner and to take reasonable measures to verify the identity of the beneficial owner using relevant and reliable information.

364. The QCB nevertheless addressed the identification of the customer or his representatives and the verification of their identity of the beneficial owner under Paragraph 1.2.2 of the Instructions. The Instructions set out an obligation to determine whether the customer is acting on behalf of another person and if so, to obtain sufficient information to verify the identity of that other person and of the beneficial owner.

365. The DSM authorities indicated that in practice, securities brokerage firms are documenting and verifying the identity of the person acting on behalf of the customer. However, there was no evidence to support the legal basis of this practice.

366. There is no specific obligation imposed by the QCB on financial institutions to take reasonable measures to understand the ownership and control structure of the customer or to determine who are the natural persons that ultimately own or control the customer. The current requirement focuses on obtaining, checking and verifying the customer’s name, legal status, and the institution/company’s articles of incorporation. No further guidance is provided to instruct financial institutions.

367. Article 6 of the DSM Decision 16/3 calls on brokerage firms to identify the particulars of the shareholders and main founders of the company, name and address of the legal representative of the company and details of his identity, and the names of the persons authorized to sign on behalf of the legal person and specimens of their signatures. However, it does not address control structure of the customer and determining who are the natural persons that ultimately own or control the customer. Again, the DSM authorities indicated that in practice, securities brokerage firms are documenting and verifying the control structure over a legal person, but there was no evidence to support the legal basis of this practice.

368. The MEC has a general guidance for insurance companies to verify the actual status of the company representative’s authorization by checking the official documents and verifying the identity of the real owner, but it is not mandatory. Furthermore, it does not call on the insurance companies to take reasonable measures to understand the ownership and control structure of the customer or to determine who are the natural persons that ultimately own or control the customer. In conclusion, none of the measures examined comply with the standard as they are not set out in law or regulation (and are incomplete).

369. QFC: Article 9 of the QFC AML Regulations sets out the primary customer identification requirements, including for beneficial owners. Article 9(1) of the QFC AML Regulations provides that a relevant person must establish and verify the identity of any customer with or for whom the relevant person acts or proposes to act.

370. Article 9(4) of the QFC AML Regulations requires that whenever a relevant person comes into contact with a customer with or for whom it acts or proposes to act, it must establish whether the customer is acting on his own behalf or on behalf of another person.

371. Article 9(5) of the QFC AML Regulations requires that a relevant person must establish and verify the identity of both the customer and any other relevant person on whose behalf the customer is acting or appears to be acting. This includes verification of the Beneficial Owner of the person and/or relevant funds which may be the subject of a Transaction to be considered. In such cases, the relevant person is required to obtain sufficient and satisfactory evidence as to their identities.

372. Moreover, Rule 3.8.1 of the QFC AML Rulebook requires a relevant person to obtain a statement from a prospective customer to the effect that the customer is or is not acting as principal. In cases where the customer is acting on behalf of a third party, a relevant person must obtain a written statement confirming the statement made by the customer, from the parties (including any Beneficial Owner, if different from the third party).

373. Appendix 1 of the QFC AML Rulebook sets out in great detail the customer identification requirements in relation to understanding the ownership and control structure of the customer. Appendix section A1.2.1 (11) requires that, in addition to the information obtained during the identification process of the legal persons, a relevant person should obtain the following: (i) certified copy of the Articles of association or statutes; (ii) certified copy of either the certificate of incorporation or the trade register entry and any trading license including renewal date; (iii) latest annual report, audited and published, if applicable; (iv) certified copies of the identification documentation of the authorized signatories; (v) certified copies of the list of authorized signatories specifying who is authorized to act on behalf of the customer account and of the board resolution authorizing the signatories to operate the account;(vi) certified copies of the identification documentation of the authorized signatories; (vii) names, country of residence, nationality of directors or partners and of the members of the governing body; (viii) list of the main shareholders holding more than 5 percent of the issued capital; and (ix) identification evidence of those shareholders with interests of 10% or more in the capital of the company.

374. In relation to public registered companies, a relevant person is required to obtain a certified copy of the latest report and accounts which will provide details of significant shareholders. In accordance with Paragraph 9 under rule A 1.2.1, a relevant person need not verify the identity of the individual shareholders or directors of a company listed on a designated exchange as such entities are considered to be publicly owned and generally accountable.

375. In relation to those Customers who are private corporate entities, paragraph 11 under rule 1.2.1 paragraph 11 h) of the Appendix 1 requires a relevant person to obtain a list of all shareholders holding more than 5 percent of the issued share capital of the company. Further, a relevant person is required to obtain identification evidence in respect of those shareholders holding more than 10 percent of the capital of the company.

376. In relation to unincorporated businesses or partnerships, paragraph 29 i) of rule 1.2.1 of the Appendix 1 requires a relevant person to verify the identity of all controllers and/or partners.

377. In relation to trusts, nominees and fiduciaries, the guidance set out under paragraph 6 a) of rule 1.2.2 pf Appendix 1 requires a relevant person to identify any settlor, trustee, or principal controller who has the power to remove the trustee as well as the identity of the beneficial owner; a certified copy of the trust deed, to ascertain the nature and purpose of the trust; and documentary evidence of the appointment of the current trustees.

378. In relation to clubs, cooperatives, charities, or professional societies, Appendix 1, rule 1.2.7 requires the relevant person to identify the principal signatories and controllers in accordance with the relevant customer identification requirements for private individuals.

379. Appendix 1, Rule 1.2.5, provides that when the applicant for business is a supra-national organization, a governmental department or a local authority, the relevant person must take steps to verify the legal standing of the applicant, including its ownership and its principal address. The relevant person should also obtain a certified copy of the resolution or other document authorizing the opening of the account or undertaking the transaction. Evidence that the official representing the body has the relevant authority to act should also be obtained. The QFC framework fully meets the standard on this point.

380. Information on Purpose and Nature of Business Relationship (c. 5.6). Domestic Sector: Paragraph 2 of the QCB Instructions requires banking and financial institutions to obtain information on the purpose of opening any account. However, there is no explicit requirement to obtain information on the intended nature of the business relationship as well. There are no requirements on the financial institutions supervised by the DSM, and the MEC to obtain information on the purpose and intended nature of the business relationship. Therefore, the Qatari domestic framework falls short of the standard on this point.

381. QFC: Rule 1.1.1 of Appendix 1 of the QFC AML Rulebook provides that in order to comply with the “Know Your Customer” requirements prescribed under Article 9 (1) of the QFC AML Regulations, a relevant persons must:

  • With respect to personal details, obtain and verify the true full name or names used and the current permanent address;
  • With respect to the nature and level of business to be conducted, obtain information regarding the nature of the business that the customer expects to undertake, and any expected or predictable pattern of transactions, including the purpose and reason for opening the account or establishing the business relationship, the anticipated level and nature of the activity that is to be undertaken and the various relationships of signatories to the account (if any) and details of any underlying beneficial owners;
  • With respect to the origin of funds, identify how all the payments are to be made, from where, and by whom and ensure that all payments are recorded to provide an audit trail; and
  • With respect to the source of wealth, establish a source of wealth or income, including how the funds were acquired, to assess whether the actual transaction pattern is consistent with the expected transaction pattern and whether this constitutes any grounds for suspicion on money laundering.

The QFC framework fully meets the standard on this point.

382. Ongoing Due Diligence on Business Relationship (c. 5.7; 5.7.1 & 5.7.2). Domestic sector: There are no specific legal or regulatory requirements imposed by the QCB, the MEC, and the DSM for financial institutions to conduct ongoing due diligence on the business relationship. Therefore, the Qatari domestic framework falls short of the standard on this point.

383. QFC: Under Rule 3.8.2 of the QFC AML Rulebook, a relevant person is required to undertake a periodic review to ensure customer identity documentation is accurate and up to date. Additionally, Rule 3.8.3 of the QFC AML Rulebook requires a relevant person to undertake the periodic review mentioned under Rule 3.8.2 when: (i) the relevant person changes its Know-Your-Customer documentation requirements; (ii) a significant transaction with the customer is expected to take place; (iii) there is a material change in the business relationship with the customer; or (iv) there is a material change in the nature or ownership of the customer.

384. Article 3.1.1 (D) of the QFC AML Rulebook sets out the general principle that a relevant person must put in place satisfactory Know Your Customer Requirements to identify the users of services, the principal beneficial owners and the origin of any funds being deposited or invested with or through a relevant person. Satisfactory procedures include knowing the nature of the business that the customer normally expects to conduct and being alert to transactions that are abnormal within the relationship.

385. Under Appendix 1, Customer Identification Requirements, rule 1.1.1 (c) a relevant person is required to identify how all payments are to be made, where they were made from, and by whom. They must also ensure that all payments are recorded in order to provide an audit trail. Under paragraph (d), they must establish the source of the wealth or income and how the funds were acquired, with a view to assess whether the actual transaction pattern is consistent with the expected transaction pattern and whether this constitutes any grounds for suspicion of money laundering.

386. Article 15 (6) of the QFC AML Regulations requires a relevant person to establish and maintain policies, procedures, systems, and controls in order to monitor for and detect suspicious transactions.

387. Article 16 of the QFC AML Regulations requires that where a relevant person is a financial institution and makes a payment on behalf of a customer to another financial institution using an electronic payment and message system, it must include the customer’s name, address, and either an account number or a unique reference number in the payment instruction.

388. Article 9 (10) of the QFC AML Regulations requires that a relevant person must ensure that the information and documentation concerning a customer’s identity remains accurate and up to date.

389. Rule 3.8.4 of the QFC AML Rulebook requires a relevant person to adopt a risk-based approach for the customer identification and verification process.

390. Depending on the outcome of the money laundering risk assessment of its customer, the relevant person should decide to what level of detail the customer identification and verification process will need to be performed. The QFC framework fully meets the standard on this point.

391. Risk—Enhanced Due Diligence for Higher Risk Customers (c. 5.8). Domestic sector: Paragraph 3 of the QCB Instructions requires banking and financial institutions to perform enhanced due diligence by obtaining additional information when opening accounts for non-residents. The additional information includes a letter of introduction or recommendation from reputable banks or financial institutions overseas and ensuring that the authentication of the account opening application, signed by the customer is adequate. It also requires that the financial institutions and banks be well known. There are no other legal, regulatory or other enforceable obligations to perform enhanced due diligence measures for higher-risk categories of customer, business relationship, or transaction. Under the current AML/CFT regulatory regime, there is no distinction between low- and high-risk customers, business relationships, or transactions. The Qatari domestic framework, therefore, clearly falls short of the standard on this point.

392. QFC: Appendix 1 (Customer Identification Requirements) of the QFC AML Rulebook requires a relevant person to adopt a risk-based approach to the customer identification process. Depending on the money laundering risk assessment regarding the customer, the relevant person should decide at what level of detail the customer identification and verification process will need to be performed. The risk assessment regarding a customer should be recorded in the customer file. The Appendix clarifies that the risk-based approach does not release a relevant person from its general obligation to identify fully and obtain evidence of customer identification to the Regulatory Authority’s satisfaction. It also provides that a relevant person should, in cases of doubt, adopt a stricter approach in its judgment concerning the risk level and the level of detail to which customer identification is performed and evidence obtained.

393. Enhanced due diligence for Nonresident customers: relevant persons are required to ensure that they are dealing with an existing person by virtue of Rule 1.2.1 of Appendix 1 of the QFC AML Rulebook. Provisions in section A 1.2 of the Rulebook require the relevant person to verify the address of the client, whether it is a natural or legal person. Accordingly, relevant persons must always determine if their clients are resident by obtaining copies of the identification card issued by the MOI.

394. Appendix 2 of the QFC AML Rulebook provides requirements and guidance to firms in respect of the risk assessment process and in paragraph 7, the QFCRA requires that where a relevant person has customers located in countries:

  • (1) without adequate anti-money laundering strategies;
  • (2) where cash is the normal medium of exchange;
  • (3) which have a politically unstable regime with high levels of private or public sector corruption;
  • (4) which are known to be drug producing or drug transit countries; or
  • (5) which have been classified as countries with inadequacies in their anti money laundering regulations.

It should consider which additional “Know your Customer” and monitoring procedures may be necessary to compensate for the enhanced risk.

395. Guidance is also provided under paragraph 8 of the Appendix A2.1 as to the enhanced due diligence procedures which a relevant person may undertake when dealing with a Customer who is classified as high risk, including:

  • requiring additional documentary evidence;
  • taking supplementary measures to verify or certify the documents supplied;
  • requiring that any initial transaction is carried out through an account opened in the customer’s name with a credit or financial institution subject to the AML Regulations and Rules or regulated in a FATF Country;
  • performing direct mailing (registered mail) of account opening documentation to the named customer at an independently verified address;
  • establishing telephone contact with a customer prior to opening the account on an independently verified home or business number or a “welcome call” to the customer utilizing a minimum of two pieces of personal security information that have previously been provided during the setting up of the account;
  • obtaining a local legal opinion on the ability of the customer to open an account and transact business with the relevant person. Local counsel should also conduct a local company search (if applicable);
  • obtaining an introduction certificate from another regulated financial institution in accordance with procedures set out above; and
  • an initial deposit check drawn on a personal account in the customers name at a bank in a FATF Country.

396. Enhanced due diligence for Private Banking customers: The QFC AML Regulations and AML Rulebook do not make any separate provision for private banking. Firms undertaking private banking are subject to the same customer identification requirements as set out in the AML Regulations and the AML Rulebook and described above under criteria 5.2 to 5.7.

397. Enhanced due diligence for Legal Persons & arrangements such as trusts: The standard Customer identification requirements as set out in the QFC AML Regulations and the AML Rulebook apply to legal persons. Specific guidance is provided in respect of the identification of various forms of legal persons in section A 1.2 of the QFC AML Rulebook. It requires that in addition to the identification documentation obtained under private companies, the relevant person should obtain the following documentation:

  • Identity of any settlor, the trustee and any principal controller who has the power to remove the trustee as well as the identity of the beneficial owner;
  • A certified copy of the trust deed, to ascertain the nature and purpose of the trust; and
  • Documentary evidence of the appointment of the current trustees.

398. Rule A1.2.3 of the QFC AML Rulebook requires a relevant person to use its best endeavors to ensure that it is advised about any changes concerning the individuals who have control over the funds and concerning the beneficial owners. Rule A1.2.4 of the QFC AML Rulebook requires that where a trustee, principal controller, or beneficial owner who has been identified is about to be replaced, the identity of the new trustee, principal controller, or beneficial owner must be verified before they are allowed to exercise control over the funds.

399. Enhanced due diligence for companies with nominee shareholders or bearer shares: There is no requirement under the QFC AML Regulations preventing a relevant person from entering into a customer relationship with a corporate entity with nominee shareholders or shares in bearer form. There is, however, an overriding requirement placed upon a relevant person to ensure they identify and verify the beneficial owner. However, there was no information provided to evidence how a relevant person would perform enhanced due diligence when establishing a business relationship with companies that have nominee shareholders or shares in bearer form.

400. Risk—Application of Simplified/Reduced CDD Measures when appropriate (c. 5.9). Domestic sector: The authorities indicated that financial institutions are not permitted to apply reduced or simplified customer due diligence measures when establishing accounts and/or relationships.

401. QFC: The QFC AML Regulations have been drafted in accordance with a risk-based approach and proportionate anti money laundering systems and controls. Article 15 of the QFC AML Regulations specifically requires that a relevant person must ensure that it adequately addresses the specific money laundering risks which it faces taking into account the vulnerabilities of its products, services and customers. The QFC AML Regulations and Rulebook also set out limited prescribed circumstances where a relevant person is not required to carry out full independent verification of a customer.

402. Article 11 of the QFC AML Regulations specifically provides that where a customer is introduced by another member of the relevant person’s group, a relevant person need not re-identify the customer provided that:

  • the identity of the Customer has been verified by the other member of the relevant person’s Group in a manner consistent with these Articles or equivalent international standards applying in FATF Countries;
  • no exception from identification obligations has been applied in the original identification process; and
  • a statement written in English is received form the introducing member of the relevant person’s group confirming that:
  • the Customer has been identified in accordance with the relevant standards under 1 and 2 above;
  • any identification evidence can be accessed by the relevant person without delay; and
  • that the identification evidence is kept for at least six years.

403. Ultimately, if a relevant person is not satisfied that the customer has been identified in a manner consistent with the Articles of the Regulations, the relevant person must perform the verification process itself.

404. Article 9 (12) of the QFC AML Regulations provides that consistent with its powers, duties, and requirements as set out in Part 3 of the QFC Financial Services Regulations, the Regulatory Authority shall adopt rules implementing the provisions of that article concerning customer identification and shall identify in such rules any exceptions that will apply in respect of these requirements.

405. Under Rule 3.9.1 of the QFC AML Rulebook, a relevant person is not required to establish the identity of a customer pursuant to Article 9 (1) of the QFC AML Regulations if the customer is one of the following;

  • an authorized firm or another relevant person; or
  • a regulated financial sector firm from a FATF country.

406. For the purpose of Rule 3.9.(1)(B) of the QFC AML Rulebook, a firm is considered to be from a FATF country if it is a firm whose entire operations are subject to the regulation, including money laundering, by:

  • an overseas Regulator in a FATF Country
  • another relevant authority in a FATF Country or
  • a subsidiary of a firm referred to above provided that the law which apples to the parent entity ensures that the subsidiary also observes the same provisions.

A relevant person is not required to establish the beneficial ownership of a customer and relevant funds if the relevant person’s customer is a person falling within the scope of Rule 3.9.1(1) of the QFC AML Rulebook.

407. Section A1.2 of the QFC AML Rulebook, (Establishing Identity-Identification Procedures), sets out the identification procedures which a relevant person is required to apply. The identification procedures do not require a relevant person to identify the individual shareholders of corporate entities listed on a Designated Exchange or to identify the directors of a listed company.

408. The QFC framework partially meets the standard on this point because of the broad exemption granted to an authorized firm or another relevant person or a regulation financial sector firm from a FATF country without conducting a risk assessment of the customers or evaluated the countries where such customers are located.

409. Risk—Simplification / Reduction of CDD Measures relating to overseas residents (c. 5.10). Domestic sector: This criterion does not apply: There are no provisions that allow the financial institutions under the supervisory responsibility of the QCB, the DSM, and the MEC to conduct reduced or simplified customer due diligence measures with respect to customers who reside in another country. All customers must therefore undergo the same degree of customer due diligence, regardless of their country of origin.

410. QFC: Rule 3.9.1 of the QFC AML Rulebook provides that a relevant person is not required to verify the identity of a customer if the customer is either (1) an authorized firm or is another relevant person or (2) a regulated financial sector firm from a FATF country.

411. Rule 3.9.2 further provides that a firm falls under the abovementioned second category if: (a) a firm whose entire operations are subject to regulations, including anti money laundering, by an overseas regulator in a FATF country or another relevant authority in a FATF country; or (b) a subsidiary of a firm referred to in (a) provided that the law that applies to the parent entity ensures that the subsidiary also observes the same provisions.

412. Article 11 of the QFC AML Regulations provides limited ability for relevant persons to rely upon others to perform certain aspects of CDD. Article 11 states that a relevant person may outsource technical aspects of the customer identification process to a qualified professional. Where a customer is introduced by another member of the relevant person’s group, a relevant person need not re-identify the customer provided that the identification process has been carried out by the other member of the relevant person’s group in a manner consistent with the regulations or equivalent international standards applying in FATF countries and no exemption was allowed from the original identification process; and a statement from the introducing member confirming the customer has been identified according to the mentioned requirements and evidence of identification is available for examination without delay and the evidence will be kept for at least six years. Article 11 further stipulates that if a relevant person is not satisfied that the customer has been identified in a manner consistent with the requirements, the relevant person must perform the verification process itself.

413. Rule 3.11.1 of the QFC AML Rulebook also provides that an authorized firm, another relevant person or a regulated financial sector firm from a FATF country is considered as a qualified professional. A qualified professional is to undertake the identification process as required by Article 9 of the AML Regulations and obtain any additional “Know Your Customer” information and confirming the identification details if the customer is not resident in the state (rule 3.11.2). Also a relevant person must have in place a cooperation agreement with relevant qualified professional that defines the tasks to be outsourced, specifying that they are to be carried out in accordance with the AML Regulations and AML Rulebook. The QFC framework partially meets the standard on this point because of the broad exemption granted to an authorized firm or another relevant person or a regulation financial sector firm from a FATF country without conducting a risk assessment of the customers or evaluated the countries where such customers are located.

414. Risk—Simplified/Reduced CDD Measures Not to Apply when Suspicions of ML/TF or other high risk scenarios exist (c. 5.11). Domestic sector: This criterion does not apply: Simplified CDD measures are not permitted and all customers must therefore undergo the same degree of customer due diligence.

415. QFC: Rule 3.9.1 (4) of the QFC AML Rulebook confirms that simplified Customer Due Diligence (CDD) is not permitted when a relevant person either knows or suspects, or has reasonable grounds to know or suspect, that a customer or a person on whose behalf he is acting (including any beneficial owner or other provider of relevant funds) is engaged in money laundering. The QFC framework meets the standard on this point.

416. Risk-Based Application of CDD to be Consistent with Guidelines (c. 5.12). Domestic Sector: This criterion does not apply. CDD measures on a risk sensitive basis are not permitted. Therefore, all customers undergo the same degree of customer due diligence.

417. QFC: Article 15 of the QFC AML Regulations, enables relevant persons to adopt a risk based approach to CDD and provides for the provision of guidance by the Regulatory Authority to relevant persons in respect of money laundering risks. Detailed guidance is provided by the Regulatory Authority in Appendix 2 of the QFC AML Rulebook. Guidance includes developing the necessary measures for:

  • High risk products, services, customers or geographies;
  • Enhanced customer monitoring;
  • Corporate structures such as limited companies, offshore trusts, special purpose vehicles and nominee arrangements;
  • Politically exposed persons;
  • Suspicious transactions and transaction monitoring.

The QFC framework meets the standard on this point.

418. Timing of Verification of Identity—General Rule (c. 5.13). Domestic sector: The QCB Instructions (Section 1/1) and DSM Decision (16/3) under Article 6 require financial institutions under their responsibility to verify the identity of all customers before establishing a business relationship. The MEC Circular No. 1 Section 1.1 provides similar language but, for the reasons mentioned above, they are not legally binding. The identification of beneficial owners, however, remains unaddressed in all three texts. The Qatari domestic framework, therefore, clearly falls short of the standard on this point.

419. QFC: Article 9 (1) of the QFC AML Regulations the relevant person must establish and verify the identity of any customer with or for whom the relevant person acts or proposes to act. Further, Article 9 (5) of the QFC AML Regulations extends the above identity verification requirement to beneficial owner. Then, in accordance with Article 9 (6) of the QFC AML Regulations the obligation to verify the identity of any customer with or for whom the relevant person acts or proposed to act must take place prior to the commencement of the business relationship and before any transaction is effected. The QFC framework meets the standard on this point.

420. Timing of Verification of Identity—treatment of exceptional circumstances (c.5.14 & 5.14.1). Domestic sector: The QCB instructions (section 1) and DSM decision (Articles 6 and 8) impose an obligation on financial institutions to verify the identity of all customers before establishing a business relationship. The MEC Circular No. 1 section 1, are mere recommendations to that effect. Overall, the Qatari domestic framework falls short of the standard on this point.

421. QFC: Article 9(7) of the QFC AML Regulations allows a relevant person to enter into an insurance contract before the customer has been properly identified (as required by Article 9(6)) only if the relevant person has controls to ensure that any money received is not passed on to any person until the customer identification requirements have been met.

422. In addition Article 9(8) of the QFC AML Regulations provides that if the customer does not supply evidence of identity in a manner that permits the relevant person to comply with the identification and verification requirements, the relevant person must discontinue any activity it is conducting for the customer and bring to an end any understanding it has reached with the customer.

423. Failure to Complete CDD before commencing the Business Relationship (c. 5.15). Domestic sector: The QCB and the MEC do not address the consequences of failure to complete the customer due diligence procedures. The DSM addresses the issue on Article 7 of the Decision where it explicitly states that a securities account should not be opened if the customer fails to satisfy or provide the information required in Article 6 of this Decision. Article 6 covers the requirements in place for opening account for both natural and legal persons. However, the DSM requirement falls short of requiring the institution to consider making a suspicious transaction report. The Qatari domestic framework, therefore, clearly falls short of the standard on this point.

424. QFC: Article 9(8) of the QFC AML Regulations requires that if a relevant person is unable to comply with the CDD requirements it must not open an account for the customer. There is no legal or regulatory requirement for relevant persons to consider making a suspicious transaction report when they are unable to comply with the CDD requirements. The QFC framework only partially meets the standard on this point as it does not require financial institutions to consider making a suspicious transaction report when unable to complete CDD measures.

425. Failure to Complete CDD after commencing the Business Relationship (c. 5.16). Domestic sector: Pursuant to the QCB instructions section 1, financial institutions must verify the identity of and conduct due diligence measures on all customers before establishing a business relationship and conducting transactions. They are not permitted to conduct business until the requirement is met. The MEC Circular No. 1 (section 1) and DSM Decision 16/3 (Article 8) provide something similar, but in non-binding terms.

426. QFC: If a relevant person is unable to comply with CDD requirements, it must immediately terminate the relationship. In the case of the exemption listed under Article 9 (7) of the QFC AML Regulations with respect to insurance contracts, the relevant person must have controls to ensure that any money received is not passed on to any person until the customer identification requirements have been met, otherwise it must not open the account. The QFC framework partially meets the standard on this point as it does not require financial institutions to consider making a suspicious transaction report.

427. Existing Customers–CDD Requirements (c. 5.17). Domestic sector: Article 19, paragraph 19/8 of the QCB Instructions provides that financial institutions should adopt programs for updating customer’s personal information, papers, and documents. There are no requirements for financial institutions under the supervision of the DSM and the MEC to apply CDD requirements to existing customers on the basis of materiality and risk, nor to conduct due diligence on such existing relationships at appropriate times. The Qatari domestic framework clearly falls short of the standard on this point.

428. QFC: Article 9(11) of the QFC AML Regulations provides that if at any time a relevant person becomes aware that it lacks sufficient information or documentation concerning a customer’s identification, or develops concerns about the accuracy of its current information or documentation, it must promptly obtain appropriate material to verify the customer’s identity. Rule 3.8.2 of the QFC AML Rulebook places an obligation upon a relevant person to undertake a periodic review to ensure that customer identity documentation is accurate and up-to-date. Rule 3.8.3 of the QFC AML Rulebook sets out specific circumstances when a specific review is necessary. These circumstances include, inter alia, situations where there is change in CDD requirements, a significant transaction with the Customer is due to take place, there is a material change in the business relationship with the customer, or where there is a material change in the beneficial ownership of the customer. However, the QFC was recently established and, therefore, there are no accounts that predate the regulations. The QFC framework meets the standard on this point.

429. Foreign PEPs—Requirement to Identify (c.6.1). The AML Law 28 of (2002) does not address the issue of Politically Exposed Persons (PEPs).

430. Domestic sector: There are no measures in place for the financial institutions supervised by the QCB, the DSM and the MEC that address any of the essential criteria (c.6.1 to c.6.4) dealing with PEPs (including having appropriate risk management systems to determine whether the customer is a politically exposed person; obtaining senior management approval for establishing business relationships with such customers; taking reasonable measures to establish the source of wealth and source of funds; and conducting enhanced ongoing monitoring of the business relationship).

431. QFC: Article 15 of the QFC AML Regulations provides that “a relevant person must have systems and controls to determine whether a Customer is a Politically Exposed Person”. Article 19 defines PEPs as “natural persons who may constitute a reputational risk and who are or have been entrusted with prominent public functions, such as Heads of State or of government, senior politicians, senior government, judicial or military officials, senior executives of state owner corporations, important political party officials; and close family members or close associates of any of those persons”. This definition is in line with the standard. Further requirements and guidance are described under the relevant criteria below.

432. Risk Management (c.6.2; 6.2.1). QFC: The QFC AML Regulations impose, pursuant to Article 15 (1)—“Money Laundering Risks”, a specific obligation on relevant persons to have in place policies, procedures, systems, and controls that adequately address the money laundering risks which take into account any vulnerabilities of its products, services, and customers. Furthermore, Article 15 (5) states that “when a relevant person has a Customer relationship with a Politically Exposed Person, it must have specific arrangements to address the risks associated with corruption and Politically Exposed Persons.”

433. Requirement to Determine Source of Wealth and Fund (c. 6.3). The QFC Rule 2.1.1in Appendix 2 provides additional details with respect to monitoring and due diligence procedures required when dealing with PEPs. These procedures include:

  • an analysis of any complex structures, for example involving trusts or multiple jurisdictions;
  • appropriate measures to establish the source of wealth;
  • the development of a profile of expected activity for the business relationship in order to provide a basis for transaction and account monitoring;
  • Senior management approval for the account opening; and
  • regular oversight of the relationship with a Politically Exposed Person by senior management.

Although not explicitly articulated in the Rule, QFCRA officials stated that the reference to complex structures, particularly the reference to trusts and multiple jurisdictions requires the firms to identify beneficial owners, not merely the apparent owner. However, the requirements fall short with respect to establishing the source of funds of customers and beneficial owners identified as PEPs.

434. Requirement to conduct ongoing monitoring (c. 6.4). With respect to conducting enhanced ongoing monitoring on business relationships with PEPs, Section 2.1 (10) of Appendix 2 states that “the risk for a Relevant Person can be reduced if the Relevant Person conducts detailed “Know Your Customer” investigations at the beginning of a relationship and on an ongoing basis where it knows, suspects, or is advised that, the business relationship involves a Politically Exposed Person. A Relevant Person should develop and maintain enhanced scrutiny and monitoring practices to address this risk.” The QFCRA AML Regulation and AML Rulebook do not specifically require relevant persons to obtain senior management approval to continue the business relationship where a customer has been accepted and the customer or beneficial owner is subsequently found to be, or subsequently becomes a PEP.

Additional Elements—Extension of the requirements of R. 6 to domestic PEPS

435. The definition of PEPs provided by Article 19 of the QFC Regulations is not limited to foreign PEPs and, therefore, also covers persons who hold prominent public functions in Qatar (domestic PEPs).

Cross-Border Correspondent Accounts and Similar Relationships

436. Requirement to Obtain Information on Respondent Institution (c.7.1). Domestic sector: There are no specific measures established by the QCB, the DSM, and the MEC addressing any of the essential criteria (c.7.1 to c.7.5) of this recommendation dealing with establishment of cross-border correspondent banking or other similar relationships. DSM authorities stated that in Qatar, brokerage houses operate domestically only and that for international transactions/orders, these needed to be conducted through a bank, in this case, HSBC Global Custodian services. There was no evidence that insurance firms maintain cross-border correspondent accounts.

437. QFC: Article 12 of the QFC AML Regulations requires that “prior to establishing a business relationship an Authorised Firm must establish and verify its Correspondent Banks identity by obtaining sufficient and satisfactory evidence of the identity”. The identity of the customer with or for whom a relevant person acts or proposes to act should be established and verified pursuant to Article 9 of the AML Regulations.

438. Assessment of AML/CFT Controls in Respondent Institution (c.7.2). Domestic sector: There are no enforceable measures in place.

439. QFC: In establishing and verifying a customer’s true identity, a relevant person must obtain sufficient and satisfactory evidence having considered the customer’s anti-money laundering risk including policies, procedures, systems, and controls with respect to vulnerabilities arising from its products, services, and customers; perform enhanced due diligence investigations for higher-risk products, services, and customer utilizing the guidance provided by the QFCRA Rulebook; risks arising from new or developing technologies; risks regarding corruption and PEPs; and systems in place for suspicious transactions and transaction monitoring.

440. Article 12 of the QFC AML Regulations further states that an Authorised Firm that establishes, operates, or maintains a correspondent account for a correspondent banking client must ensure that it has arrangements to:

  • conduct due diligence in respect of the opening of a correspondent account for a correspondent banking client including measures to identify its:
  • ownership and management structure;
  • major business activities and customer base;
  • location; and
  • intended purpose of the correspondent account;
  • ensure that the correspondent banking client has verified the identity of, and performed on-going due diligence on its customers having direct access to the correspondent account and that the correspondent banking client is able to provide customer due diligence information upon request to the Authorized Firm; and
  • monitor transactions processed through a correspondent account that has been opened by a correspondent banking client, in order to detect and report any suspicion of money laundering.

The same Article prohibits an Authorized Firm from: a) establishing a correspondent banking relationship with a shell bank; b) establishing or keeping anonymous account or accounts in false names; or c) maintaining a nominee account which is held in the name of one person, but controlled by or held for the benefit of another person whose identity has not been disclosed to the Authorized Firm.

441. In addition to the AML regulations, the QFCRA AML Rulebook (AMLR) extends and clarifies the provisions in the AML Regulations, under Rule 3.12 requiring relevant persons to verify if any secrecy or data protection law exists in the country of incorporation of a business partner that would prevent access to relevant data; to have specific arrangements to ensure that adequate due diligence and identification measures with regard to the business relationship are taken and to conduct regular reviews of its relationship with its correspondent banks.

442. Approval of Establishing Correspondent Relationships (c. 7.3). Domestic sector: There are no enforceable measures in place.

443. QFC: Further guidance in the Rulebook provides that specific care should be taken to assess the anti-money laundering arrangements of correspondent banking clients and, if applicable, other qualified professionals relating to customer identification, transaction monitoring, terrorist financing and other relevant elements and to verify that these business partners comply with the same or equivalent anti-money laundering requirements as the relevant person. Information on applicable laws and regulations regarding the prevention of money laundering should be obtained. A relevant person should also ensure that a correspondent banking client does not use the relevant person’s products and services to engage in business with shell banks. If applicable, information on distribution networks and delegation of duties should be obtained. The senior management of a relevant person should give its approval before it establishes any new correspondent banking relationships. Finally, the AML Rulebook further requires a relevant person to have arrangements to guard against establishing a business relationship with business partners who permit their account to be used by shell banks.

444. Documentation of AML/CFT Responsibilities for Each Institutions (c. 7.4) and Payable-Through Accounts (c. 7.5). Domestic sector: There are no enforceable measures in place.

445. QFC: The QFC AML Regulations and AML Rulebook do not specifically establish the requirements when establishing correspondent banking relationships to gather sufficient information about a respondent institution to understand fully the reputation and quality of supervision, including whether it has been subject to a money laundering or terrorist financing investigation or regulatory action; and to document the respective AML/CFT responsibilities of each institution.

446. Misuse of New Technology for ML/FT and Risk of Non-Face to Face Business Relationships. Misuse of New Technology for ML/FT (c. 8.1). Domestic sector: There are no specific measures established by the QCB, the DSM, and the MEC that address any of the essential criteria (c.8.1 to c.8.2.1) dealing with money laundering threats that may arise from the new or developing technologies. The QCB Instructions address technology developments; however, the emphasis is more on the relationship between QCB and financial institutions, particularly with respect to call centers, maintenance of banking electronic equipment, and replacement of ATM cards and Debit/Credit Cards. QCB and DSM officials indicated that currently opening accounts/establishing relationships over the internet is not allowed because there is physical presence requirement in place for customers opening accounts/relationships. However, the authorities were not able to provide documentation to support the legal basis for the physical presence requirement. For the DSM, only trading orders are allowed through the internet, but that is after the customer/investor has been properly identified. DSM officials also indicated that all new accounts are opened at the ground level of the DSM building (client’s service counter), but like the QCB, the focus is more on establishing the relationship that on establishing effective measures to address specific money laundering and terrorist financing risks. In order to open an account at the DSM, the following process takes place:

For individuals:

  • Filling out a new investor’s application form to get an investor’s identification number.
  • Submission of the following documents along with the application form:
    • - A copy of a valid passport.
    • - A copy of power of attorney (in case there is a need for one).
    • - A copy of a court decision or a guardianship order (guardian).
    • - A copy of birth certificate if buying/selling securities on behalf of minors (under 18).

For Companies and other entities:

  • Filling out a new investor’s application form to get an investor’s identification number.
  • Submission of the following documents along with the application form:
    • - A copy of a valid commercial registration document showing the authorized persons including their signatures.
    • - An original authorization signature letter issued by the company for the purpose of opening an account with DSM.

447. QFC: Article 15 (3) of the QFC AML Regulations stipulates that a relevant person must be aware of any money laundering risks that may arise from new or developing technologies that may favor anonymity and take measures to prevent their use for the purpose of money laundering.

448. Further guidance is provided in Section A.2.1 of the Appendix 2 of the QFC AML Rulebook where a relevant person should take specific and adequate measures necessary to compensate for the higher risks of money laundering which may arise from products and services such as non-face-to-face business relationship or transaction, such as via email, telephone, or the Internet or internet-based products.

449. Risk of Non-Face-to-Face Business Relationships (c. 8.2 & 8.2.1). Domestic sector: There are no enforceable measures in place.

450. QFC: Article 15 (3) of the QFC AML Regulations specifically requires a relevant person to be aware of any money laundering risks that may arise from new or developing technologies that might favor anonymity and take measures to prevent their use for the purpose of money laundering.

451. Guidance on conducting risk assessments is provided in the Appendix 2 to the QC AML Handbook (Paragraph 2.1.2). It provides that a relevant person should take specific and adequate measures necessary to compensate for the higher risk of money laundering which might arise, for example from the following products, services or customers:

  • non-face-to-face business relationships or Transactions, such as via email, telephone or the Internet;
  • internet-based products;
  • correspondent banking relationships;
  • customers from FATF “Non Cooperative Countries and Territories” and higher-risk countries; and
  • Politically Exposed Persons.

452. Relevant person are also recommended under paragraph 2.1.2 to apply an intensified monitoring of transactions and accounts in relation to these products, services and customers. Such measures may include, for example, the following:

  • requiring additional documentary evidence;
  • taking supplementary measures to verify or certify the documents supplied;
  • requiring that the initial transaction is carried out through an account opened in the customer’s name with a credit or financial institution subject to AMLR and the AML Regulation or regulated in a FATF Country;
  • performing direct mailing (registered mail) of account opening documentation to the named customer at an independently verified address, which such mailing is returned completed or acknowledged without alteration to the name or address;
  • establishing telephone contact with a customer prior to opening the account on an independently verified home or business number or a “welcome call” to the customer utilizing a minimum of two pieces of personal identity security information that have been previously provided during the setting up of the account;
  • obtaining a local legal opinion on the ability of the customer to open an account and transact business with the relevant person. Local counsel should undertake a local company search (if applicable);
  • obtaining an introduction certificate from another regulated financial institution in accordance with the procedures set out above; and
  • an initial deposit check drawn on a personal account in the customer’s name at a bank in a FATF country.

3.3.2 Recommendations and Comments

453. There are substantial shortcomings in the Qatari framework, in particular in the domestic sector, which are largely due to the fact that a number of requirements that should be set out in primary or secondary legislation are addressed through OEMs or non-binding guidance. In a number of instances, the measures in place in the domestic sector are too general and lack the level of detail required under the standard.

454. In order to address the shortcomings in the domestic sector, it is recommended that the Qatari authorities prohibit, through law or regulation, anonymous accounts or accounts in fictitious names; and establish, through law or regulation, clear requirements for financial institutions to:

  • Undertake customer due diligence (CDD) measures when:
    • carrying out occasional transactions above the applicable designated threshold. This also includes situations where the transaction is carried out in a single operation or in several operations that appear to be linked;
    • carrying out occasional transactions that are wire transfers in the circumstances covered by the Interpretative Note to SR VII;
    • there is a suspicion of money laundering or terrorist financing, regardless of any exemptions or thresholds; and
    • the financial institution has doubts about the veracity or adequacy of previously obtained customer identification data.
  • Identify the customer (whether permanent or occasional, and whether natural or legal persons or legal arrangements) and verify that customer’s identity using reliable, independent source documents, data or information (identification data) following the examples of the types of customer information that could be obtained, and the identification data that could be used to verify that information as set out in the paper entitled General Guide to Account Opening and Customer Identification issued by the Basel Committee’s Working Group on Cross Border Banking.
  • Verify, for customers that are legal persons or legal arrangements, that any person purporting to act on behalf of the customer is so authorized, and identify and verify the identity of that person.
  • Identify the beneficial owner, and take reasonable measures to verify the identity of the beneficial owner using relevant information or data obtained from a reliable source such that the financial institution is satisfied that it knows who the beneficial owner is.
  • Determine for all customers whether the customer is acting on behalf of another person, and should then take reasonable steps to obtain sufficient identification data to verify the identity of that other person.
  • Conduct ongoing due diligence on the business relationship.

455. The Qatari authorities are further recommended to establish, through law, regulation, or other enforceable means, clear obligations/requirements for financial institutions to:

  • Obtain information on the purpose and intended nature of the business relationship.
  • Perform enhanced due diligence for higher risk categories of customer, business relationships, or transactions.
  • Reject opening an account when unable to comply with CDD requirements and to consider making a suspicious report.
  • Apply CDD measures on existing customers on the basis of materiality and risk and to conduct due diligence on such relationships at appropriate times.
  • Have appropriate risk management systems to determine whether the customer is a politically-exposed person; obtain senior management approval for establishing business relationships with such customers; take reasonable measures to establish the source of wealth and source of funds; and conduct enhanced ongoing monitoring of the business relationship.
  • Establish requirements for financial institutions to have measures in place for establishing cross-border correspondent banking and other similar relationships.
  • Require financial institutions to establish measures including policies and procedures designed to prevent and protect the financial institutions from money laundering and terrorist financing threats that may arise from new or developing technologies or specific CDD measures that apply to non-face-to-face business relationships or transactions.

456. It is also recommended that the QFC authorities strengthen the AML Regulation and Rulebook by requiring relevant persons to:

  • Remove the broad exception to customer identification requirements contained in Rule 3.9 of the Rulebook by implementing a process for conducting a risk sensitive assessment of customers and FATF countries where such customers are located to determine compliance with and the level of implementation of Rec. 5.
  • Require institutions to consider making a suspicious transaction report when unable to complete CDD measures, including when the business relationship has already commenced and the institution is not able to conduct required CDD measures.
  • Take reasonable measures to establish the source of funds of customers and beneficial owners identified as PEPs and obtain senior management approval to continue the business relationship where a customer has been accepted and the customer or beneficial owner is subsequently found to be, or subsequently becomes a PEP.
  • Incorporate into the existing requirements the obligation to gather sufficient information about a respondent institution to understand fully the reputation and quality of supervision, including whether it has been subject to a money laundering or terrorist financing investigation or regulatory action; and to document the respective AML/CFT responsibilities of each institution.

3.3.3 Compliance with Recommendations 5 to 8

RatingSummary of factors underlying rating
R.5NCDomestic sector:
  • Lack of explicit obligations imposed by law (primary or secondary legislation) for:
    • Explicitly prohibiting anonymous accounts or accounts in fictitious names.
    • Customer identification and due diligence process when:
      • Carrying out occasional transactions above the applicable designated threshold, including situations where the transaction is carried out in a single operation or in several operations that appear to be linked.
      • Carrying out occasional transactions that are wire transfers in the circumstances covered by the Interpretative Note to SR VII.
      • There is a suspicion of money laundering or terrorist financing, regardless of any exemptions or thresholds.
      • The financial institution has doubts about the veracity or adequacy of previously obtained customer identification data.
      • Identifying the customer (whether permanent or occasional, and whether natural or legal persons or legal arrangements) and verifying that customer’s identity using reliable, independent source documents, data or information (identification data).
      • Verifying, for customers that are legal persons or legal arrangements, that any person purporting to act on behalf of the customer is so authorized, and identify and verify the identity of that person.
      • Identifying the beneficial owner, and take reasonable measures to verify the identity of the beneficial owner using relevant information or data obtained from a reliable source such that the financial institution is satisfied that it knows who the beneficial owner is.
      • Determining for all customers whether the customer is acting on behalf of another person, and should then take reasonable steps to obtain sufficient identification data to verify the identity of that other person.
      • Conducting ongoing due diligence on the business relationship.
  • Lack of measures in law, regulation, or other enforceable means that require financial institutions to:
    • Obtain information on the purpose and intended nature of the business relationship.
    • Perform enhanced due diligence for higher risk categories of customer, business relationships or transactions.
    • Reject opening an account when unable to comply with CDD requirements and to consider making a suspicious transaction report.
    • Apply CDD measures on existing customers on the basis of materiality and risk and to conduct due diligence on such relationships at appropriate times.


QFC:
  • Lack of measures in the AML Regulations that would require relevant persons to:
  • Identify all customers, regardless of the exception contained in Rule 3.9; and
  • Consider making a suspicious transaction report when unable to complete CDD measures.
R.6NC
  • Lack of measures for the financial institutions supervised by the QCB, the DSM and the MEC with respect to customer due diligence procedures for politically exposed persons.
  • Lack of requirements in the QFCRA AML Regulation (and Rulebook) for relevant persons to obtain senior management approval to continue business relationship where a customer has been accepted and the customer or beneficial owner is found to be or subsequently becomes a PEP, and to take reasonable measures to establish the source of funds of customers and beneficial owners identified as PEPs.
R.7NC
  • Lack of measures for the financial institutions supervised by the QCB, the DSM and the MEC dealing with establishment of cross-border correspondent banking or other similar relationships.
  • Lack of requirements in the QFC AML Regulations and Rulebook for relevant persons to gather sufficient information about a respondent institution to understand fully the reputation and quality of supervision, including whether is has been subject to a money laundering or terrorist financing investigation or regulatory action; and to document the respective AML/CFT responsibilities of each institution.
R.8PC• Lack of requirements on financial institutions under the supervision of the QCB, the DSM, and the MEC to establish adequate policies and procedures designed to prevent and protect the financial institutions from money laundering and terrorist financing from new or developing technologies or specific CDD measures that apply to non face-to-face business relationships or transactions.

3.4 Third parties and introduced business (R.9)

457. Domestic sector: There are no requirements (or prohibitions) for banks and financial institutions with respect to reliance on intermediaries or other third parties to perform some of the elements of the CDD process. Also, there is no measure in place that would ensure that the final responsibility for CDD measures remains with the financial institution opening/initiating the relationship. The supervisory authorities indicated that under the current regime, financial institutions are required to conduct their own due diligence. However, the authorities were not able to provide the legal basis for this requirement. Meetings conducted with officials from financial institutions revealed that all due diligence process is performed by the institution establishing the business relationship and that at this time, no intermediaries or other third parties are conducting elements of the CDD process.

458. Requirement to Immediately Obtain Certain CDD elements from Third Parties (c.9.1). QFC: Article 11 of the QFC AML Regulations provides that when a customer is introduced by another member of the relevant person’s group, a relevant person need not re-identify the customer, provided that:

  • A. the identity of the customer has been verified by the other member of the relevant person’s group in a manner consistent with the articles or equivalent international standards applicable to FATF countries;
  • B. no exception from identification obligations has been applied in the original identification process; and
  • C. a statement written in the English language is received from the introducing member of the relevant person’s group confirming that:
    • I. the customer has been identified in accordance with the relevant standards under (A) and (B);
    • II. any identification evidence can be accessed by the relevant person without delay; and
    • III. that the identification evidence is kept for at least six years.

459. Availability of Identification Data from Third Parties (c.9.2) and Ultimate Responsibility for CDD (c.9.5). Article 11 also states that if a relevant person is not satisfied that the customer has been identified in a manner consistent with the articles; the relevant person must perform the verification process itself. Where customer identification records are kept by the relevant person or other persons outside the state, a relevant person must take reasonable steps to ensure that the records are held in a manner consistent with the articles. Also, a relevant person must verify if there are secrecy or data protection legislation that would restrict access without delay to such data by the relevant person, the QFC Authority, the Regulatory Authority, the FIU, or the law enforcement agencies of Qatar. Where such legislation exists, the relevant person must obtain without delay certified copies of the relevant identification evidence and keep these copies in a jurisdiction which allows access by all the persons.

460. Regulation and Supervision of Third Party (applying R. 23, 24 & 29, c.9.3 and c.9.4). Although the QFC AML Regulations permit financial institutions to rely on intermediaries or other third parties to perform elements of the CDD process or to introduce business, there are some inconsistencies with the FATF requirements: no specific measures to evaluate the quality of supervision of the third party; and no indication that in determining which countries the third party that meets the conditions can be based, the competent authorities have taken into account information available on whether those countries adequately apply the FATF Recommendations. Also, the exemption for not re-identifying the customer if the identity of the customer was previously verified by other members of the relevant person’s group in a manner consistent with the QFCRA requirements or equivalent international standards applying in FATF countries is too broad and does not seem adequate given that there is no requirement for relevant persons to evaluate the adequacy of the CDD measures and process conducted and to ensure the quality of supervision of the third party.

3.4.1 Recommendations and Comments

461. The authorities are recommended to:

  • Introduce provisions/measures in the event that financial institutions supervised by the QCB, DSM, and MEC rely on intermediaries or other third parties to perform some of the elements of the CDD process.
  • Specify that the final responsibility for CDD measures remains with the financial institution opening/initiating the relationship.

462. The QFCRA is recommended to:

  • Require a relevant person to evaluate the quality of supervision of the third party;
  • Determine in which countries the third party that meets the conditions can be based;
  • Take into account information available on whether those countries adequately apply the FATF Recommendations; and
  • Abolish or re-evaluate the broad customer identification exemption granted when a customer is a member of the relevant person’s group or equivalent international standards are applied in FATF countries, with a view to establish the risk and the conditions for implementing this waiver.

3.4.2 Compliance with Recommendation 9

RatingSummary of factors underlying rating
R.9NC
  • Lack of legal or regulatory requirements when there is no prohibition imposed by the QCB, the DSM, and the MEC for banking and financial institutions to rely on intermediaries or other third parties to perform some of the elements of the CDD process.
  • Lack of specific measures imposed by the QFCRA to require relevant persons to evaluate the quality of supervision of the third party; and to determine in which countries the third party that meets the conditions can be based taking into account information available on whether those countries adequately apply the FATF Recommendations.
  • Broad CDD exemption provided by the QFCRA when a customer is a member of the relevant person’s group or equivalent international standards are applied in FATF countries.

3.5 Financial Institution Secrecy or Confidentiality (R.4)

3.5.1 Description and Analysis

463. Inhibition of Implementation of FATF Recommendations (c. 4.1). Domestic sector: Article 82 of Law No. (33) of 2006 (QCB Law) states that “the member of the board of directors, personnel, auditors and advisers of all financial institutions shall not disclose any information concerning any customer except with his prior written consent, or pursuant to a provision of the Law, or upon an order or decision of the court. This prohibition shall continue even after termination of service of the abovementioned persons. It shall apply to the abovementioned persons whose services have been terminated before the date this Law come into force”. The law does not provide for any exceptions to the confidentiality requirement. According to the authorities, banking secrecy may nevertheless be lifted and access to all information may be granted by the Governor of the QCB. Banking secrecy may also be lifted by the relevant court, on request of the prosecutors. However, given the shortcomings with respect to information sharing identified in cross-border activities, intermediaries/introduced business and wire transfers the Qatari framework falls short in these respects.

464. QFC: Authorized firms in the QFC are subject to various confidentiality requirements under QFC law, including the specific requirements under Rule 2.1.12 of the Principles Rulebook for firms to “ensure that information of a confidential nature received in the course of dealing with its clients is treated in an appropriate manner”. Confidentiality obligations are subject to the following:

  • a) Article 48 of the FSR Regulations that enables the regulatory authority to require the production by a person in the QFC of specified information/documents of a specified description within such timeframe and in such manner as it reasonably requires; and
  • b) Article 8(6)(G) of the QFC AML Regulations which requires relevant person to respond promptly to any request for information made by the FIU, the QFC Authority, the Regulatory Authority, or other competent state authorities.

465. QFC firms are subject to confidentiality requirements pursuant to Rule 2.1.12 mentioned above. The secrecy provisions contained in Article 82 of the Central Bank Law do not apply to QFC firms. Article 18 of the QFC Law (17) of 2005 provides that the civil laws, rules and regulations of the State shall apply in the QFC save to the extent that regulations exclude or conflict with or are inconsistent with them.

466. Article 19 paragraph 1 of the QFC Financial Services Regulations prohibits the QFC Regulatory Authority to disclose any information received in the exercise of its functions. However, several exceptions are listed. Article 19(3) of the FSR specifically provides that the Regulatory Authority may disclose the information ordinarily covered by the confidentiality requirements “to any body, agency or authority performing functions relating to the detection or prevention of money laundering whether in the State or internationally”. It also enables the Regulatory Authority to disclose confidential information in the following circumstances:

  • with the consent of the Person to whom the duty of confidentiality is owed;
  • where such disclosure is permitted or required by or pursuant to the QFC Law, these regulations or any other regulation conferring powers, duties or functions on the Regulatory Authority;
  • in response to a legally enforceable demand;
  • where the disclosure is made in good faith for the purposes of the performance or exercise by the Regulatory Authority of any of its functions, duties, and powers under the QFC Law, this regulation or any related regulations;
  • in the case of persons other than the Regulatory Authority, to the Regulatory Authority;
  • to the Tribunal or Appeals Body in connection with any matter falling within their jurisdiction;
  • to any other civil or criminal enforcement agency or authority, whether in the state or internationally; or
  • to overseas regulators in accordance with Article 20 (International Relations and Cooperation).

467. Further, Article 20 (3) of the FSR also stipulates that the Regulatory Authority shall exercise such of its powers under the QFC Law or Regulations (or any Related Regulations) as it considers appropriate to cooperate with and provide assistance to overseas regulators in the exercise of their functions or in connection with the prevention or detection of financial crime.

468. Rule 3.10.1 of the QFC AML Rulebook also stipulates that a relevant person must maintain records in such a manner that:

  • The Regulatory Authority or another competent third party is able to assess the relevant person’s compliance with legislation or regulation applicable to the QFC;
  • Any transaction which was processed by or through the relevant person on behalf of a customer or any third party can be reconstructed;
  • Any customer or third party can be identified;
  • All internal and external suspicious transaction reports can be identified; and
  • The relevant person can satisfy, within an appropriate time, any regulatory enquiry or court order to disclose information.

469. Article 48 of the FSR allows the QFC Regulatory Authority to require the production by a person in the QFC or outside the QFC (with an order from a judiciary body) of specified information/documents or information/documents of a specified description within such timeframe and in such manner it reasonably requires. This article also allows the Regulatory Authority with power to enter the premises of any person in the QFC at any time for the purposes of inspecting and copying information or documents stored in any form on such premises.

470. Meetings with financial institutions regulated by the QFC Regulatory Authority confirmed that there are no impediments for the supervision and control authorities and the financial intelligence unit to prevent them from obtaining and/or having access to information.

3.5.2 Recommendations and Comments

471. The authorities need to establish measures to enable information sharing between financial institutions.

3.5.3 Compliance with Recommendation 4

RatingSummary of factors underlying rating
R.4LC• Lack of measures to share information between financial institutions in line with recommendations R.7, R. 9, and SR VII.

3.6 Record-Keeping and Wire Transfer Rules (R.10 & SR.VII)

3.6.1 Description and Analysis

472. Record-Keeping and Reconstruction of Transaction Records, Identification Data, and Availability of Records to Competent Authorities (c.10.1 & 10.1.1, c.10.2, and c.10.3). Domestic Sector: The requirement for financial institutions under the supervision of the QCB is established by Article 81 of the QCB Law No.(33) of 2006 pursuant to which every financial institution is required to maintain the records and documents concerning its work in a proper way and in a safe place inside the State of Qatar. The article also delegates to the QCB the authority to specify the period for maintaining such records and documents. The record retention period is established by the QCB under Section 1, paragraph 4 of the QCB Instructions (which are considered other enforceable means) where financial institutions are required to keep records of the customers’ identities and their agencies, including copies of official identity cards and files of the accounts and the correspondences of all the customers even of those who closed their accounts. These records have to be kept according to Section 7 of the Instructions and available for review by QCB and the local competent authorities in case of relevant criminal prosecutions and investigations. Under Section 7 of the instructions, the QCB requires the regulated banking and financial institutions to maintain the necessary records on domestic and international financial transactions for a period of not less than 15 years, to enable them to respond swiftly to inquiries from the QCB or the competent authorities. The records retained must be sufficient to permit the retrieval of individual information, including the amount and types of currencies involved if any, the types of transaction and their dates, the transferees and beneficiary, and any other documents such as a copy of the passport or the identification card, and an account statement. Banking and financial institutions are also required to maintain records of the customer’s identities and their agencies, including copies of official identity documents and also files of the accounts and the correspondences of all the customers even of those who closed their accounts. These documents must be available to the QCB and the domestic competent authorities in case of criminal prosecutions and investigations.

473. The retention/recordkeeping obligation is not established by primary or secondary legislation for the DSM financial institutions. The DSM addresses the record retention/recordkeeping obligation under Article 9 of Decision 16/03 (which is also considered other enforceable means). Article 9 states that the registers and records pertaining to the customers, containing their identification and other documents and the documents of their agents, the files of accounts, correspondence of the transactions being executed shall be kept for a period of at least 15 years. It further states that these documents shall be available for the perusal of the Market Committee and the Financial Information Unit (FIU) and the judicial authorities whenever required. Also, under Article 12 of Law 14 of 1995 (DSM Law), the DSM as the competent authority, has access to all data and information requested. This data and information must be made available to the inspection and audit team and treated with high confidentiality and should not be disclosed. In the case where the institution under inspection and/or audit is a licensed bank, the DSM should coordinate with the QCB and allowed to conduct joint examination.

474. Likewise, the retention/recordkeeping obligation for those financial institutions under the supervision of the MEC is not established by primary or secondary legislation. The MEC addresses recordkeeping aspects in its Circular; however, due to the lack of legal basis, the MEC’s Circular is not considered legally binding. The Circular nevertheless provides useful recommendations, as follows: Section 3 of Circular No. 1 of 2007 issued by the MEC requires all insurance companies to maintain for a period of at least five years all the necessary records related to the different insurance transactions executed in favour of the customers, including all files, documents, accounts, correspondences, claims, and other documents.

475. In conclusion, only the QCB has established the legal obligation for retention/recordkeeping under the QCB Law No.(33). The DSM imposes the record-keeping obligations on the financial institutions they supervise under the DSM Decision 16/3. The regulatory record keeping/retention period of 15 years imposed by both the QCB and the DSM, is in line with the standard and even goes beyond the minimum period recommended by FATF. However, in the case of the DSM and MEC, it fails to meet the standard because it is not established through primary or secondary legislation. Furthermore, the QCB and DSM obligation is not sufficiently precise in its wording. Meetings conducted with representatives from financial institutions revealed that it is not clear to them when the current record-keeping requirement starts and for how long they need to maintain the documentation when requested by a competent authority. Further meetings with the authorities revealed that the retention period should start following the termination of the account relationship. The QCB Instructions and DSM Decision should be clarified to explicitly indicate when the record-keeping obligation starts.

476. QFC: The record-keeping requirements are addressed in the QFC AML Regulations which constitute secondary legislation. Article 10 of the QFC AML Regulations provides that all relevant information, correspondence, and documentation used by a relevant person to verify a customer’s identity, pursuant to the customer identification requirements as described in the regulations, must be kept for at least six years from the date on which the business relationship with a customer has ended. If this date is unclear, the business relationship may be taken to have ended on the date of the completion of the last transaction. Article 10 also requires the relevant person to keep all relevant details of any transaction carried out with or for a customer for at least six years from the date on which the transaction was completed. The QFC AML Rulebook further provides that a relevant person must maintain records in such a manner that the Regulatory Authority or another competent third party is able to assess the relevant person’s compliance with legislation or regulations applicable in the QFC; any transaction which was processed by or through the relevant person on behalf of a customer or any third party can be reconstructed; any customer or third party can be identified; all internal and external suspicious transaction reports can be identified; and the relevant person can satisfy, within an appropriate time, any regulatory enquiry or court order to disclose information.

477. Obtaining Original Information for Wire Transfer (applying c.5.2. & 5.3 in R.5, c.VII.1). Domestic sector: In Qatar, funds/wire transfers may only be carried out by banking institutions. Therefore, the criterion does not apply to the DSM and MEC. As far as banking institutions are concerned, the Qatari authorities have not yet implemented specific measures to address the requirements of SR VII with respect to information to be obtained for wire transfers.

478. Section 1 of the QCB Instructions require the banking and financial institutions to ascertain the identity of the customers or those who represent them, on the basis of the official identity documents and register of these identities, when making any deals, or transactions with them, providing services especially when opening account, contracting facilities contracts, financial transfers or managing their funds, whether in portfolios, shares in mutual funds, leasing trusts funds, or any other businesses and banking and financial services.

479. The obligation to obtain and maintain information is set out in Section 2 of the QCB Instructions which requires that in addition to name, nationality, identity, and address, banking and financial institutions should maintain and obtain the confirmation documents and mails used for all the transferred funds, internally and externally. The instructions further indicate that the necessary measures should be taken to control the transfers that lack the related information about the two parties (name, address, account number, etc.) and call on financial institutions to exercise caution on these operations because of the potential money laundering or terrorist financing risk.

480. QFC: Article 16(1) (Transfer of Funds) of the QFC AML Regulations states that where a relevant person is a financial institution and makes a payment on behalf of a customer to another financial institution using an electronic payment and message system, it must include the customer’s name, address and either an account number or a unique reference number in the payment instruction. This applies regardless of whether the transfer is domestic or cross-border. Further guidance in the QFC Rulebook (paragraph 17) conveys that the information about the customer as the originator of the fund transfer should remain with the payment instruction through the payment chain. It also provides that relevant persons should monitor for and conduct enhanced scrutiny of suspicious activities including incoming fund transfers that do not contain complete originator information, including name, address, and account number or unique reference number. There is no de minimis threshold in place under the current QFC framework. The QFCRA officials confirmed that all the necessary information is requested and obtained for all wire transfers regardless of the amount.

481. Inclusion of Originator Information in Cross-Border and Domestic Wire Transfers (c.VII.2 and c.VII.3) and Maintenance of Originator Information (c.VII.4 and VII.4.1). Domestic sector: The current regulatory framework for wire transfers is limited to obtaining basic information on the originator and beneficiary (ies). There is no distinction between domestic and international transfers, nor is there an established threshold for the application of the provisions in the Recommendation. In addition, there is no requirement for beneficiary financial institutions to adopt effective risk-based procedures for identifying and handling wire transfers that are not accompanied by complete originator information. Also, under the current obligation, financial institutions are not required to ensure that the information obtained from the originator remains with the transfer or related message through the payment chain.

482. Financial institutions visited indicated that all international wire transfers are executed following documentation procedures established by SWIFT and if transfers are received without adequate or proper information, these are returned to the sending institution. SWIFT documentation procedures require all wire transfers to contain the following key information: SWIFT transaction number, transaction date, transaction amount, name, address, beneficiary (ies), details of the payment, intermediary institution, if applicable, receiving institution, and other details or payment instructions.

483. QFC: As indicated above, Article 16(1) (Transfer of Funds) of the QFC AML Regulations states that where a relevant person is a financial institution and makes a payment on behalf of a customer to another financial institution using an electronic payment and message system, it must include the customer’s name, address and either an account number or a unique reference number in the payment instruction. This applies regardless of whether the transfer is domestic or cross-border. Further guidance in the QFC Rulebook 3.17 paragraph 1 conveys that the information about the customer as the originator of the fund transfer should remain with the payment instruction through the payment chain. It also provides that relevant persons should monitor and conduct enhanced scrutiny of suspicious activities including incoming fund transfers that do not contain complete originator information, such as the name, address, and account number or unique reference number.

484. Risk-Based Procedures for Transfers Not-Accompanied by Originator Information (c.VII.5). Domestic sector: There are no measures in place that would require the financial institutions to adopt effective risk-based procedures for identifying and handling wire transfers that are not accompanied by complete originator information.

485. QFC: Further guidance in the QFC Rulebook 3.17 paragraph 2 conveys that relevant persons should monitor for and conduct enhanced scrutiny of suspicious activities including incoming funds transfers that do not contain complete originator information including name, address and account number or unique reference number in accordance with Appendix 2. Appendix A.2.2 paragraph 8 of the QFC Rulebook provides that with regard to enhanced scrutiny to funds transfers, which do not contain complete originator information including name, address and account number or unique reference number, a relevant person should examine the transaction in more detail in order to determine whether certain aspects related to the transaction might make it suspicious and thus warrant eventual reporting to the FIU and the Regulatory Authority.

486. Monitoring of Implementation of SR VII (c.VII.6). Domestic sector: There are no measures in place that would require financial institutions to effectively monitor the level of compliance with rules and regulations addressing the requirements of this special recommendation.

487. QFC: As of the mission date, two financial institutions were operating within the QFC. The QFCRA officials indicated that as part of the supervisory cycle, the QFCRA will conduct on-site visits to determine the level of compliance with the AML Law, AML Regulations and the AML Rulebook. For the few firms operating, the QFCRA has been monitoring their progress and activities and conducting risk assessments to ensure the firms are conducting their activities in line with the license approved by the QFCRA.

488. Sanctions (applying c. 17.1–17.4, in R. 17, c.VII.7). Domestic sector: Only the courts and the QCB may issue sanctions for noncompliance with, respectively, the prohibition of tipping-off which is set out in the AML Law and the other enforceable AML/CFT measures set out in the QCB AML/CFT instructions and the DSM decisions. This is not appropriate for several reasons: there are no sanctions for the non-banking financial sector other than that for tipping-off and, in the banking sector, the only sanction available to the QCB is one of a last resort (i.e., the revocation of the license under Article 58 of the QCB law. See write-up under Recommendation 17 for more details).

489. QFC: If firms do not comply with the requirements set out in the QFC AML Regulations and the rules contained in the QFC Rulebook, the QFCRA is empowered, under Part 9 of the FSR, to take a range of civil disciplinary and enforcement actions, against natural and legal persons and, where relevant, against the directors and senior management:

  • public censure (Article 58 of Part 9 of the FSR);
  • financial penalties (Article 59 of the FSR);
  • imposition of a number of prohibitions and restrictions including prohibiting an authorized firm or approved individual from entering into certain specified transactions, requiring an authorized firm or approved individual to carry on business or conduct itself or himself in a specified manner, or prohibiting a person from performing a specified function, any function falling within a specified description or any function (Article 62 of Part 9 of the FSR);
  • obtaining injunctions (Article 63 of Part 9 of the FSR);
  • withdrawal of the license of a relevant person.

3.6.2 Recommendations and Comments

490. Domestic sector: The Qatari authorities are recommended to:

  • Set the record retention/recordkeeping requirement in primary or secondary legislation for financial institutions under the DSM and MEC.
  • Provide additional guidance to financial institutions under the QCB and DSM with specific instructions as to when the record retention/keeping requirement starts, that is, following the termination of an account or business relationship or longer if requested by a competent authority.
  • Require banks (i) to ensure that all originator information that accompanies a wire transfer is transmitted with the transfer by each intermediary and beneficiary financial institution in the payment chain; (ii) When technical limitations prevent full originator information accompanying a cross-border wire transfer from being transmitted with a related domestic wire transfer, to keep a record for five years all the information received from the ordering financial information.
  • Require banks to adopt effective risk-based procedures for identifying and handling wire transfers that are not accompanied by complete originator information. The lack of complete originator information may be considered a factor in assessing whether they are required to be reported to the financial intelligence unit or other competent authorities. In some cases, the beneficiary financial institution should consider restricting or even terminating its business relationship with financial institutions that fail to meet the SR.VII standard.
  • Establish a mechanism to monitor effectively the compliance of financial institutions with rules and regulations implementing SR.VII.
  • Ensure that sanctions (in line with R.17) also apply in relation to the obligations under SR.VII.

491. QFC: Under the QFC regulatory framework, there is no distinction between domestic and cross-border wire transfers; and there is no requirement for financial institutions to ensure that non-routine batched transactions are not batched where this would increase the risk of money laundering or terrorist financing. Although relevant persons within the QFC should monitor for and conduct enhanced scrutiny of suspicious activities including incoming fund transfers that do not contain complete originator information, including name, address, and account number or unique reference number, there are no explicit measures in place for beneficiary financial institutions to adopt effective risk-based procedures for identifying and handling wire transfers that are not accompanied by complete originator information. The system is too new to be tested because the QFC was recently established, and most of the firms established within the QFC are subsidiaries of foreign companies where most of the transfers are conducted by/through their respective holding/parent companies.

492. The QFCRA should enhance existing measures to require relevant persons to:

  • ensure that non-routine batched transactions are not batched where this would increase the risk of money laundering or terrorist financing; and
  • establish explicit measures to ensure that beneficiary financial institutions adopt an effective risk-based procedures for identifying and handling wire transfers that are not accompanied by complete originator information.

3.6.3 Compliance with Recommendation 10 and Special Recommendation VII

RatingSummary of factors underlying rating
R.10PC
  • Domestic sector: Record keeping requirement not established by primary or secondary legislation by DSM and MEC.
SR.VIINC
  • Lack of specific measures imposed by the QCB on financial institutions to address all the requirements of this recommendation.
  • Lack of requirements imposed by the QFCRA on relevant persons to ensure that beneficiary financial institutions adopt an effective risk-based procedures for identifying and handling wire transfers that are not accompanied by complete originator information.

3.7 Monitoring of Transactions and Relationships (R.11 & 21)

3.7.1 Description and Analysis

493. Special Attention to Complex, Unusual Large Transactions (c.11.1), Examination of Complex & Unusual Transactions (c.11.2), and Record-Keeping of Findings of Examination (c.11.3). Domestic sector: Paragraph 12 of the QCB Instructions requires the banking and financial institutions to pay special attention to all unusual, complex or large deals and transactions as well as to all kinds of “extraordinary deals”, which have neither visible financial targets nor legal purpose. “Extraordinary banking operations” 15 are defined under the first article of the instructions as major transactions and the banking and financial transactions that do not match the customer’s income, the nature of his activity, the pattern of his previous transactions with the bank or that are suspiciously repeated by the customer and also the transactions that do not have clear financial purposes or legitimate purposes. Paragraph 12 further requires the financial institutions to examine the background and purpose of these deals to record the results of the examination and to notify the FIU.

494. Paragraph 1.3 of the instructions requires banks to check any banking transaction that exceeds 100,000 Qatari Riyals in the various banking activities, whether in assignments of right, currency exchange, opening letters of credit, account deposits, any kind of investment, or other bank activities that can be used in money laundering. Also requires checking any other banking and financial transactions suspected to be used in terrorist financing, regardless of the amount.

495. Pursuant to paragraph 13 of the instructions, special attention must also be given when examining the business relations and transactions with companies and financial institutions from countries that do not or insufficiently restrict these instructions, particularly if no visible financial objectives exist for these transactions. It is also a requirement to examine and report to senior management of the banking and financial institutions the background and purpose of these deals. Paragraph 19.3 provides that banks should implement procedures, through stages, to determine whether financial and banking transactions are suspicious or non suspicious. Such stages are as follows: first stage - ordinary financial and banking transactions daily undertaken for bank’s customers; second stage - extraordinary transactions undertaken for the first time or frequently; and, third stage–when extraordinary operations are turned into suspicious transactions of money laundering or terrorism financing. This is done through gathering information and documents and preliminary analysis of the case by the compliance officer and his team. Paragraph 19.6 provides that banks should keep records for extraordinary transactions made for the first time or frequently and for the suspicious transactions, regardless of the decision taken concerning such operations. Authorities indicated that the records should be maintained at least for 15 years, which is in line with the recordkeeping requirements.

496. Paragraph 8.1 and 8.2 of the QCB Instructions address the detection of extraordinary financial or banking transactions and follow-up actions but in a confusing way: the header for all three sub-sections of Paragraph 8 is drafted in mandatory terms and applies to both banks and other financial institutions under the QCB’s supervision, but the measures listed in 8.1 are drafted in a way that would suggest that they are optional and only seem to apply to banks. More specifically, paragraph 8.1 provides that if extraordinary transactions are detected, the banks “may” ask the customer to complete a document and provide supported justifications for these extraordinary transactions in order to determine whether they may be linked to money laundering operations or terrorist financing. 16 Banks should obtain this information from the customer in the ordinary course of business and without letting the customer know the purpose of their enquiries. Under 8.2, the banks must notify the FIU “in case the customer does not respond to the bank”, but since the banks may choose not to investigate further on an extraordinary transaction, the reporting requirement may be vain.

497. Pursuant to paragraph 8.3, the banking and financial institutions must freeze the funds or other assets belonging to terrorists and to persons who finance terrorism and terrorism organizations in accordance with court judgements or instructions issued by the governor. However, as noted under Special Recommendation III, no further measures have been taken, neither by the courts nor by the QCB Governor, to implement this requirement, and the private sector was not informed of the names of persons whose funds and assets should be frozen in accordance with UNSCR 1267 and 1373.

498. Chapter Two, paragraph 5/1 of the QCB Instructions sets out a requirement to pay special attention to unusual transactions, such as large amount transactions, or regular small amounts of deposits with acceptable or obvious financial reason, or transactions that happen with other parties in countries where no efficient controls on combating money laundering and terrorism financing are in place. The QCB Instructions fall short of requiring financial institutions to keep findings available for competent authorities and auditors.

499. The requirements or measures in place established by the DSM and the MEC to require their respective financial institutions to: (i) pay special attention to all complex, unusual large transactions, or unusual patterns of transactions, that have no apparent or visible economic or lawful purpose; (ii) examine as far as possible the background and purpose of such transactions and to set forth their finding in writing; and (iii) keep such finding available for competent authorities and auditors for at least five years do not clearly and adequately address the recommendation as explained below.

500. There is an obligation under Decision No. 16/3 of the DSM for companies and brokerage firms to verify transactions that exceed QR. 100,000 or the equivalent in foreign currency to ensure that these transactions are not exploited in money laundering or financing of terrorism. Furthermore, it is not clear whether transactions exceeding the mentioned threshold are considered large, unusual large or complex and no guidance has been provided by the DSM as to how the process of verification should be conducted.

501. The MEC, under Circular 1 of 2007, Section 2.4 provides a vague and broad reference to giving special attention to the valuable and common insurance transactions and identifying their purposes. However, the Circular is not legally binding (and there is no further guidance that would clarify the text of the Circular).

502. QFC: Article 15 of the QFCRA AML Regulations provides that relevant persons must have in place policies, procedures, systems and controls that adequately take into account any money laundering risks and vulnerabilities of its products, services, and customers. It also provides that relevant persons must assess risks in relation to money laundering and perform enhanced due diligence investigation for higher-risk products, services, and customers having regard to guidance issued by the QFCRA. The QFCRA in its AML Rulebook Appendix A2.2 requires relevant persons to have effective “Know Your Customer” arrangements to provide the basis for recognizing unusual and suspicious transactions. The Rulebook further states that where there is a customer relationship, a suspicious transaction will often be one that is inconsistent with the customer’s known legitimate transactions, or with the normal business activities for that type of account or customer. Therefore, the key to recognizing “suspicions” is knowing enough about the customer and the customer’s normal expected activities to recognize when a transaction is abnormal.

503. The QFCRA Rulebook provides circumstances, by way of examples, that might give rise to suspicion or reasonable grounds for suspicion including:

  • a) Transactions which have no apparent purpose and which make no obvious economic sense;
  • b) Transactions requested by a customer without reasonable explanation, which are out of the ordinary range of services normally requested or are outside the experience of a relevant person in relation to a particular customer;
  • c) The size or pattern of transactions, without reasonable explanation, is out of line with any pattern that has previously emerged;
  • d) A customer refuses to provide the information requested without reasonable explanation;
  • e) A customer who has just entered into a customer relationship used the relationship for a single transaction or for only a very short period of time;
  • f) An extensive use of offshore accounts, companies or structures in circumstances where the customer’s economic needs do not support such requirements;
  • g) Unnecessary routing of funds through third party accounts; andh) Unusual transactions without an apparently profitable motive.

504. Article 13 of the QFCRA AML Regulations establishes the internal and external reporting requirements addressing unusual and suspicious transactions. Particularly, Article 13.7 requires that when the money laundering reporting officer (MLRO) receives an internal report on an unusual or suspicious transaction he/she must investigate the circumstances in relation to which the report was made, including where necessary accessing any relevant “Know Your Client” information; determine whether in accordance with the AML Law No.(28) of 2002 a corresponding external suspicious transaction report must be made to the FIU; if required, to make such report to the FIU. Article 13.8 requires the MLRO to document the steps taken to investigate the circumstance in relation to which an internal suspicious transaction report is made and where no external suspicious transaction report is made to the FIU, the reasons why no such report was made. All relevant details of any internal and external suspicious transaction report must be kept for at least six years from the date on which the report was made.

505. Although there are measures in place for relevant persons to pay attention to complex, unusual large transactions, or unusual patters of transactions with no apparent or visible economic or lawful purpose, there are no specific requirements to make available to the competent authorities and auditors such findings.

506. Special Attention to Countries Not Sufficiently Applying FATF Recommendations (c.21.1 & 21.1.1.) and Examinations of Transactions with no Apparent Economic or Visible Lawful Purpose from Countries Not Sufficiently Applying FATF Recommendations (c.21.2). Domestic sector: Article 13 of the QCB Instructions requires the banking and financial institutions to pay special attention when examining the business relations and transactions with companies and financial institutions from countries that apply no obligation to comply with the Recommendations particularly if no clear financial objectives are shown for these transactions. It also requires that the reasons and purposes of these deals be examined and reported to the senior management of the banking and financial institution. However, the current framework does not require banking and financial institutions to also consider countries that insufficiently apply the FATF Recommendations.

507. As far as advising about concerns with respect to weaknesses in the AML/CFT systems of other countries, Article 19.11 of the QCB Instructions provides that banking and financial institutions should use all possible means for supervising extraordinary transactions and deals, including supervisory reports, list of non-cooperative countries, list of persons and entities pursued internationally, suspect’s investigation programs, etc. Article 19.12 further provides that banking and financial institutions should monitor the international recent developments of the various types of money laundering and terrorism financing and measures of combating, particularly related recommendations and instructions issued by the FATF, the IMF, the IBRD, Basel committee, and other international organizations.

508. The DSM and MEC do not have measures in place to ensure that financial institutions are advised of concerns about weaknesses in the AML/CFT systems of other countries. Although financial institutions are required to examine the background and purpose of the business relations and transactions, there is no explicit requirement to make findings available to competent authorities and auditors. DSM officials indicated that no measures or requirements have been established for brokerage houses because currently all orders/transactions, taking place in the domestic market, with Qatari citizens have to be pre-funded, that is, the funds have to be deposited in a bank for the benefit of the brokerage house. For investors placing orders in the international markets, these orders and payments have to go through another bank, in this case HSBC Global Custodian services. For this reason DSM officials and brokerage houses rely on banks to pay attention to business relationships and transactions with persons from or in countries which do not or insufficiently apply the FATF standard.

509. Under Section 6 (Supervisory Measures and Training) of Circular No. 1 of 2007 issued by the MEC, insurance companies are “required” to set policies and plans to combat money laundering and the financing of terrorism including giving particular attention to the insurance transactions concluded with persons or companies in countries that do not apply or insufficiently apply the Recommendations. In such cases, the purpose of those operations should be examined and all necessary measures should be taken to verify the presence of the insurance premises and determine the insurance value. Moreover, the branches of the companies should observe such instructions. The domestic and foreign branches of companies should equally observe those instructions. As mentioned on previous occasions, however, the Circular is not legally binding.

510. There are no legal or regulatory requirements for financial institutions under the supervision of the DSM to give special attention to business relationships and transactions with persons from or in countries which do not or insufficiently apply the FATF Recommendations.

511. QFC: Under Article 14 of the QFCRA AML Regulations, a relevant person is required to have arrangements in place to ensure that it obtains and makes proper use of any relevant findings issued by the government (or any governmental departments) of the State of Qatar; the QCB or the National Anti Money Laundering Committee or the FIU; FATF; the QFC Authority; the QFC Regulatory Authority; or the Gulf Co-operation Council. The findings of a body, as previously listed, are “relevant findings” if they include a finding or other conclusion that arrangements for restraining money laundering in a particular country or jurisdiction are materially deficient in comparison with one or more of the relevant internationally accepted standards, including any recommendations published by the FATF, required of or recommended to countries and jurisdictions; or contain a finding or other conclusion concerning named persons, groups, organizations, or entities or any other body where a suspicion of money laundering or terrorist financing exists.

512. Rule 3.15.1 of the QFCRA Rulebook requires relevant persons to pay special attention to any transactions or business relationships with persons, including beneficial owners, located in such countries or jurisdictions. Rule 3.15.2 further states that a relevant person considering transactions or business relationships with persons located in countries or jurisdictions that have been identified as deficient, or against which any authority in the state has outstanding advisory notices, must be aware of the background against which the assessments, or the specific recommendations, have been made. These circumstances should be taken into account with respect to introduced business from such jurisdictions, and when receiving payments from existing customers or with respect to inter-bank transactions from correspondent banking Clients.

513. Further guidance in the QFCRA AML Rulebook provides, under 3.15.3, that transactions with counterparties located in countries or jurisdictions which have been relieved from special scrutiny, for example, taken off the FATF list of NCCTs, may nevertheless require attention which is higher than normal. In order to assist relevant persons, the Regulatory Authority may, from time to time, publish Qatar, FATF or other findings. Given the recent establishment of the QFC, the Regulatory Authority has not yet published any guidance on countries or jurisdictions relieved from special scrutiny. However, the Regulatory Authority expects relevant persons to take their own steps in acquiring relevant information from various available sources.

514. The QFCRA guidance specifically mentions that relevant persons should be proactive in obtaining and appropriately using available national and international information, for example suspect lists or databases from credible public or private sources with regard to money laundering and terrorist financing (QFC Rulebook, paragraph 3.15.3.3). The QFCRA has arrangements with the National Anti Terrorism Committee. In accordance with these arrangements, the QFCRA receives the lists published by the United Nations Security Council pursuant to resolutions and distributes these lists to relevant QFC firms. It also indicates that the QFCRA encourages relevant persons to perform checks against their customer databases and records for any names appearing on such lists and databases as well as to monitor transactions accordingly.

515. The QFCRA encourages under QFC Rulebook, paragraph 3.15.3.4, relevant persons to assess which countries carry the highest risks and conduct an analysis of transactions from countries or jurisdictions known to be a source of terrorist financing.

516. In addition, the QFCRA may require relevant persons to take any special measures it may prescribe with respect to certain types of transactions or accounts where the Regulatory Authority has reasons to believe that any of the above may pose a money laundering risk to the QFC.

517. Although measures are in place to require financial institutions within the QFC to give special attention to business relationships and transactions with persons from or in countries which do not or insufficiently apply the FATF Recommendations, there are no measures to explicitly require financial institutions to examine, as far as possible, the background and purpose of transactions with no apparent economic or visible lawful purpose, and to maintain written findings available to the competent authorities.

518. Ability to Apply Counter Measures with Regard to Countries Not Sufficiently Applying FATF Recommendations (c.21.3). There is no indication that the existing AML/CFT framework provide the Qatari supervision and control authorities, i.e., QCB, DSM, MEC, and QFCRA with the authority to apply counter-measures when a country continues not to apply or insufficiently applies the FATF Recommendations.

3.7.2 Recommendations and Comments

519. There are major shortcomings in the existing AML/CFT regulatory framework with respect to requiring financial institutions to pay special attention to all complex, unusual large transactions, and all unusual patterns of transactions which have no apparent economic or visible lawful purpose does not provide for appropriate measures.

520. Domestic sector:

  • The QCB is recommended to establish a clear requirement for banking and financial institutions to make the findings on the examination of complex, unusual large transactions or unusual patterns of transactions also available to auditors.
  • The DSM and the MEC are recommended to establish formal requirements for financial institutions to: (i) pay special attention to all complex, unusual large transactions, or unusual patterns of transactions, that have no apparent or visible economic or lawful purpose; (ii) examine as far as possible the background and purpose of such transactions and to set forth their finding in writing; and (iii) keep such finding available for competent authorities and auditors for at least five years.
  • The DSM is also recommended to provide guidance indicating whether transactions exceeding QR. 100,000 or the equivalent in foreign currency should be considered large, unusual large or complex.

521. QFC: The QFC authorities are recommended to establish a specific requirement for relevant persons to make the findings on the examination of complex, unusual large transactions or unusual patters of transactions available to the competent authorities and auditors.

522. With respect to Recommendation 21, the DSM and the MEC are recommended to establish measures to:

  • ensure that financial institutions are advised of concerns about weaknesses in the AML/CFT systems of other countries; and
  • require them to make findings available to competent authorities and auditors.

523. The DSM should establish a regulatory obligation on financial institutions to give special attention to business relationships and transactions with persons from or in countries which do not or insufficiently apply the FATF Recommendations.

524. The QCB, the DSM, the MEC and the QFCRA should have the authority to apply counter-measures to address instances where a country continues not to apply or insufficiently applies the FATF Recommendations.

3.7.3 Compliance with Recommendations 11 and 21

RatingSummary of factors underlying rating
R.11PC
  • Lack of requirements imposed by the QCB to make the findings of examinations of complex and unusual transactions available to auditors.
  • Lack of requirements imposed by the DSM and the MEC on financial institutions to pay special attention to all unusual large transactions or unusual patterns of transactions that have no apparent or visible economic or lawful purpose; to examine as far as possible the background and purpose of such transaction and set forth their findings in writing; and to maintain them for at least five years.
  • Lack of specific requirements imposed by the QFCRA to make the findings of examinations of complex and unusual transactions available to competent authorities and auditors.
R.21NC
  • Lack of requirements imposed by the DSM and the MEC on financial institutions to pay special attention to business relationships and transactions with persons from or in countries which do not or insufficiently apply the FATF Recommendations.
  • Lack of apparent authority at the QCB, the DSM, the MEC and the QFCRA to apply counter-measures to address instances where a country continues not to apply or insufficiently applies the FATF Recommendations.

3.8 Suspicious transaction reports and other reporting (R.13–14, 19, 25 & SR.IV)

3.8.1 Description and Analysis

525. Requirement to Make STRs on ML and TF to FIU (c.13.1, 13.2, 13.3 & IV.1). Article 6 of the AML Law establishes the obligation for financial institutions to “provide the competent entity with a detailed report on transactions [they carry] out whose nature or purpose is suspicious.[If] the competent entity finds any reason to believe that the transactions (…) constitute a money laundering crime, it shall refer papers and documents related to the transaction to the coordinator [of the NAMLC]”. The law does not address reporting of suspicions of terrorist financing. The deputy Governor of the QCB, acting in his capacity as chairman of the NAMLC established the Qatari FIU as a central independent unit located in the QCB, through Administrative Order No. 1/2004 of August 31, 2004 (See also write-up under Recommendation 26).

526. Domestic sector: In addition to Article 6 of the AML Law, the QCB specifically requires the financial institutions under its supervision to notify the FIU of any suspicious transaction, including attempted, which it defined as “extraordinary banking and financial transactions which the bank suspects or has justified reason to suspect that their money is linked or related to money laundering, financing of terrorism, terrorist actions, or for terrorism organizations” (Article 1 and 10 of the instructions).

527. The instructions define “suspicious transactions” as extraordinary banking and financial transactions, including attempted, which the bank suspects or has justified reason to suspect that their money is linked or related to money laundering, financing of terrorism, terrorist actions, or for terrorism organizations. “Extraordinary banking operations” are defined as major transactions and the banking and financial transactions that do not match the customer’s income, the nature of his activity, the patterns of his previous transactions within the bank or that are suspiciously repeated by the customer and also the transactions that do not have clear financial purposes or legitimate purposes.

528. Sections 10 and 11 of the Instructions provide that if the bank discovers that any suspicious operation has taken place, the compliance office should notify the FIU immediately to take the necessary procedures using a specific form. In any case of failure to report, alert or assist the persons related to money laundering, or terrorism financing transactions, the employee may be subjected to legal and financial consequences.

529. The DSM also addressed the reporting of suspicious transactions in its Decision No. (16/3). Article 9 of the Decision provides that on discovery of any abnormal financial transaction, the company or the brokerage firm may, for the purpose of proving the suspicion that these transactions may relate to money laundering or financing of terrorism, require the customer to complete the documents and submit the justifications for the abnormal transactions provided that these procedures shall be applied within the context of the orderliness and usual procedures without drawing the customer’s attention to the fact that such procedures relate to the combating of money laundering and financing of terrorism. However, Article 9 would be far too vague to be useful in practice.

530. The MEC Circular also calls for some form of reporting, but, it does not rest on a sound legal basis and the measures that it sets out are not enforceable. In short, it provides that the FIU should be notified on an urgent basis of any suspect transaction and the suspicious transaction forms should be delivered to the Unit by hand, or sent by fax or e-mail or any appropriate means and should be deemed confidential. The MEC circular would not be effective in practice because it does not provide sufficient coverage of the reporting system.

531. QFC: Article 13(1) of the QFC AML Regulations requires a relevant person to have appropriate arrangements in place to ensure that whenever any employee, acting in the ordinary course of his employment, either knows or suspects; or has reasonable grounds for knowing or suspecting that a person is engaged in money laundering or conduct relating to the financing of terrorism, that employee must promptly make a internal STR to the relevant person’s Money Laundering Reporting Officer (MLRO).

532. It is interesting to note that the QFC provides, in its Regulations, a definition of money laundering which is more extensive than that provided in the AML Law. The fact that it is set in secondary legislation does not enable it to take precedent on the money laundering offence as set out in the primary legislation, but it nevertheless sets more stringent requirements on the QFC firms as far as the reporting requirements are concerned.

533. Article 19 of the QFC AML Regulations provides the following definition for Money laundering:

  • “The following conduct when committed intentionally:
    • a) any act which constitutes an offence under Article 2 of Law (28) of 2002 on Anti Money Laundering (as amended by virtue of Decree-Law No. (21) of 2003 - O.G. 11/2003);
    • b) any act which involves Criminal Property and which act constitutes an offense under the Articles of Law No. (11) of 2004 (Penal Code);
    • c) any act which finances the commission of an offence under the Articles of Law No. (3) of 2004 (Combating Terrorism);
    • d) the conversion or transfer of Property, knowing that such property is derived from Criminal Conduct or from an act of participation in such conduct, for the purpose of concealing or disguising the illicit origin of the Property or of assisting any person who is involved in the commission of such conduct to evade the legal consequences of his action;
    • e) the concealment or disguise of the true nature, source, location, disposition, movement, rights with respect to, or ownership of Property, knowing that such Property is derived from Criminal Conduct or from an act of participation in such conduct;
    • f) the acquisition, possession or use of Property, knowing, at the time of receipt, that such Property was derived from Criminal Conduct or from an act of participation in such conduct;
    • g) the provision or collection of lawful Property, by any means, with the intention that it should be used or in the knowledge that it is to be used, in full or in part, for terrorism;
    • h) any act which constitutes participation in, association with or conspiracy to commit, attempts or incitement to commit an offence specified in paragraph (a), (b) or (c) or an act specified in paragraph (d), (e), (f) or (g); or
    • i) any act which constitutes aiding, abetting, facilitating, counselling or procuring the commission of an offence specified in paragraph (a), (b) or (c) or an act specified in paragraph (d), (e), (f) or (g).”
  • Criminal Property is defined as:
    • (1) “Property that constitutes a person’s benefit from criminal conduct or represents such a benefit (in whole or part and whether directly or indirectly) if the alleged offender knows or suspects that it constitutes or represents such a benefit; and
    • (2) for these purposes it is immaterial:
      • (a) who carried out the conduct;
      • (b) who benefited from it; and
      • (c) when the conduct occurred.”

534. Article 13(2) of the QFC AML Regulations requires a relevant person to have policies and procedures in place to ensure that disciplinary action can be taken against any employee who fails to make such a report. Article 13(7) of the QFC AML Regulations provides that when a relevant person’s MLRO receives an internal STR, he must without delay, investigate the circumstances in relation to which the report was made, including where necessary accessing any relevant “Know Your Client” information; determine whether in accordance with the AML Law, a corresponding external STR must be made to the FIU; if required, make such an external report to the FIU; and where an external report is made to the FIU, notify the Regulatory Authority that such a report has been made and include general details of the report.

535. Although there are explicit requirements for reporting suspicious transactions, the DSM and the MEC have not yet established the obligation or requirement for financial institutions to also report attempted transactions to the FIU.

536. STRs Related to Terrorism and its Financing (c.IV.1). As mentioned above, there is no obligation imposed by primary or secondary legislation to report suspicious transactions related or linked to terrorist financing.

537. Domestic sector: QCB nevertheless addressed terrorist financing in its Instructions, notably in the reporting requirements set out under Section 5, 10 and 11 (described above) and in the definition of “suspicious transactions” (also mentioned above). “Terrorism financing” is defined as using any funds or other assets in financing terrorism activities or terrorist organizations.

538. Article 9 of the DSM Decision No. (16/3) of 2005 described above also refers to the financing of terrorism. The comments made under criteria 13.1 above also apply under criteria IV.1.

539. QFC: The reporting requirement set out in Article 13 (1) of the QFC AML Regulations and described above also applies to suspicions of terrorist financing (which remains undefined).

540. STRs Reported Regardless of whether they involve tax matters (c.13.4 & IV.2). There is no indication, neither in the domestic sector nor in the QFC, that would indicate that the reporting requirements are limited when the transactions are also thought to involve tax matters.

541. Additional element (c.13.5). Domestic sector: QCB instructions, DSM decision, MEC circular, and QFC regulations require financial institutions to notify the FIU of any suspicious transaction, including attempted which could be linked or related to money laundering. However, the circular does not rest on a sound legal basis and measures set out are not enforceable. QFC:

542. Protection for Making STRs (c.14.1). Domestic sector: Article 5 of the AML Law No. (28) of 2002 provides that in the enforcement of this Law, provisions related to the secrecy of banking transactions shall not apply to the chairman, members of the board of directors and employees of the financial institution, unless where it is proved that the disclosure was meant to harm the owner of the transaction.

543. Under Section 5/4 of the QCB Instructions banking and financial institutions or a reporting employee shall bear no responsibility after reporting on suspicious transactions, whether the suspicions were confirmed or not, as long as it was a bona fide reporting.

544. Article 9 of the DSM Decision No. (16/3) 2005 provides that the entities subject to this reporting provision of documentation and information related to a suspicious transaction should not be deemed to be contradictory to the confidentiality laws and should not result in any responsibility on the notifying entity or its employees.

545. MEC’s Circular No.1 of 2007, Second Section, paragraph 4 provides, in non-binding terms, that reporting of suspicious transactions is not regarded as a breach of the secrecy of the transactions and it should not entail any kind of liability on the company or its employees.

546. QFC: Article 13(11) of the QFCRA AML Regulations establishes that the MLRO or other employee of a relevant person is not liable to proceedings; subject to liability; nor in breach of any duty merely by reason of the making of an external STR to the FIU if such STR is made in good faith. Authorized firms are also required to ensure that their Employees are aware of and sensitive to these issues when considering the “Know Your Customer” process.

547. Prohibition Against Tipping-Off (c.14.2). Article 4 of the AML Law No. 28 of 2002 establishes the obligation for employees of the financial institution not to inform their customers about the actions taken against them related to combating money laundering. Such employees should not disclose any information with the intention of influencing money laundering investigations. The violation of the prohibition is sanctioned by imprisonment and a fine (see write-up under Rec. 17).

548. Domestic sector: Under Section 6 of the Instructions, the QCB establishes the obligation for all banking and financial institutions, their managers, employees, and staff not to warn their customers when any of their activities raises a suspicion.

549. Article 9 of the DSM Decision No. (16/3) 2005 provides that the entities that are subject to the provisions of this Decision shall not warn their customers on their suspected transactions but, should subject these transactions to more verification and precautionary measures.

550. Paragraph 5 of MEC’s Circular No. 1 of 2007 provides that the company and its employees should not warn the customer about any suspicion on the transactions but, as mentioned above, this decision does not rely on a sound legal basis and is, therefore, neither binding nor enforceable.

551. QFC: Section 3.14 of the QFCRA AML Rulebook provides that where a relevant person reasonably believes that performing the “Know Your Customer” process will tip-off a customer or potential customer, it may choose not to pursue that process and must instead file an STR. Further guidance in the QFCRA AML Rulebook provides that relevant persons are reminded that in accordance with Article 4 of the AML Law, employees at a financial establishment are prohibited from informing their customers of the measures taken against them to combat money laundering. They are also prohibited from disclosing any information with the intention of harming a relevant criminal investigation.

552. Additional element (c.14.3): Measures in place do not address the requirements for ensuring that the names and personal details of staff of financial institutions that make STRs are kept confidential by the FIU.

553. Consideration of Reporting of Currency Transactions Above a Threshold (c.19.1). The Qatari authorities, mainly the FIU, sent a letter (study) to NAMLC, through the Vice Governor of the QCB addressing the issue of considering the establishment of a currency transaction reporting system. The letter (study) presents three issues: 1) the fact that Qatar has a cash-based society which in the views of the FIU establishing such system will be difficult; 2) the additional burden that such system would put on the FIU and its limited resources; and 3) the current measures imposed by the QCB on financial institutions to limit cash transactions. The spirit of the letter (study) considers in a limited way the disadvantages of the cash transaction reporting system and overlooks the advantages. In light of this, the assessors encourage the authorities to perform a more in-depth study as to whether it would be feasible and useful to establish such system.

554. Domestic sector: Instead, the QCB has established internal cash recording requirements under Section 1/3 of the Instructions for banking and financial institutions. The requirements imposed the obligation on banking and financial instructions to only check and record any banking transaction that exceeds QR. 100,000 in the various activities, whether in assignments of right, currency exchange, opening letters of credit, account deposits, any kind of investment, or other bank activities that could be used in money laundering. All institutions are also required to check any other banking and financial transactions, suspected or linked to terrorism financing regardless of the amount. However, the current requirement does not extend to reporting the transaction (s) to the QCB.

555. Meetings with officials from the QCB Supervision Department responsible for banking, exchange houses, investment companies and finance companies revealed that although the internal cash recording requirement imposed by the QCB Instructions is set at QR. 100,000 the internal recording requirement threshold for exchange houses was recently lowered, by way of a Circular issued by the QCB, to currency transactions that exceeds QR. 35,000. A copy of the Circular was requested but the authorities did not provide. Therefore, the mission was not able to determine the reason (s) for reducing the threshold for exchange houses.

556. Further guidelines recommend all banks and financial institutions under the regulation and supervision of the QCB to establish a controlled internal reporting system capable of generating reports on current accounts movements and balances; assignment of right reports; movements and balances reports of the correspondents’ accounts; large transaction reports; and reports of transactions in small amounts. The large transactions report should contain all transactions that exceed QR.100,000. Banks and financial institutions are also recommended to pay special attention to these large transactions. The reports should assist the banks and financial institutions in determining the accounts related to such transactions and the source of the large amounts.

557. The cash recording requirements do not impose an obligation on banking and financial institutions to report these transactions to the QCB but only to maintain the information. The financial institutions and QCB supervision department officials indicated that compliance with the cash recording requirements is verified through periodic on-site inspections.

558. A similar cash reporting requirement is in place under the DSM Decision No. (16/3) of 2005. Article 9 establishes that companies and brokerage firms that receive cash transactions in an amount that does not exceed QR.30,000 or the equivalent in foreign currency need to notify the Market on a prescribed form issued by the DSM. The companies and brokerage firms are also required to verify the identity of the customer by reference to an official document which in most cases is the ID card. However, a separate cash recording requirement in the Decision requires companies and brokerage firms to verify and record in their books and records transactions above QR.100,000. Neither the Market Committee authorities nor the brokerage firms were not able to explain the purpose for having two different threshold requirements.

559. There is no cash recording or reporting requirement in place for insurance companies.

560. Although banks and financial institutions seem to be complying with the recording requirement and in some instances reporting cash transactions to their respective supervision and control authorities, this information is not shared with the FIU to complement the FIU’s financial intelligence analysis, trends, and typologies exercises. In the case of securities firms, DSM officials indicated that the current practice is for institutions to forward these reports directly to the FIU.

561. QFC: QFCRA officials indicated that until a national central agency is created and the obligation to report is established by law or regulation, the firms under its supervision and regulation will not be required to report cash transactions.

562. Additional elements (c.19.2 and c.19.3): The reporting of currency transactions above a threshold is currently under consideration by the Qatari authorities.

563. Guidelines for Financial Institutions with respect to STR and other reporting (c. 25.1). Domestic sector: In Chapter 2 of its Instructions, the QCB provides a list of guidelines designed to assist the banking and financial institutions (exchange houses, investment companies and finance companies) in detecting and monitoring any suspicious behavior of their customers. The QCB also requires that all departments of the banking and financial institutions use the guidelines and any future amendments to enhance their employees’ the knowledge of AML/CFT. The guidelines give an overview of the money laundering stages. They also provide a list of transactions that may be deemed suspicious and that are classified per category ranging from “money laundering using cash”; “money laundering using banking accounts”; “money laundering using financial institutions related to investment activities”; and “money laundering through international activities”.

564. Instruction 19/12 of the QCB requires banking and financial institutions to monitor international recent developments on money laundering and terrorism financing taking place and measures for combating them, particularly those related to recommendations and instructions issued by the FATF, the IMF, the International Bank for Reconstruction and Development (IBRD), the Basel Committee, and other international organizations.

565. No guidelines have been established by the DSM or the MEC for securities and insurance firms, respectively.

566. QFC: The QFCRA has supplemented the AML Regulations with the AML Rulebook. The AML Rulebook is designed to extend and clarify the provisions of the AML Regulations and to provide, where relevant, detailed regulatory guidance to relevant persons to assist them in complying with the AML Law, the AML Regulations, the AML Rulebook and the specific Anti-Money Laundering requirements of the QFCRA.

567. QFCRA Rule A.2.2 provides relevant persons with circumstances that might give rise to suspicion or reasonable grounds, including:

  • Transactions which have no apparent purpose and which make no obvious economic sense;
  • Transactions requested by a customer without reasonable explanation, which are out of the ordinary range of services normally requested or are outside the experience of a relevant person in relation to a particular customer;
  • The size and pattern of transactions, without reasonable explanation, is out of line with any pattern that has previously emerged;
  • A customer refuses to provide the information requested without reasonable explanation;
  • A customer who has just entered into a customer relationship used the relationship for a single transaction or for only a very short period of time;
  • An extensive use of offshore accounts, companies or structures in circumstances where the customer’s economic needs do not support such requirements;
  • Unnecessary routing of funds through third party accounts; or
  • Unusual transactions without an apparent profitable motive.

568. Furthermore, Article 14 of the QFCRA AML Regulations requires relevant persons to have arrangements in place to ensure that they obtain and make proper use of any relevant findings issued by the government of the state or any government departments in the state; the Central Bank of Qatar or the NAMLC or the FIU; the FATF; the QFC Authority; QFC Regulatory Authority; or the Gulf-Cooperation Council.

569. Although the QFCRA provides guidelines to its relevant persons, the guidelines on money laundering and terrorist financing techniques and trends appear to be limited to those listed above.

570. QFCRA officials indicated that since the QFC became operational no suspicious transaction report has been reported to the FIU.

571. Feedback to Financial Institutions with respect to STR and other reporting (c.25.2). With respect to feedback received from the competent authorities (i.e., QCB, DSM, MEC, and QFCRA), private sector stakeholders indicated that the only communication between the FIU and their respective institutions takes place when a STR is submitted to the FIU and receipt of the STR is acknowledged. Feedback also takes place during periodic meetings hosted by the FIU.

3.8.2 Recommendations and Comments

572. The current requirement set out in the AML Law to report transactions that may be linked to money laundering activities is too vague with respect to the DSM and MEC to be effective. The fact that the money laundering offence covers only a few predicate offences further limits the scope of the reporting requirement. The fact that there is no reporting requirement set out in primary or secondary legislation with respect to terrorist financing is a major shortcoming in the Qatari framework.

573. Authorities are recommended to:

  • Establish, in primary or secondary legislation, the requirement for all financial institutions to report to the FIU transactions, including attempted transactions, when a financial institution suspects or has reasonable grounds to suspect that the funds are the proceeds of a criminal activity, or are related or linked to terrorist financing, terrorist acts or terrorist organisations or those who finance terrorism.
  • Ensure the protection of financial institutions under the supervision of the DSM and MEC, and their staff from liability for filing STR and prohibit “tipping off” in the insurance sector.
  • Consider re-assessing the study conducted with respect to Rec. 19 to provide for a more comprehensive analysis and details as to how the decision to establish or not the cash reporting system was achieved.
  • Ensure that competent authorities, and particularly the FIU, provide guidance to assist financial institutions on AML/CFT issues covered under the FATF recommendations, including, at a minimum. a description of ML and FT techniques and methods; and any additional measures that these institutions could take to ensure that their AML/CFT procedures are effective.
  • Establish communication standards and a mechanism for providing feedback to reporting institutions including general and specific or case-by-case feedback.
  • Consider reviewing the guidance provided by the FATF Best Practice Guidelines on Providing Feedback to Reporting Financial Institutions and Other Persons.

3.8.3 Compliance with Recommendations 13, 14, 19 and 25 (criteria 25.2), and Special Recommendation IV

RatingSummary of factors underlying rating
R.13PC
  • Vague requirement to report transactions is to vague with respect to the DSM and MEC and limited scope of reporting in light of the limited list of predicate offenses.
  • Obligation to report transactions linked to terrorist financing, terrorist acts or organizations or those who finance terrorism not established by primary or secondary legislation.
  • Obligation to report transactions, including attempted transactions, not established by primary or secondary legislation.
  • Lack of requirement to report regardless of whether transactions are thought to involve tax matters.
R.14LC
  • Lack of legal basis to support protection from STR reporting and tipping off in the insurance sector.
R.19C
R.25PC
  • Lack of guidelines established by the DSM and the MEC for the securities and insurance sectors, respectively.
  • Lack of adequate and appropriate feedback from competent authorities.
  • Limited guidelines on AML/CFT issues provided by the QFCRA to relevant persons.
SR.IVNC
  • Requirement to report suspicious transactions related or linked to terrorist financing not imposed by primary or secondary legislation.

3.9 Internal controls, compliance, audit and foreign branches (R.15 & 22)

574. Establish and Maintain Internal Controls and Independent Audit to Prevent ML and TF (c.15.1, 15.1.1, 15.1.2 and 15.2) and Ongoing Employee Training on AML/CFT Matters (c.15.3). Domestic sector: Paragraph 5 of the QCB AML/CFT Instructions requires banking and financial institutions to adopt programs to combat money laundering and financing of terrorism including developing and applying internal control policies and systems; appointing qualified employees at the senior management levels; and arranging continuous training programs for the employees and the staff to inform them of the latest issues regarding money laundering and the financing of terrorism and other suspicious operations that will improve their ability to recognize such operations and their types and knowing how to confront them.

575. In addition, Paragraph 19 of the QCB Instructions requires that in completion of the policies and systems for combating money laundering and terrorism financing which should also include measures and supervisory procedures designed to protect against economic crimes and suspicious operations, all banks should comply with the following:

  • Setting general strategy for combating money laundering and terrorism financing, based on the set of policies which must be applied in that field, provided that it is issued in both languages, Arabic and English.
  • Setting a manual for the executive procedures that all the bank’s departments and branches must comply with.
  • Implementing stage procedures to manage financial and banking operations and classifying them into suspicious and non-suspicious ones, this includes the following stages: (i) first stage: includes ordinary financial and banking operations implemented daily for bank’s customers; (ii) second stage: includes extraordinary operations which happen either for the first time or repeatedly (iii) third stage: the stage in which the extraordinary operations are turned into suspicious operations of money laundering or terrorism financing. This is achieved by gathering information and documents and making preliminary analysis for the case by compliance officer and his team.
  • Keeping an integral database of customer accounts and their banking dealings through using computer and through the original documents and papers.
  • Hiring a compliance officer to combat money laundering and financing terrorism together with assigning a specialized team to help the officer in this task.
  • Developing training programs in the field of combating money laundering and terrorism financing, together with extending the scope of participation of bank’s personnel and officials.
  • Setting a program for upgrading customer identities, papers and documents.
  • Setting a quick and direct mechanism for enabling the compliance officer to notify/report suspicious operations.
  • Using all possible means for supervising extraordinary operations and deals (supervisory reports, lists of non cooperative countries, lists of persons and bodies pursued internationally, program for identifying suspects).
  • Keeping records of other suspicious operations (such as forgery, falsification, fraud and others).
  • Implementing measures for combating money laundering and terrorism financing during and after implementing the banking transactions in a manner consistent with the customers’ risk profile.

576. In addition, Chapter 7, Section 10 of the QCB Instructions provides additional guidance to financial institutions when designating the compliance officer position, as well as, the board committee that is responsible for providing oversight of this function. Section 10.2 of this Chapter grants the compliance officer with the necessary independence and access right to all areas of the institution and to the information they may hold. The compliance officer is also required to comply with the laws and instructions, file reports on deficiencies and corrective actions, serve as the point of contact for matters dealing with compliance, and liaise with the QCB supervision department regarding inquiries on compliance issues and supervision requirements.

577. The DSM Decision 16/3 for 2005 also addresses the need for AML/CFT programs. Article 9 calls on all entities to have programs for combating money laundering and the financing of terrorism that include development and application of internal supervisory systems; the appointment of qualified personnel at the administration level; and organization of continuous training programs for updating the staff of the new developments in the field of money laundering and the financing of terrorism including suspect transactions with a view to enhancing their capacity to detect, report, and notify these transactions. The same Article also requires that companies and brokerage firms undertake to appoint liaison officers for the notification of the offences of money laundering and financing of terrorism to the FIU and sending copies of the STR to the liaison officers of the Market. Such liaison officers shall have experience of the national legislation and other rules and directives concerning money laundering.

578. Circular No. (1) of 2007 issued by the MEC is not legally binding but nevertheless provides useful elements as follows: Section 3 calls on all insurance companies operating in the State of Qatar to set policies and plans to combat money laundering and the financing of terrorism, including establishment of internal supervisory measures and controls; organization of training sessions for the employees; appointment of a follow-up officer charged mainly with the verification of the implementation of those policies and plans within the company and its different departments and branches; reporting suspicious transactions and in the event where any suspicious transaction is identified, the follow-up officer at the company should notify the FIU affiliated to the Qatar National Anti Money Laundering Committee at the QCB immediately to take necessary measures.

579. The QCB has issued enforceable measures, through its instructions, to banking and financial institutions under its supervision. The QCB instructions set the general requirements for banking and financial institutions to establish and maintain internal procedures, policies, and controls. However, there are some marked inconsistencies with respect to the content and scope of details that banking and financial institutions must comply including adequate procedures, policies and controls for customer due diligence, record retention, detection of unusual and suspicious transactions and the reporting obligation.

580. Banking and financial institutions under the supervision of the QCB are also required to have an audit function in place and the internal auditor is required to review the activities of the compliance officer. In many instances, the internal audit function has been outsourced to local accounting/auditing firms. There are procedures in place for screening and approving individuals, but these procedures are applied by the QCB, when approving senior management candidates within the institution, but these do not extend to all other employees. In addition, there is no clear requirement for financial institutions to have similar screening procedures for hiring employees. Under Chapter 2, Second General Guidelines section of the QCB Instructions, provides that as part of his job, the banking and financial institutions’ external auditor has to review, audit and implement AML/CFT instructions and to ensure the appropriateness of bank’s policies and efficiency of the internal control system. The results of his auditing must be stated in the management letter presented to the management and to QCB. Within his regular job as an auditor, he has to notify the FIU of any suspicious transactions related to money laundering or financing of terrorism. The auditor should be familiar with the management procedures and whether they are appropriate or not. In such case he has to contact the competent authority immediately. However, the mission was informed that the work currently performed by these auditors/auditing firms does not include an assessment of the banking and financial institutions’ adequacy of internal control systems and policies with respect to AML/CFT. As such, the requirements do not fully address the obligation on banking and financial institutions to maintain an adequately resourced and independent audit function (there requirement for internal audit is lacking) to test compliance with the procedures, policies and controls; and to put in place screening procedures to ensure high standards when hiring employees.

581. The DSM Decision addresses many of the elements of the essential criteria; however, it falls short by not having requirements/measures in place for institutions to: 1) grant timely and unrestricted access, to the compliance officer and his/her staff, to customer identification data and other CDD information; and 2) maintain an adequately resourced and independent audit function to test compliance with the law, decisions, and other enforcement measures.

582. The MEC’s Circular No. 91) of 2007 does not seem to have the legal basis for requiring financial institutions to establish and maintain internal policies and controls to prevent ML and FT. Therefore, the measures listed in the MEC Circular cannot constitute “other enforceable means” for the purposes of this assessment. The only enforceable AML/CFT requirements are set out in the AML Law (as amended in 2003), the QCB 2006 AML/CFT Instructions, and the DMS 2005 Decision (16/3).

583. QFC: Article 6 of the QFCRA AML Regulations requires that a relevant person must: (1) establish and maintain effective anti money laundering policies, procedures, systems and controls to prevent opportunities for money laundering in relation to the relevant person and its activities; (2) set up and operate arrangements, including the appointment of an Money Laundering Reporting Officer (MLRO) in accordance with the responsibilities and duties of the MLRO which are designed to ensure that it is able to comply and does comply with the provisions of the regulations; (3) take reasonable steps to ensure that its employees comply with the relevant requirements of its anti money laundering policies, procedures, systems and controls; (4) review the effectiveness of its anti money laundering policies, procedures, systems and controls at least annually; and (5) ensure that its anti money laundering policies, procedures, systems and controls apply to any branch or subsidiary operating in another jurisdiction. If another jurisdiction’s laws or regulations prevent or inhibit a relevant person from complying with the AML Law or with the regulations, the relevant person must promptly inform the QFCRA in writing. However, as the QFC is still relatively new, the effectiveness of the general AML compliance requirements, including policies and programs are yet to be tested.

584. Article 9 of the QFCRA AML Regulations sets out the customer identification requirements to which a relevant person must adhere. Article 10 of the QFCRA AML Regulations sets out the documents retention and record policy with which a relevant person is expected to comply. Article 13 of the QFC AML Regulations sets out the internal and external reporting requirements for reporting suspicious transactions with which a relevant person must comply. Article 17 of the QFC AML Regulations requires the relevant person to have arrangements to ensure that all employees receive training and are aware of the laws and regulations in addition to other matters like the relevant person’s AML policies, procedures, systems and controls.

585. Article 6(2) of the QFC AML Regulations requires that a relevant person must set up and operate arrangements including the appointment of a MLRO. Article 8 of the QFC AML Regulations further requires that a relevant person must appoint an individual to act as its MLRO and operate arrangements that are designed to ensure that it and the MLRO comply with the relevant obligations of these Regulations. A relevant person must appoint an individual to act as a deputy of the relevant person’s MLRO who must fulfil the role of MLRO in the latter’s absence. If the position of MLRO falls vacant, the relevant person must appoint another individual as its MLRO. A relevant person must ensure that the MLRO is of sufficient seniority within the relevant person to enable him to: act on his own authority; have direct access to the senior management of the relevant person; have sufficient resources including, if necessary, an appropriate number of appropriately trained employees to assist in the performance of his duties in an effective, objective and independent manner; have unrestricted access to information about the financial and business circumstances of a customer or any person on whose behalf the customer is or has been acting; and have unrestricted access to relevant information about the features of the transactions which the relevant person has entered into or may have contemplated entering into with or for the customer or that person.

586. A relevant person must ensure that its MLRO is responsible for all of its anti money laundering activities carried on in or from the QFC. Also a relevant person must ensure that its MLRO carries out and is responsible for the following:

  • establishing and maintaining the relevant person’s anti money laundering policies, procedures, systems and controls and compliance with anti money laundering legislation and regulation applicable in the QFC;
  • the day-to-day operations for compliance with the relevant person’s anti money laundering policies, procedures, systems and controls;
  • receiving internal STRs from the relevant person’s employees;
  • taking appropriate action following the receipt of an internal STR form the relevant person’s employees;
  • making, in accordance with the AML Law, external STRs to the FIU and notifying the Regulatory Authority, as required;
  • acting as the point of contact within the relevant person for the FIU, other competent Qatar authorities and the Regulatory Authority regarding money laundering issues;
  • responding promptly to any request for information made by the FIU, the QFC Authority, the Regulatory Authority or other competent State authorities;
  • receiving and acting upon findings;
  • establishing and maintaining an appropriate anti money laundering training program (whether by himself or someone else) and adequate awareness arrangements; and
  • making annual reports to the relevant person’s senior management, as required.

587. The MLRO must report at least annually to the senior management of the relevant person on the matters of compliance with applicable anti money laundering laws including Articles, Rules and Regulations; the quality of the relevant person’s anti money laundering policies, procedures, systems and controls; any findings and how the relevant person has taken them into account; any internal STRs made by the relevant person’s staff and action taken in respect to those reports, including the grounds for all decisions; any external STRs made by the relevant person and action taken in respect to those reports including the grounds for all decisions; the results of the review of effectiveness of its anti money laundering policies, procedures, systems and controls; and any other relevant matters related to money laundering as it concerns the relevant person’s business.

588. A relevant person must ensure that its senior management promptly assesses the report provided by the MLRO, take action, as required subsequent to the findings of the report, in order to resolve any identified deficiencies and make a record of their assessment and the action taken. The report provided by the MLRO and the records of the assessment and actions must be documented in writing. A complete copy of each document must be provided to the Regulatory Authority promptly.

589. Rule 3.3 5 of the QFCRA AML Rulebook requires that the testing for compliance with policies, procedures and controls be undertaken by the internal audit or compliance oversight function or by a competent firm of independent auditors or compliance professionals. The relevant person must ensure that the review process covers at least the following: taking into account the nature, scale and complexity of the business: a sample testing of “Know Your Customer” arrangements; an analysis of all STRs to highlight any area where procedures or training may need to be enhanced; and a review of the nature and frequency of the dialogue between the senior management with the MLRO (if applicable) to ensure that their responsibility for implementing and maintaining adequate controls is satisfactory.

590. Article 17 of the QFC AML Regulation sets out the staff awareness and training requirements with which a relevant person must comply. It requires a relevant person to have arrangements to provide regular information and training to all employees to ensure that they are aware of the identity and responsibilities of the relevant person’s MLRO and his deputy; applicable legislation relating to anti money laundering; the potential effect on the relevant person, its employees and its customers of breaches of applicable legislation relating to money laundering; the relevant person’s anti money laundering policies, procedures, systems and controls and any changes to these; money laundering risks, trends and techniques; the types of activity that may constitute suspicious activity in the context of the business in which an employee is engaged that may warrant an internal STRs; the relevant person’s arrangements regarding the making of an internal STR; the use of findings; and their individual responsibilities under the relevant person’s arrangements made under these Regulations, including those for obtaining sufficient evidence of identity and recognising and reporting knowledge or suspicion of money laundering.

591. These requirements should be brought to the attention of new employees and remain available to all employees. A relevant person must have arrangements to ensure that its anti money laundering training is up-to-date with money laundering trends and techniques, its anti money laundering training is appropriately tailored to the relevant person’s different activities, services, customers and indicates any different levels of money laundering risk and vulnerabilities, and all employees receive anti money laundering training.

592. A relevant person must conduct anti money laundering training sessions with sufficient frequency to ensure that within any period of 24 months it is provided to all employees. All relevant details of the relevant person’s anti money laundering training must be recorded, including dates when the training was given, the nature of the training, and the names of the employees who received the training. These records must be kept for at least six years from the date on which the training was given.

593. Employee Screening Procedures (c.15.4). Domestic sector: There are no legal or regulatory requirements for banking and financial institutions under the QCB and MEC to put in place screening procedures to ensure high standards when hiring employees. Meetings conducted with representatives from the private sector revealed that these firms have developed internal mechanisms and controls to ensure that potential employees are adequately screened, including conducting criminal background checks, conducted through the MOI, and verifications from previous employers.

594. Article 59 of the DSM Internal Regulations establishes the licensing requirements and screening procedures for securities brokers and their employees as follows: i) be a Qatari national ; ii) enjoy full legal capacity; iii) not have been convicted for a criminal offence or sentenced for issuing a cheque without provision; iv) have adequate bank balance unless he has been rehabilitated; v) have at least secondary school qualifications or their equivalent; vi) have good conduct and reputation; vii) devoted to the business and not working in any manner and in any capacity for another securities broker; viii) able to fulfill any other conditions to be specified and published by the market in its publication. In addition, the persons so nominated by the licensed securities brokers shall not be Chairman, member of the board of Directors or employees of a company whose shares are traded in the Market.

595. Article 60 further requires that the approval of any persons satisfying the conditions stated in the preceding Article as an agent and the delivery of the professional card thereto shall be subject to his successfully qualifying an examination regarding professional awareness. The Market shall determine the subjects, regulation and procedures of such examination.

596. QFC: Rule 4.6.1 of the QFCRA Controls Rulebook (which is enforceable) requires that every authorized firm have systems and controls in place to satisfy itself of the suitability of anyone who acts for it. Rule 4.6.2 goes on to require that the firm must ensure that its staff are fit and proper, appropriately trained for the duties they perform, and trained in the requirement of the legislation applicable to the QFC. The Financial Services Regulations also provide for Controlled Functions to be conducted only by Approved Individuals (Article 41). The Controlled Functions include among others Senior Executives, Directors, Finance Officers, MLRO, and Senior Management. Rule 4.3.1 of the QFC Controls Rulebook provides further guidance with respect to assessing the individual’s honesty, integrity and reputation. The Authorized Firm should consider among other relevant things, whether the individual has ever:

  • been convicted or found guilty of any offenses relating to fraud, theft, false accounting, serious tax offenses, dishonesty, money laundering, market manipulation, insider dealing or any other financial sector crimes;
  • been refused entry to, been dismissed from, or requested to resign from any profession, position of trust or fiduciary office whether or not remunerated;
  • been refused, restricted in, or had suspended, the right to carry on any business or trade for which specific license, registration or other authority is required;
  • been disqualified by a court from acting as a Director or in any other management capacity of any Company, Partnership or other legal entity;
  • been censured, criticized, suspended, expelled, fined or been the subject of any investigation, intervention or disciplinary proceedings by any Overseas Regulator or equivalent body;
  • resigned or been required to resign from any such body;
  • been a Director, Partner or otherwise involved in the management of a Company, Partnership or other related entity in any jurisdiction where either whilst involved or within one year of that association ending the entity has been wound up, put into liquidation, ceased trading, placed in receivership or administration or negotiated a settlement with creditors;
  • been subject to any conviction or adverse finding of any court for fraud, misconduct, wrongful trading or other misconduct;
  • been involved in the management of a Company, Partnership or other legal entity which has been subject to an investigation under companies or other such legislation for malpractice or misconduct;
  • been the subject of disciplinary procedures by a government body, agency or other self regulatory body or organization;
  • the subject of a formal complaint in connection with financial services or ancillary services which relates to his/her integrity, competence or financial soundness;
  • contravened any provision of financial services rules, legislation, code of practice or principle or other ethical standards as defined by any Overseas Regulator or similar such body; and
  • whether the Approved Individual has been candid and truthful in all his dealings with the Regulatory Authority.

597. With regards to competence and capability, Rule 4.4.1 of the QFC Controls Rulebook provides that an Authorized Firm should consider among other relevant things:

  • the securing of appropriate examination passes and competence assessments; and
  • whether the individual is capable of performing functions which the Authorized Firm or applicant employs or intends to employ him to perform.

598. Rule 4.5.1 of the QFC Controls Rulebook provides guidance with respect to the financial soundness of an individual. In this respect an Authorized Firm should consider, relevant aspects like:

  • whether the individual is able to meet his debts as they fall due; and
  • whether the individual has been adjudged bankrupt, been the subject of a receiving or administration order, had a bankruptcy petition served on him, had his estate sequestrated, entered into a deed of arrangement (or any contract in relation to a failure to pay due debts) in favor of his creditors or, within the last 10 years, has failed to satisfy a judgment debt under a court order, whether in the State or elsewhere.

599. Additional element (c.15.5) - Domestic sector: QCB instructions Chapter 7, Section 10 requires banks to appoint an officer or establish an unit in the bank, to be responsible for following up the implementation of QCB laws and instructions, accountable directly to the board of directors. Section 10.2 of this Chapter grants the compliance officer with the necessary independence and access right to all areas of the institution and to the information they may hold. Article 9 of the DSM decision addresses the appointment of qualified personnel at the administration level; however, it falls short of indicating the ability of this personnel to act independently and to report to management above the compliance officer’s next reporting level or the board of directors. Section 3 of MEC’s circular addresses the appointment of a follow up officer charged mainly with the verification of the implementation of the policies and plans within the company and its different departments and branches, but falls short of addressing the requirement of this criterion. In addition, MEC’s circular is not enforceable.

600. QFC: Article 6(2) of the QFC AML Regulations requires that a relevant person must set up and operate arrangement including the appointment of a MLRO. Article 8 of the QFC AML Regulations further requires that a relevant person must appoint an individual to act as its MLRO and operate arrangements that are designed to ensure that it and the MLRO comply with the relevant obligations of these Regulations. A relevant person must ensure that the MLRO is of sufficient seniority within the relevant person to enable him to: act on his own authority; have direct access to the senior management of the relevant person; have sufficient resources including, if necessary, an appropriate number of appropriately trained employees to assist in the performance of his duties in an effective, objective and independent manner; have unrestricted access to information about the financial and business circumstances of a customer or any person on whose behalf the customer is or has been acting; and have unrestricted access to relevant information about the features of the transactions which the relevant person has entered into or may have contemplated entering into with or for the customer or that person. Under Article 8(7) of the QFC Regulations the MLRO must report at least annually to the senior management of the relevant person.

601. Application of AML/CFT Measures to Foreign Branches & Subsidiaries (c.22.1, 22.1.1 & 22.1.2) and Requirement to Inform Home Country Supervisor if Foreign Branches & Subsidiaries are Unable to Implement AML/CFT Measures (c.22.2). Domestic sector: Section 14 of the QCB AML/CFT Instructions requires banking and financial institutions to demand from their branches and subsidiaries companies operating abroad to comply with the QCB Instructions, as much as with the laws of the host country, as permitted, especially if those branches and subsidiaries companies operate in countries which do not totally or partially comply with the recommendations. If these institutions find that the laws applicable in the countries in which these branches or subsidiaries operate hamper the application of the rule, they must report to the FIU at the QCB. Although the spirit of the QCB Instructions is for banking and financial institutions to ensure that their foreign branches and subsidiaries observe AML/CFT measures consistent with home country, as well as host country requirements and the FATF Recommendations, the requirement falls short because it does not explicitly require branches and subsidiaries to apply the higher standard, to the extend that local laws and regulations permit. Also, the requirement to inform the FIU does not seem adequate given that the regulatory authority with responsibility over banking and financial institutions compliance with laws and regulations is the QCB. The FIU should be contacted with matters dealing with suspicious transactions.

602. With respect to the DSM and MEC, the authorities stated that there are no branches or subsidiaries operating abroad. Therefore no provisions/measures have been established for financial institutions regulated by these two entities to ensure that in the event that a foreign branch and/or subsidiary is authorized to operate abroad, it observes AML/CFT measures consistent with home country requirements and the FATF Recommendations, to the extent that local (i.e. host country) laws and regulations permit; pays particular attention that this principle with respect to their branches and subsidiaries in countries which do not or insufficiently apply the FATF Recommendations; and meets the minimum AML/CFT requirements of the home and host countries differ, to apply the higher standard, to the extent that local (i.e. host country) laws and regulations permit.

603. QFC: Article 6(5) of the QFCRA AML Regulations requires that a relevant person must ensure that its anti money laundering policies, procedures, systems and controls apply to any branch or subsidiary operating in another jurisdiction. Article 6(6) further states that if another jurisdiction’s laws or regulations prevent or inhibit a relevant person from complying with the Law No. 28 of 2002 on Anti Money Laundering or with the regulations, the relevant person must promptly inform the Regulatory Authority in writing. Guidance provided under Rule 3.3.6 of the QFCRA AML Rulebook states that if another jurisdiction’s laws or regulations prevent or inhibit a relevant person from complying with the AML Law or the AML Regulations, the Regulatory Authority may impose restrictions that may be necessary, preventing it from operating a branch or subsidiary in that jurisdiction. There is also an additional requirement imposed by the QFCRA for entities to conduct a periodic review to verify that any branch or subsidiary operating in another jurisdiction is in compliance with the obligations imposed under the AML Law and the provision of the AML Regulation.

604. Additional element (c.22.3)–Domestic sector: The QCB, DSM, and MEC have not established measures to ensure that financial institutions are consistently applying CDD measures at the group level. QFC: Article 6(5) of the QFC AML Regulations requires that a relevant person must ensure that its AML policies, procedures, systems and controls apply to any branch or subsidiaries operating in another jurisdiction. However, under Rule 3.9.1 of the QFC AML Rulebook, a relevant person is not required to establish the identity of a customer pursuant to Article 9(1) of the QFC AML Regulations if the customer is one of the following: an authorized firm or another relevant person; or a regulated financial sector firm from a FATF country.

3.9.1 Recommendations and Comments

605. Domestic sector: The authorities are recommended to:

  • Set out clear requirements for all financial institutions to establish and maintain internal procedures, policies, and controls so that the same requirements apply uniformly to policies and controls addressing customer due diligence, record retention, detection of unusual and suspicious transactions and the reporting obligation.
  • Strengthen the QCB requirement to ensure that the staff supporting the designated AML/CFT compliance officer has timely and unrestricted access to customer information data and other customer due diligence information, transaction records, and other relevant information.
  • Impose a similar requirement on financial institutions that are regulated by the DSM and MEC.
  • Require all financial institutions to ensure that the scope of the internal audit function (or outsourcing of this function) includes AML/CFT reviews/audits and an overall assessment of the financial institutions’ adequacy of the internal control systems and policies with respect to AML/CFT;
  • Require financial institutions under the supervision of the DSM and MEC to maintain an adequately resourced and independent audit function to test compliance with the procedures, policies and controls; and
  • Require banking and financial institutions under the supervision of the QCB and MEC to put screening procedures in place to ensure high standards when hiring employees.

606. The QCB is further recommended to expand the existing measures to establish an explicit obligation for financial institutions to apply the higher AML/CFT standard, to the extent that local laws and regulations permit.

607. The authorities should set out provisions for financial institutions under the control of the DSM and MEC in the event that foreign branches and subsidiaries are established to ensure that these institutions observe AML/CFT measures consistent with home country requirements and the FATF Recommendations, to the extent that local (i.e. host country) laws and regulations permit; to pay particular attention that this principle is observed with respect to their branches and subsidiaries in countries which do not or insufficiently apply the FATF Recommendations; and where the minimum AML/CFT requirements of the home and host countries differ, to apply the higher standard, to the extent that local (i.e. host country) laws and regulations permit.

3.9.2 Compliance with Recommendations 15 & 22

RatingSummary of factors underlying rating
R.15PC
  • Inconsistencies with respect to QCB and DSM requirements and MEC non-binding measures for financial institutions to comply with the same requirements including adequate procedures, policies and controls for customer due diligence, record retention, detection of unusual and suspicious transactions and the reporting obligation.
  • Lack of specific QCB requirement to provide timely and unrestricted access to all customer information to the staff supporting the compliance officer.
  • Lack of specific DSM and MEC requirement to provide timely and unrestricted access to all customer information to the compliance officer as well as his/her staff.
  • Lack of DSM and MEC requirement for internal audit function to assess the adequacy of internal control systems and policies with respect to AML/CFT and to maintain an adequately resourced and independent audit function.
  • Lack of legal or regulatory requirements imposed by QCB, DSM and MEC for financial institutions to put in place screening procedures to ensure high standards when hiring employees.
R.22PC
  • Lack of obligation imposed by the QCB on financial institutions with branches and subsidiaries to apply the higher standard, to the extent that local laws and regulations permit.
  • No legal or regulatory requirements established by the DSM and MEC for financial institutions to comply with the provisions of this recommendation.

3.10 Shell banks (R.18)

3.10.1 Description and Analysis

608. Prohibition of Establishment of Shell Banks (c.18.1). Domestic sector: There are no explicit provisions in the law or regulations or other enforceable means that would explicitly prohibit the establishment of shells banks in Qatar.

609. The QCB licensing requirements for banks set out in Chapter 11 (Article 52 to 59) of QCB law of 2006 may prevent to a certain extent the establishment of shell banks in Qatar but fail to do so entirely: in order to be granted the license, the applicant must (amongst other things) have been established as a joint-stock company pursuant to the Law No 33 of 2002 on Commercial Companies (Article 52 of the QCB Law). Article 3 of the Law on Commercial Companies provides in turn that “every company established in Qatar shall be of a Qatari nationality with its headquarters in Qatar”. There are however no further measures that would define headquarters or require physical presence in a way that would encompass the meaningful “mind and management” of the company, and there are no indications that the QCB ensures itself of the applicant’s physical presence in Qatar.

610. The situation is equally unclear as far as continued operations of shell banks that might have been established under previous laws: whilst the licensing requirements contained in the 1993 QCB law (which established the QCB) were similar, it has not been established that the physical presence was required under the legal framework that applied before the enactment of the 2002 law on commercial companies.

611. QFC: Article 14—Limited Liability Companies (LLC)—of the QFC Companies Regulations conveys that a form of legal entity known as a limited liability company may be incorporated in the QFC. It further states that an LLC is a Company which is formed by being incorporated under these Regulations. Article 17(1)—Incorporation of a Limited Liability Company—of the Companies Regulations states that any one or more persons may apply for the incorporation of an LLC for the purpose of carrying on a business of a kind permitted by the QFC Law to be conducted in the QFC by signing and filing with the Companies Registration Office (CRO) an incorporation document together with the prescribed fee and otherwise complying with the requirements of these Regulations in respect of registration. Article 17(2)(C) requires that the incorporation document filed with CRO should set out or have attached thereto the address of the registered office of the LLC, which should be in the QFC.

612. Article 42—Situation of registered office—of the Companies Regulations requires that once a limited liability company is incorporated in the QFC, it must have a registered office in the QFC and carry on business from that office unless the QFC Authority permits such business activity to be carried on at or from another place within the QFC. Therefore a bank must be authorized by the QFC Regulatory Authority to have a physical presence in the QFC.

613. In addition, Rule 2.2.1 (A) of the Individuals Rulebook (INDI)—Additional Requirements for specific Controlled Functions—states that the senior executive function must be carried out by an individual who in the case of a local firm is ordinarily resident in the State.

614. Prohibition of Correspondent Banking with Shell Banks (c.18.2) and Requirement to Satisfy Respondent Financial Institutions Prohibit of Use of Accounts by Shell Banks (c.18.3). Domestic sector: There are no measures in place that would effectively prevent the financial institutions from entering into, or continuing correspondent banking relationships with shell banks.

615. Similarly, there are no requirements on the financial institutions to satisfy themselves that respondent financial institutions in a foreign country do not permit their accounts to be used by shell banks.

616. QFC: Article 12(3) of the QFCRA AML Regulation prohibits authorized firms from establishing a correspondent banking relationship with a shell bank; establishing or keeping anonymous accounts or accounts in false names or maintaining a nominee account which is held in the name of one person, but controlled by or held for the benefit of another person whose identity has not been disclosed to the authorized firm.

617. Rule 3.12 of the QFCRA Rulebook provides further guidance to relevant persons by requiring them to take specific care while assessing the anti money laundering arrangements of correspondent banking clients and, if applicable, other qualified professionals relating to customer identification, transaction monitoring, terrorist financing and other relevant elements and to verify that these business partners comply with the same or equivalent anti money laundering requirements as the relevant person. A relevant person should ensure that a correspondent banking client does not use the relevant person’s products and services to engage in business with shell banks. A relevant person should also have arrangements to guard against establishing a business relationship with business partners who permit their accounts to be used by shell banks.

618. Article 42 of the QFC Companies Regulations requires that once a limited liability company is incorporated in the QFC, it must have a registered office in the QFC and carry on business from that office. Further, a bank must be authorized by the QFCRA to have presence in the QFC. Rule 2.2.1 of the QFC Individuals Rulebook requires a person carrying on a senior executive function of a firm incorporated in the QFC to reside in Qatar. Rule 2.2.2 requires a person carrying on the MLRO function to be a resident in Qatar.

3.10.2 Recommendations and Comments

619. The authorities are recommended to:

  • Amend the QCB licensing requirements with a view to clearly prevent the establishment of shell banks in Qatar;
  • Prohibit banks from entering into or continuing correspondent relationships with shell banks; and
  • Require financial institutions to satisfy themselves that respondent financial institutions in a foreign country do not permit their accounts to be used by shell banks.

3.10.3 Compliance with Recommendation 18

RatingSummary of factors underlying rating
R.18PC
  • Measures in place in the domestic sector are not sufficient to effectively prohibit the establishment of shell banks and do not prevent domestic banks from having dealings with foreign shell banks.

3.11 The supervisory and oversight system - competent authorities and SROs. Role, functions, duties and powers (including sanctions) (R. 17, 23, 25 & 29)

3.11.1 Description and Analysis

620. Regulation and Supervision of Financial Institutions (c. 23.1) and Designation of Competent Authority (c.23.2). Domestic sector: Article 7 of the AML Law provides that the “competent entities” shall determine the duties of the financial institutions and follow-upon their implementation. The definition of “competent entity” pursuant to Article 1 of the AML Law comprises the Ministry or government department or general authority, or public corporation or QCB as the case may be.

621. Article 5 paragraph 12 of the QCB Law provides that “the QCB should lay out and enforce the State monetary policy, policy of the rate of exchange and financial and banking supervision. To achieve this, the QCB is empowered to (…) supervise and control (…) money laundering in accordance to law or as authorized by the State”. As such, the QCB is responsible for AML/CFT regulation and supervision of banks, investment companies, finance companies and exchange houses (which include money transfer services and money/currency changing). In 2006, it issued enforceable instructions on combating money laundering and terrorism financing.

622. Article 11 of the DSM Law establishes the DSM’s powers and functions for operating the market. Under Article 11 the DSM has the power to review and decide on applications for licensing and membership. Under Article 12 of the same law, the DSM is empowered to inspect and review the records of brokers and intermediaries and their books and all transactions records, to check the audit the activities of the departments in charge of issuing securities in the public companies listed in the Exchange, and securities portfolios managed by any registered member in the market.

623. There are no provisions in law or regulation that extend the duties of the regulators for the MEC, to regulation and supervision for AML/CFT purposes. The MEC nevertheless acts as de facto AML/CFT supervisors in their respective remit and issued AML/CFT measures that are drafted in mandatory terms. In the absence of a clear legal basis for the MEC’s supervisory role, these measures are not enforceable. MEC has only issued guidance to financial institutions under its responsibility. The authorities were not able to provide documentation to support that inspections focused on AML/CFT were conducted prior to the assessment visit.

624. QFC: The QFCRA is responsible for the licensing and regulation/supervision of all authorized firms including those that are subject to the Core Principles, on both a prudential and conduct of business basis (Article 9 and Schedule 3 and 4 of the QFC law). Schedule 3 describes the business activities that may be carried on in or from the QFC including:

  • Financial business, banking business of whatever nature and investment business, including (without limit) all business activities that are customarily provided by investment, corporate and wholesale financing banks, as well as Islamic and electronic banking business;
  • Insurance and reinsurance business of all categories;
  • Money market, stock exchange and commodity market business of all categories, including trading in and dealing in precious metals, stocks, bonds, securities, and other financial activities derived therefrom, or associated therewith;
  • Money and asset management business, investment fund business, their provision of project finance and corporate finance in all business fields and Islamic banking and financing business;
  • Funds administration, fund advisory and fiduciary business of all kinds;
  • Pension fund business and the business of credit companies;
  • The business of insurance broking, stock broking, and all other financial brokerage business;
  • Financial agency business and the business of provision of corporate finance and other financial advice, investment advice and investment services of all kinds; and
  • The provision of financial custodian services and the business of acting as legal trustees.

625. The QFCRA’s remit encompasses the fight against money laundering and “other financial improprieties” which is understood to cover as terrorist financing (Schedule 2 of the QFC Law). Part 5 of the QFC Financial Services Regulations (FSR) of 2005 sets out the QFCRA’s role with respect to authorization of firms that wish to operate in or from the QFC; Article 15 of the QFC AML Regulations provides for a risk assessment system to include policies, procedures, systems and controls to address money laundering risks; and Part 8 of the QFC FSR provides for basis for the QFCRA’s supervision and investigations.

626. The QFCRA is aware that for branches operating within the QFC the head office of a branch may be subject to consolidated supervision in another jurisdiction. Where that is the case, the QFCRA will ensure that the supervisory oversight by the lead regulator is consistent with the Core Principles and FATF standards as also applied by the QFCRA. The QFCRA would expect that the risk management framework operating within head offices, would also extend o the branch and include money laundering and terrorist financing risks. In such cases, the QFCRA will request the necessary comfort from the lead regulator that its supervisory methodology is consistent with the QFCRA’s approach. Where the QFCRA is the lead regulator, supervision will be on a consolidated basis.

627. Fit and Proper criteria and Prevention of Criminals from Controlling Institutions (c.23.3) and Application of Prudential Regulations to AML/CFT (c.23.4). Domestic sector: The QCB, through its licensing/authorization process, has established the necessary measures to prevent criminals or their associates from holding or being the beneficial owner of a significant or controlling interest or holding a management function, including in the executive or supervisory boards, councils, etc in a financial institution. In evaluating the fit and proper criteria the licensing/authorization department of the QCB obtains and reviews the following documentation:

  • basic information about the applicant;
  • shareholding structure including the names of the shareholders who own 5% of the shares or more; and
  • names of members of the board of directors and CEO’s of the bank, the holding company and subsidiaries.

628. The information verification procedures includes ascertaining whether:

  • the bank (including the branches), the bank’s holding company, its subsidiaries or sister companies or its directors have been convicted by a court judgment;
  • the bank has been blamed or reprimanded by other supervision authorities with legal capacity during the past three years;
  • there are any current procedures that may lead to such a conviction;
  • there are any constraints on the operations conducted by the bank (including the branches), the bank’s holding company, its subsidiaries or sister companies imposed by supervision authorities on the bank inside Qatar or other supervision authorities with legal capacity;
  • any other licensing application form submitted by the bank to open affiliated offices (branches, subsidiaries) or representative offices in other countries been rejected;

629. The established framework for the management of risks facing the bank and the control systems in force, the roles, duties and types of risk management activities practiced inside Qatar, including the types of regional and international activities should be determined in addition to the identification of the capacities and resources inside Qatar (including the labor force, management information system and risk systems). Information related to main plans and initiatives related to risk management activities inside Qatar shall be provided, including main areas identified by auditors or senior supervisors in the bank for the purpose of strengthening these areas so as to adapt them with the bank activities. Licensing procedures for exchange houses, investment companies and finance companies are similar to those in place for banking institutions.

630. With respect to the DSM, a person engaging directly or indirectly, as agent or broker, in the business of offering, selling, buying or otherwise dealing or trading in securities must be registered as a broker with the DSM. Interviews conducted with officials from the Market Committee of the DSM revealed that there are procedures, applicable fees, and licensing requirements for granting licenses to entities intending to carry out brokerage business in the Market. Officials stated the requirements for granting licensing to securities brokers and their agents to be as follows:

  • The applicant for the license shall be a Qatari institution or company, a bank licensed to operate in the State or any establishment or natural person whom the Committee approves for carrying out brokerage business;
  • The paid-up capital shall not be less than QR 5, 000, 000 (Five Million Qatari Riyals);
  • The person (s) assuming the responsibilities of brokerage management shall have the prerequisite, expertise and qualifications for carrying out and managing brokerage activities;
  • The manager in charge of the brokerage business shall have a University degree or the equivalent qualifications, and shall have the experience in financial or banking fields for a period of at least three years; and
  • The securities broker shall undertake to submit, when requested, a summary of financial statements and reports approved by a financial controller for the last consecutive three years or the period from the date of incorporation, whichever is shorter.

631. The securities firm should, when requested by the Market, undertake to carry out the following:

  • Provide a valid unconditional bank guarantee, for unlimited period, an amount of not less than QR 500, 000 (Five Hundred Thousand Qatari Riyals). This guarantee shall be payable on the first demand;
  • Open and manage a settlement account with the payment bank in accordance with the procedures and regulations of the Market;
  • Provide an insurance policy against trading risks, mismanagement and the inability to discharge financial obligations, for an amount not less than QR 5,00,0000 (Five Million Qatari Riyals) provided that the Market shall be the first beneficiary under such policy;
  • Provide another bank guarantee of the same description, for an amount not less than (QR 2,000,000 (Two Million Qatari Riyals) to be deposited with the Market for being used in establishing a reserve guarantee fund; and
  • The Committee may add any other terms or requirements.

632. The securities firms who are licensed to carry out brokerage business in the Market shall be registered in a special record prepared by the Market for this purpose. Every securities broker shall be given a serial number. The record should also contain all information submitted by the broker to the Market on submitting the license application.

633. The securities brokers who are licensed to carry out brokerage business in the Market should nominate specific persons from among their employees for acting as their agents in the Market provided that these agents shall satisfy the following conditions and requirements:

  • Be of a Qatari nationality;
  • Enjoying full legal capacity;
  • Not convicted for any criminal offense or sentenced for issuing a cheque without sufficient bank balance unless he has been rehabilitated;
  • Having at least secondary school qualifications or the equivalent;
  • Bears good conduct and reputation;
  • Is devoted to the business and does not work in any manner and in any capacity for another securities broker; and
  • Fulfill any other conditions to be specified and published by the market in its publication.

The authorities indicated that the persons so nominated by the licensed securities brokers should not be a Chairman, a member of the board of directors or employees of a company whose shares are traded in the Market.

634. Licensing procedures from the Commercial Affairs Department, the supervisory authority for insurance companies, of the MEC although requested were not available to the mission.

635. QFC: As part of the authorization process to allow firms to undertake regulated activities in or from the QFC, the QFCRA performs an assessment of the individuals and the firm to be authorized to ensure that the individuals are capable of and will comply with the AML/CFT requirements. The QFCRA also has a vetting approach with respect to the licensing and/or authorization of firms and individuals wishing to operate in or from the QFC. In respect of firms authorized by the Regulatory Authority, certain controlled functions must only be conducted by individuals approved by the Regulatory Authority. In considering approval, the Regulatory Authority considers the persons qualifications, experience and fitness and propriety. The Regulatory Authority therefore obtains information in respect of the applicants’: (i) employment history; (ii) membership of professional associations; (iii) qualifications; (iv) criminal history; and (v) other relevant background.

636. Independent reviews are conducted by the Regulatory Authority to verify information provided by the applicant and additional checks are undertaken using Integrascreen, Bankers Almanac and other on-line sources. In particular, prior to authorization, the QFCRA considers several aspects in determining whether individuals are fit and proper to be authorized. Part 7 of the QFC FSR provides detailed provisions for the approval of persons performing controlled functions. A controlled function is a function which involves the exercise of significant influence over the conduct of the firm’s affairs in relation to Regulated Activities; dealing directly with clients or customers in relation to Regulated Activities; or dealing with the property of clients or customers and is specified as a Controlled Function in Rules issued by the Regulatory Authority from time to time. Controlled functions include Senior Executives, Directors, Finance Officers, MLRO, and Senior Management, among others. Article 41 of the QFC FSR requires the Authorized Firms to ensure that no individual acting for the Authorized Firm or a contractor of the Authorized Firm performs a controlled function for that Authorized Firm unless the individual is approved by the Regulatory Authority as an Approved Individual.

637. Rule 4.3.1 of the QFC Rulebook provides further guidance with respect to assessing the individual’s honesty, integrity and reputation. Under Appendix A.1.1 of the INDI Rulebook, the Authorized Firm should consider among other relevant things, whether the individual has ever:

  • been convicted or found guilty of any offenses relating to fraud, theft, false accounting, serious tax offenses, dishonesty, money laundering, market manipulation, insider dealing or any other financial sector crimes;
  • been refused entry to, been dismissed from, or requested to resign from any profession, position of trust or fiduciary office whether or not remunerated;
  • been refused, restricted in, or had suspended, the right to carry on any business or trade for which specific license, registration or other authority is required;
  • been disqualified by a court from acting as a Director or in any other management capacity of any Company, Partnership or other legal entity;
  • been censured, criticized, suspended, expelled, fined or been the subject of any investigation, intervention or disciplinary proceedings by any Overseas Regulator or equivalent body;
  • resigned or been required to resign from any such body;
  • been a Director, Partner or otherwise involved in the management of a Company, Partnership or other related entity in any jurisdiction where either whilst involved or within one year of that association ending the entity has been wound up, put into liquidation, ceased trading, placed in receivership or administration or negotiated a settlement with creditors;
  • been subject to any conviction or adverse finding of any court for fraud, misconduct, wrongful trading or other misconduct;
  • been involved in the management of a Company, Partnership or other legal entity which has been subject to an investigation under companies or other such legislation for malpractice or misconduct;
  • been the subject of disciplinary procedures by a government body, agency or other self regulatory body or organization;
  • the subject of a formal complaint in connection with financial services or ancillary services which relates to his/her integrity, competence or financial soundness;
  • contravened any provision of financial services rules, legislation, code of practice or principle or other ethical standards as defined by any Overseas Regulator or similar such body; and
  • whether the Approved Individual has been candid and truthful in all his dealings with the Regulatory Authority.

638. With regards to competence and capability, Rule 4.4.1 of the QFC Controls Rulebook provides that an authorized firm should consider among other relevant things:

  • the securing of appropriate examination passes and competence assessments; and
  • whether the individual is capable of performing functions which the Authorized Firm or applicant employs or intends to employ him to perform.

639. Rule 4.5.1 of the QFC Controls Rulebook provides guidance with respect to the financial soundness of an individual. In this respect an Authorized Firm should consider, relevant aspects like:

  • whether the individual is able to meet his debts as they fall due; and
  • whether the individual has been adjudged bankrupt, been the subject of a receiving or administration order, had a bankruptcy petition served on him, had his estate sequestrated, entered into a deed of arrangement (or any contract in relation to a failure to pay due debts) in favor of his creditors or, within the last 10 years, has failed to satisfy a judgment debt under a court order, whether in the State or elsewhere.

640. Licensing or Registration and Monitoring and Supervision of Value Transfer/Exchange Services (c.23.5 and c.23.6). Domestic sector: Under Article 5 paragraph 2 of the QCB Law 33, the QCB is responsible for the licensing as well as AML/CFT regulation and supervision of exchange houses (which include money transfer services and money/currency changing). Instructions issued by the QCB address the obligations and responsibilities of the value transfer/exchange services with respect to effectively implementing the AML/CFT laws and regulations.

641. QFC: Money or value transfer services or money or currency changing services are not one the permitted activities listed in Schedule 3 of the QFC law. Consequently, they cannot be undertaken in or from the QFC.

642. Power of Supervisors to Monitor AML/CFT Requirements (c.29.1), Authority to conduct AML/CFT inspections by Supervisors (c.29.2), Power for Supervisors to Compel Production of Records (c.29.3 & 29.3.1) and Powers of Enforcement & Sanction (c.29.4). Domestic sector: Overall, current supervision of financial institutions is mostly targeted towards prudential matters and does not sufficiently address AML/CFT issues.

643. The QCB is empowered to conduct AML/CFT supervision under Article 5, paragraph 12 of the QCB law. As the competent authority, it has also issued specific instructions dealing with AML/CFT. In addition, Article 71 of Law No. (330 of 2006 (QCB) empowers the QCB to inspection financial institutions. Under this article financial institutions and their branches and the subordinate companies inside or outside the State, and the representation bureaus must provide the inspectors/supervisors with all information they require and allow them to have access to all records, accounts and document they require. It further states that secrecy of information shall not be a protest against the inspectors/supervisors responsible for conducting inspections. The access to information is not predicated on the need to require a court order. As of the mission date, however, banking and financial institutions had been subject to limited on-site AML/CFT inspections as part of the prudential visits. The QCB authorities indicated that their inspection program includes inspecting all Qatari banks every year and if possible, some of the foreign branches and subsidiaries ensuring that all banks are covered within a 24 months period. Currently, the QCB does not conduct targeted AML/CFT inspections. The authorities confirmed that the AML/CFT component is included as part of the global on-site inspection activities. The mission reviewed copies of sanitized examination reports to assess the scope and adequacy of the inspection and feedback provided to the institutions. In addition, QCB officials provided additional explanations describing how the AML/CFT work is conducted during the on-site inspections including communicating findings to management of the institution. It appeared from the review and the explanations provided that AML/CFT coverage was low. The reports reflect AML/CFT matters only when shortcomings have been identified, and otherwise contain no reference to AML/CFT procedures performed. In general, the scope of the AML/CFT inspections, reporting practices and frequency of on-site visits do not appear to be in-depth nor risk-driven to ensure that banking and financial institutions are complying with the requirements of the laws and regulations.

644. In November 2006, the QCB adopted a risk-based approach to supervision both prudential and on AML/CFT. New examination manuals and risk-based inspection procedures have been developed for banks, investment companies, finance companies and exchange houses. These new procedures include risk management matrices, templates to assign risk profiles to each institution and detailed verification procedures. As of the mission date, the QCB had implemented the new supervisory approach and methodology during one bank inspection only and was in the process of reviewing the work of the inspectors and drafting the report of examination. Therefore, given the recent adoption and establishment of the QCB’s new risk-based supervisory approach, the mission was not able to assess the adequacy and effectiveness of its implementation. Additional time is needed to be able to test the effectiveness of the new supervisory approach.

645. Article 12 of the DSM Law empowers the DSM to inspect and review the records of brokers and intermediaries and their books and all transactions records, to check the audit the activities of the departments in charge of issuing securities in the public companies listed in the Exchange, and securities portfolios managed by any registered member in the market. It further requires all data and information requested by the inspection and audit team is available, accessible to the inspection and audit team and treated with high confidentiality. In the event that the entity subject to inspection and audit is a licensed bank, the DSM coordinates with the QCB and is allowed to conduct joined inspections. The DSM officials indicated that, in practice, all entities were inspected and audited annually. During these annual visits, the component of AML/CFT was reviewed with particular emphasis in three activities: compliance with the requirements of Decision 16/3; review of suspicious transactions reported; and review of cash transactions recorded and reported to the FIU. The authorities further stated that inspections were discontinued at the end of 2006, in preparation for the integration of the DMS into the Qatar Financial Monetary Authority.

646. In practice, DSM officials indicated that all entities were inspected and audited annually. During these annual visits, the component of AML/CFT was reviewed with particular emphasis in three activities: compliance with the requirements of Decision 16/3; review of suspicious transactions reported; and review of cash transactions recorded and reported to the FIU. The authorities further stated that inspections were discontinued at the end of 2006, in preparation for the integration of the DMS into the Qatar Financial Monetary Authority.

647. Meetings held with securities’ supervisors and private institutions revealed that the level and frequency of inspections related to AML/CFT has been minimal. There are frequent visits from the DSM but they mostly target prudential matters and only pay particular attention to three areas when conducting AML/CFT; compliance with the Decision requirements, review of suspicious transaction reports; and review of cash transaction reports recorded and sent to the FIU. To date no sanctions have been imposed on financial institutions for non-compliance.

648. With respect to powers of enforcement and sanction, Article 58, paragraph 1 of the QCB Law empowers the QCB to revoke a financial institution’s license as a sanction for violations of the provision of this law, as well as, violations to the provisions of decisions and instructions. In addition, Article 105 of the same law provides that the QCB or the Committee, as the case may be, shall impose fines on the financial institutions not exceeding (5,000) Five Thousand Qatari Riyals, daily, for violations of the law of the Bank and its instructions according to the decision of the Bank. The “Committee” refers to the Banking Committee that is established under Article 60 of Law 33, comprised by a chair—one of the Vice President of the Court of Appeal, nominated by the Supreme Council of Justice; the Deputy Governor of the QCB; and one of the qualified and experienced banking experts.

649. QCB Instructions (Part 9) provide a listing of sanctions (fines) that may apply but all of them are directly related to prudential matters and not to AML/CFT issues. In other words, the only sanctions that the QCB may issue for non-compliance with the (two) preventive measures set out in the AML instructions, are the revocation of the license and a daily monetary fine, as described above. This is clearly not proportionate in all cases. However, in practice no sanction has been imposed by the QCB for non-compliance with AML/CFT requirements.

650. In the area of sanctions, Article 20 of the DSM Law provides that a disciplinary committee be established by a decision of the Market Commission. This committee should be responsible of hearing cases against the brokers and intermediaries and listed companies traded in the market that are in break of the provision of the law, the bylaws and the decisions of regulating the Market, and the breaches related to compromising the fair and proper functioning of the market and the ethics of the business conduct. The disciplinary committee should be headed by a judge selected by the MOJ upon a suggestion by suggestions of the President of the Courts of Justice, and composed of two other members selected among the members of the Market commission to be nominated by a decision of the market commissions.

651. The disciplinary committee should apply the following sanctions: blame, warning, confiscating fully or partially of the Bank deposit; stopping dealing in a specific securities, or stopping a broker or an intermediary from conducting business for a period not more than four months; and withdraw membership. Similar to the QCB, in practice no sanction has been imposed by these authorities for non-compliance with AML/CFT requirements.

652. The MEC appears to be the de facto supervisor for AML/CFT matters with respect to the insurance sector, to date, MEC has only issued guidance to financial institutions under its responsibility. Similar to the QCB and DSM, in practice no sanction has been imposed by the authorities for non-compliance with AML/CFT requirements.

653. QFC: The QFC law and the QFC FSR sets out the QFCRA’s role in the regulation of financial services in the QFC. The QFC AML Regulations which were enacted by the Minister of Economy and Commerce in September 2005, designate the QFCRA as the sole supervisory authority responsible for ensuring compliance with the requirements set out in the Regulations. The QFCRA is given extensive powers to investigate and take disciplinary actions, as needed, under the FSR. In October 2005, the QFCRA issued its AML Rulebook which provides further requirements and guidance to the relevant persons operating in or from the QFC. The AML Regulations contain further provisions on the supervisory powers of the QFCRA including a regime for the approval of individuals performing certain controlled functions. The regulations also set out the QFCRA’s powers in respect of investigations, enforcement and discipline. Under Part 8–Supervision and Investigation, the QFCRA has the power to require persons in the QFC to obtain documents and information including specified information or information of a specified description; and/or specified documents or documents of a specified description, within a timetable and in such form and manner as the Regulated Authority may require. The QFCRA is authorized to enter the premises of any person in the QFC at any time for the purpose of inspecting and copying information or documents stored in any form on such premises. The QFCRA may, by notice in writing given to a person require the production to the QFCRA of a report by a nominated person on any matter about which the QFCRA has required or could require the provision of information or production of documents.

654. The power to conduct inspections of a person in the QFC is granted to the QFCRA under Part 8, Article 48(3). Under this Article, the QFCRA may enter the premises of any person in the QFC at any time for the purpose of inspecting and copying information or documents stored in any form on such premises. This power is not predicated on the need to obtain a court order. In conclusion, a framework has been implemented to ensure that adequate supervisory measures and tools are available to the QFC/QFCRA. However, as the QFC and QFCRA are still relatively new, the effectiveness of the policies and programs are yet to be tested.

655. Availability of Effective, Proportionate & Dissuasive Sanctions (c.17.1), Designation of Authorities (c. 17.2), Ability to Sanction Directors & Senior Management of Financial Institutions (c.17.3), and Range of Sanctions—Scope and Proportionality (c.17.4). The AML Law deals with some preventive measures but in a very limited way: Article 4 prohibits the “tipping-off” and Article 6 addresses the reporting requirements (see write-up under Rec. 5, 13 and SR IV). Non-compliance with Article 4 is punishable by imprisonment for a period not exceeding one year and a fine of not more than QR. 3,000. These penalties shall be doubled if the crime is committed in collaboration with one person or more as well as in the case of repetition (i.e. if the accused person has committed a similar crime within a period of five years after having served the penalty for the original offense). The AML Law does not however provide a sanction for failure to report suspicious transactions. The other penalties that figure in the AML Law relate to the money laundering offense.

656. The AML Law and, consequently, the sanction for tipping-off, are enforceable in both the domestic sector and the QFC. However, the law provides for criminal sanctions which may only be issued by a criminal court. This would entail that the supervisory authorities that detect a case of tipping-off should seize the public prosecutor’s office, but none of the relevant texts provides this.

657. Domestic Sector: Article 58, paragraph 1 of the QCB Law enables the QCB revoke a financial institution’s license as a sanction for violations of the provision of this law, as well as, violations to the provisions of decisions and instructions. In addition, Article 105 of the same law provides that the Bank (QCB) or the Committee, as the case may be, shall impose fines on the financial institutions not exceeding (5,000) five thousand Qatari Riyals, daily, for violations of the law of the bank and its instructions according to the decision of the Bank. The “Committee” refers to the Banking Committee that is established under Article 60 of Law 33, comprised by a chair—one of the Vice President of the Court of Appeal, nominated by the Supreme Council of Justice; the Deputy Governor of the QCB; and one of the qualified and experienced banking experts.

658. The QCB Instructions (Part 9) provide a listing of further sanctions (fines) that may apply but all of them are directly related to prudential matters and not to AML/CFT issues. In other words, the only sanction that the QCB may issue for non-compliance with the (two) preventive measures set out in the AML instructions, is the revocation of the license. This is clearly not proportionate in all cases.

659. Meetings with QCB officials revealed that between 2004 and 2006, the QCB imposed 79 financial fines ranging from QR. 1,500 to QR. 4.7 million, all of them involving violations of prudential instructions. Besides financial fines, the QBC has also exercised its prudential powers using other non-monetary sanctions including enforcing cease and desist orders, removing directors and officers, and placing a financial institution under administration. However, no sanction has been imposed by the QCB for non-compliance with AML/CFT requirements. This may be explained in part by the fact that the QCB had only been granted the powers to supervise AML/CFT issues a few months before the onsite visit but, in the assessors’ views, it could also be due to the fact that the QCB does not put sufficient focus on supervision of AML/CFT issues.

660. Regarding sanctions, Article 20 of the DSM Law provides that a disciplinary committee be established by a decision of the Market Commission. This committee should be responsible of hearing cases against the brokers and intermediaries and listed companies traded in the market that are in break of the provision of the law, the bylaws and the decisions of regulating the Market, and the breaches related to compromising the fair and proper functioning of the market and the ethics of the business conduct. The disciplinary committee should be headed by a judge selected by the MOJ upon a suggestion by suggestions of the President of the Courts of Justice, and composed of two other members selected among the members of the Market commission to be nominated by a decision of the market commissions.

661. The disciplinary committee should apply the following sanctions: blame, warning, confiscating fully or partially of the Bank deposit; stopping dealing in a specific securities, or stopping a broker or an intermediary from conducting business for a period not more than four months; and withdraw membership. Although the disciplinary committee has the power to impose financial sanctions up to a maximum of two million Qatari Riyals, there is no clear mechanism to ensure that the range of financial sanctions is broad and that sanctions are proportionate to the severity of the situation. Similar to the QCB, in practice no sanction has been imposed by the DSM for non-compliance with AML/CFT requirements.

662. Meetings conducted with the MEC’s authorities revealed that no penalties/sanctions have been imposed for non-compliance with AML.

663. QFC: I Part 9 of the FSR sets out the disciplinary and enforcement actions that the QFCRA may take. They include:

  • publicly censure (Article 58);
  • financial penalties (the amounts of which are not specified; Article 59);
  • appointment of managers (Article 60);
  • undertakings: the QFCRA may require a person to give a legally enforceable undertaking, such as an undertaking to refrain from engaging in any particular type of conduct (Article 61);
  • prohibition of certain activities or obligation to act in a certain way (Art,. 62);
  • commence proceedings before the Tribunal either to seek assistance in the enforcement of the QFCRA’s regulatory powers or to seek specific disciplinary redress (Article 63, 64 and 65). Orders sought may include injunctions, orders for winding up or the appointment of administrators;

664. None of these sanctions had been issued at the time of the assessment. This may be explained by the fact that the QFC is relatively new and that most of the QFC firms was still starting business. The effectiveness of the regime in place for sanctioning non-compliance with the requirements of the AML Law, QFCRA AML Regulations, and QFCRA AML Rulebook therefore could not be tested. The QFC needs additional time to be able to test the effectiveness of the regime.

665. Adequacy of Resources for Competent Authorities (c.30.1), Integrity of Competent Authorities (c.30.2), Training for Competent Authorities (c.30.3), and Statistics (applying R.32). Domestic sector: The organizational structure of the QCB is as shown in Figure 5.

Figure 5.Organization Chart of the Qatar Central Bank

666. Within the QCB, the Department of Banking Supervision is responsible for supervising the activities of Financial Institutions (i.e., banks, investment and finance companies, and exchange houses) in prudential as well as AML/CFT related risks. More specifically, the Department of Banking Supervision:

  • Inspects FIs and verifies their compliance with the provisions and terms of the Law and Regulations issued by QCB;
  • Obtains necessary information and data from FIs to verify compliance with QCB’s instructions;
  • Proposes the issuance of necessary instructions, regulations and directives to organize the activities of FIs;
  • Studies violations committed by FIs and propose the appropriate fines in this regard;
  • Proposes issuing and renewing FIs’ licenses;
  • Supervises any FI liquidation;
  • Studies the banking risks through on-site and off-site inspections; and
  • Fulfills any other function that falls within, related to, or implied by the nature of work at the department.

667. As of the mission date, the Department of Banking Supervision had a staff of 14 supervisors assigned to on-site inspections. Training on AML/CFT matters has been coordinated mainly by the FIU. QCB staff also participated in local and regional AML/CFT workshops. However, a specific listing of courses and workshops attended in the last 12 months was not available.

668. The organization structure of the DSM is as shown in Figure 6.

Figure 6.DSM Organization Chart

669. Based on meetings conducted with DSM officials, supervision of AML/CFT falls within the responsibility of the Surveillance Department, including inspection, surveillance and audit departments. The DSM staff is comprised of approximately 100 individuals, with 7 assigned to inspections of brokerage firms. No training information was available for review, although the officials indicated that AML/CFT training had taken place during 2005 and 2006.

670. The organization structure of the MEC is shown if Figure 7.

Figure 7.MEC Organizational Structure

671. Under this structure, the Commercial Affairs Department is responsible for licensing insurance companies. However, officials were not sure whether AML/CFT was also under their scope of supervision. Also, as in the other cases, training information on AML/CFT matters was not available for review. The mission was not able to discuss with MEC staff the licensing procedures and practices governing insurance companies. Individuals responsible to these activities were not available during the mission.

672. QFC: Under Article 8 of the QFC Law, the QFCRA (Regulatory Authority) is a body corporate incorporated in the State of Qatar. The Regulatory Authority has financial and administrative autonomy from the State of Qatar, the QFC Authority, and the QFC institutions. The Regulatory Authority has both a supervisory and investigative/enforcement arm which are staffed by personnel recruited from around the world with extensive and recognized experience within their field. The State of Qatar is required under Article 8(4) to provide adequate funding directly to the Regulatory Authority. The establishment of the Regulatory Authority outlined in Schedule 4 of the QFC Law provides for sufficient operational independence and autonomy. Refer also to the “Overview of the Financial Sector” section for additional information on the organization of the QFC. The QFCRA is an independent body as evidenced by: (i) management of the Regulatory Authority being vested, by Qatari law, in the Board of the Regulatory Authority; (2) the Regulatory Authority reporting directly to the Council of Ministers of the State of Qatar; and (3) members of the Board only being able to be removed by the Council of Ministers if the member:

  • 1) becomes incapable through ill health of performing his duties;
  • 2) becomes bankrupt;
  • 3) is convicted of a criminal offense or is guilty of serious misconduct; and
  • 4) funding being provided on annual basis directly from the State of Qatar.

673. The interrelationship of these bodies is shown below:

Figure 8.Diagram of the QFC Structure

674. The Regulatory Authority has the following statutory objectives as set out in the QFC Law and Article 12 of the FSR:

  • The promotion and maintenance of efficiency, transparency and the integrity of the QFC;
  • The promotion and maintenance of confidence in the QFC of users and prospective users of the QFC;
  • The maintenance of the financial stability of the QFC, including the reduction of the systemic risk relating to the QFC;
  • The prevention, detection and restraint of conduct which causes or may cause damage to the reputation of the QFC, through appropriate means including the imposition of fines and other sanctions;
  • The provision of appropriate protection to those licensed to carry on business at the QFC and their clients or customers;
  • The promotion of understanding of the objectives of the QFC amongst users and prospective users of the QFC and other interested Persons; and
  • Ensuring the Regulatory Authority is run with a view to: (i) it operating at all times in accordance with best international standards for financial and business centers of a similar kind; (ii) establishing and maintaining the QFC as a leading financial and business centre in the Middle East; and (iii) minimizing the extent to which the business carried on by a Person carrying on Regulated Activities can be used for the purposes of or in connection with Financial Crime.

675. The structure of the Regulatory Authority is set out in the diagram below:

Figure 9.Diagram of the QFCRA Structure

676. The QFCRA officials indicated that when selecting and recruiting staff, the highest standards are applied. Currently, professional staff are recruited from international financial regulators located in a variety of highly respected jurisdictions, including other financial centers in the region.

677. Because a core mandate of the QFCRA is the prevention and mitigation of financial crime, the QFCRA recruited an experienced anti money laundering specialist whose responsibility is to ensure not only that relevant persons are educated in respect of their obligations under the AML Regulations and the AML Rulebook, but also that the staff of the QFCRA fully understand the complexities of the AML framework operating within the QFC, the AML framework operating within the State of Qatar and the complex inter-relationship between the two.

678. The specialist is responsible for providing continuing training and assisting in the professional development to the QFCRA staff. The QFRA is currently involved in financial crime education initiatives to relevant persons.

679. Information requested from the authorities to evaluated the competent authorities’ financial and human resources, statistics on licenses (applications, granted, refused), supervisory inspection programs/plans for prior and current year, and sanctions imposed by type and institution was not readily available to the mission.

3.11.2 Recommendations and Comments

Domestic sector: the authorities are recommended to:

  • Establish the legal basis for AML/CFT supervision of the financial institutions currently regulated by the MEC.
  • Strengthen the QCB, DSM and MEC overall AML/CFT supervision and develop formal examination procedures for AML/CFT matters.
  • Re-evaluate the adequacy of the penalties regime, in particular with respect to the criminal sanction for tipping-off provided in the AML Law, and provide the domestic supervisory authorities with an adequate range of sanctions.

3.11.3 Compliance with Recommendations 17, 23, 25 & 29

RatingSummary of factors relevant to s.3.10 underlying overall rating
R.17NC
  • Inadequate penalties, in particular with respect to the criminal sanction for tipping-off provided in the AML Law.
  • Inadequate sanction regime with respect to the severity of the sanction that the QCB and DSM may issue. Absence of legal framework for sanctions in the insurance sector.
  • No penalties/sanctions imposed by QCB, DSM, and MEC related to AML/CFT.
R.23PC
  • No licensing procedures available for review for insurance companies licensed by the MEC.
  • No designated entity responsible for AML/CFT supervision for domestic insurance sector.
R.25PC
  • Lack of guidelines established by the DSM and the MEC for the securities and insurance sectors, respectively.
  • Lack of adequate and appropriate feedback from competent authorities.
  • Limited guidelines on AML/CFT issues provided by the QFCRA to relevant persons.
R.29PC
  • Lack of adequate MEC supervisory authority/powers for AML/CFT matters in insurance sector.
  • Lack of AML/CFT inspections of insurance companies to monitor compliance.

3.12 Money or Value Transfer Services (SR.VI)

3.12.1 Description and Analysis (summary)

680. Designation of Registration or Licensing Authority (c.VI.1), Application of FATF Recommendations (Applying R.4,-11, 13–15, & 21–23, & SRI-IX) (c.VI.2), Monitoring of VTSO (c.VI.3). Domestic sector: Under Article 5 paragraph 2 of the QCB Law No. 33, the QCB is responsible for the licensing, regulation and supervision of MVT service operators which, in Qatar, operate under exchange houses. Article 52 of the same law states that “no person shall use the term “bank” or logo of a bank or a finance or an investment company or an exchange office or any other financial institutions in the documents, correspondences, advertisements or any other means before obtaining the license from the QCB. Also practicing of works and activities provided for in the Law is prohibited unless it is licensed”. MVT service operators are covered by and subject to the obligations imposed by the AML Law. QCB Instructions establish the requirements for MVTs to among other things:

  • Identify the customers;
  • Report suspicious transactions to the FIU;
  • Report cash transactions greater that QR. 1000,000 (a recent Circular was issued reducing the reporting threshold to QR. 35,000);
  • Maintain records for 15 years;
  • Establish policies, procedures and internal controls to prevent money laundering and terrorism financing;
  • Pay attention to companies and financial institutions from countries that do not apply or insufficiently apply the FATF Recommendations;
  • Pay attention to complex and large transactions; and
  • Appoint a compliance office responsible for AML/CFT matters.

681. With regard to customer identification, the MVTs are required to identify the direct customer executing the transaction. QCB officials indicated that inspections of these MVTs are conducted to ensure compliance with the requirements of the Instructions, monitoring of funds through banks as well as other alternative remittance operators who are routinely used to send and receive funds and settlements.

682. When transferring funds abroad, the MVTs batch the outgoing requests for transfers at the end of the day and use their bank accounts to conduct the transfers. The settlement of transactions takes place through disbursements of funds to the recipients abroad also through banking institutions as well as other MVT service providers where relationships are established. A list of service operators/agents is maintained by the exchange house and verified by QCB inspectors during on-site visits.

683. Because MVTs fall within the jurisdiction and oversight of the QCB, these institutions are also subject to the same sanctions as other financial institutions. During 1999 and 2000, QCB officials used these powers when several exchange companies were sanctioned for non-compliance with customer identification requirements. Penalties imposed ranged from QR. 5,000 to QR. 10,000. The QCB has also temporarily closed an exchange company conducting transactions through an unauthorized business. Corrective action in this instance included removal of the company officials. The exchange company reopened again after QCB officials validated that adequate controls were in place to avoid a similar situation in the future. In 2005 the QCB issued three enforcement actions against exchange houses in the system. In 2006 only one enforcement action was issued. However, none of these was related to noncompliance with the AML/CFT requirements.

684. Anecdotal evidence revealed that an informal money/value transfer system appears to be operating within Qatar. This informal system seems to be directly related and used by a large group of communities working in Qatar in the services and construction sectors. Individuals within these communities periodically transfer money to their families and relatives in their respective countries through exchange houses, which as mentioned earlier are supervised/regulated by the QCB. However, the mission was informed that sometimes due to high costs associated to and time delays experienced when transferring funds abroad, (combined many times with a lack of an extensive financial system network in the receiving countries) individuals have sent and are currently sending money to their families through an informal system. QCB officials indicated that they are not aware of any informal money/value transfer system or activities taking place in Qatar.

685. Although money or value transfer services fall within the supervisory responsibility of the QCB, the major shortcomings related to inadequate customer identification and due diligence measures, lack of requirements for wire transfers, lack of sanctions for noncompliance and lack of effective risk-based supervision and regulation do not provide an adequate framework for dealing with informal value transfer services/unlicensed operators as they appear to be taking place within Qatar without adequate monitoring.

686. QFC: Money or value transfer services is not a permitted activity under the QFC law and therefore cannot be conducted in or from the QFC. In these circumstances, Special Recommendation VI is not applicable to the QFC.

3.12.2 Recommendations and Comments

687. Domestic sector: the authorities are recommended to:

  • Investigate the possibility of an informal MVT system operating in Qatar and consider effective measures for monitoring these activities, if identified.
  • Address the shortcomings identified in recommendations 4–11, 13–15, and 21–23, as applicable to this recommendation.

3.12.3 Compliance with Special Recommendation VI

RatingSummary of factors underlying rating
SR.VIPC
  • Potential informal money/value transfer system operating in Qatar without effective monitoring.
  • Number of shortcomings identified in other recommendations related to CDD, sanctions, supervision and regulation.

4 Preventive Measures—Designated Non-Financial Businesses and Professions

4.1 Customer due diligence and record-keeping (R.12) (applying R.5, 6, and 8 to 11).

4.1.1 Description and Analysis

Domestic Sector

688. Casinos are prohibited and notaries are government officials in charge of the authentication of real estate transactions, and as such do not fall in the FATF definition of DNFBPs. Other DNFBPs are present in the country: Real estate agents, dealers in precious metals, dealers in precious stones, lawyers and legal advisers, accountants and TCSP.

689. The AML Law does not apply AML/CFT requirement to DNFBPs in terms of customer due diligence, record-keeping and monitoring. However, the MEC issued on January 17, 2007, circular No.2 of 2007 on AML/CFT procedures requesting all companies, regardless of their activities, to identify clients, verify transactions, keep records and establish internal monitoring and training. The same requirements apply to the auditing offices pursuant to circular No. 3 of 2007 of the MEC. Similarly, the MOJ issued resolution No.108 of 2006 that applies to lawyers and law offices. But legal advisers are not covered. Dealers of precious metals acting as exchange houses are included in the scope of the AML Law and are subject to the QCB instructions on combating ML and FT (see the analysis in sections 3.1 to 3.5). The MEC and MOJ circulars are not considered enforceable means (See the discussion on enforceability at the beginning of section 3).

690. CDD Measures for DNFBPs in set circumstances (applying c. 5.1–5.18 in R. 5 to DNFBP) (c. 12.1).

691. Real estate agents, dealers in precious metals and stones and TCSP: There is no specific AML/CFT regulation covering these businesses and professions. Consequently, they have to comply with Circular No.2 of 2007 requesting all companies to identify every natural person or his representative based on an official ID document before executing any financial transaction. In the case of a legal person, the circular requests identification of the customer based on the commercial register and the license details. It also requests the verification of the actual status of the company representative’s authorization on the basis of the official documents and verifying the identity of the real owner.

692. The circular does not, however, address all the requirements concerning customer identification. It only refers to the financial transaction and does not address its preparation. The circular also requires to identify the “real owner” of a legal person but this requirement is vague. It does not require to verify that the person purporting to act on behalf of the customer is so authorized, and identify and verify the identity of that person. The circular does not request the identification of the beneficial owner, nor the conduct of due diligence on an ongoing basis. There is no provision on the necessity to obtain information on the purpose and intended nature of the business relationship. There is no requirement for enhanced due diligence for higher risk categories of customer, business relationships or transactions, no provision that addresses failure to satisfactory complete CDD, and no measures applicable to existing customers. Moreover, the scope of the circular appears to be excessively wide. Indeed, it covers all companies in Qatar, including grocery stores or restaurants. This is not required by the standard and it is hardly enforceable. Finally, the circular does not set out enforceable requirements with sanctions for noncompliance.

693. Accountants: Circular No. 3 of 2007 requests all accountants to identify any natural person (or his representative) on the basis of official ID documents. In the case of a legal person, the circular requests identification of the customer based on the commercial register and the license documents. Identification may also be based on official documents of the company representative. Due diligence procedures have to be conducted at the beginning and during the relation with the customer including registering and maintaining copies of the identities. Article 2.2.1 of the circular also requests “the verification of the seriousness and safety” of all financial transactions and gives a variety of criteria that may be taken into account such as the expenses, revenues, investments, cash collection or payment operations, incoming or outgoing drafts, sale, purchase, importation and exportation contracts, and other transactions.

694. The circular does not address all the requirements concerning customer identification. In particular, it does not address CDD when preparing a transaction and only refers to financial transactions. The requirement to identify the company representative of a legal person is vague and does not ask to verify that the representative purporting to act on behalf of the customer is duly authorized, and identify and verify the identity of that person. Moreover, concerning legal persons, the circular does not clearly state if the identification requirements are cumulative or not in the case of dealing with a company representative. The circular does not request the identification of the beneficial owner, or the conduct of due diligence on an ongoing basis. There is no provision on the necessity to obtain information on the purpose and intended nature of the business relationship and the criteria of transactions that need to be verified pursuant to Article 2.1.1 are by far too large. The requirement of enhanced due diligence for higher risk categories of customer, business relationships or transactions is absent, and there is no provision in relation to the failure to satisfactory complete CDD nor with regard to measures applicable to existing customers. Finally, the circular does not set out enforceable requirements with sanctions for noncompliance.

695. Lawyers: Lawyers are required by resolution No. 108 of 2006 of the MOJ to verify the identity of their clients whether individuals or corporate bodies. This includes the verification of the transactions of the client, and the verification of the identity of the real client (if there are several parties to the case). The relationship with the client has to be documented by means of a contract and an authenticated power of attorney.

696. Resolution No. 108 of 2006 does not address all the necessary requirements concerning customer identification. In particular, the requirement of identification and verification are not sufficient, the provisions do not request the identification of the beneficial owner, or the conduct of due diligence on the business relationship, including on an ongoing basis. There is no provision on the necessity to obtain information on the purpose and intended nature of the business relationship. The requirement of enhanced due diligence for higher risk categories of customer, business relationship or transaction is absent, and there are no provision in relation to the timing of verification of the identity and to the failure to satisfactory complete CDD as well as concerning existing customers. Moreover, Resolution No. 108 of 2006 does not appear to be enforceable. It does not set out enforceable requirements with sanctions for non-compliance. The references to obligations and penalties referred to in instruction 9 of the resolution are only for the observance of the AML Law and Law No. 23 of 2006 concerning the Advocacy Law. But the AML Law and the Advocacy Law do not envisage sanctions for non-compliance with Ministerial Resolutions. Instruction 10 does not provide for sanctions either.

697. CDD Measures for DNFBPs in set circumstances (applying criteria under R. 6 & 8–11 to DNFBP) (c.12.2). Applying R.6,8,9 (PEPs, payment technologies and introduced business): There is no mention in the AML Law, or in any regulations, on PEPs, payments technologies and introduced business for any DNFBPs.

698. Applying R.10 (record keeping)—Real estate agents, dealers in precious metals and stones and TCSP: Pursuant to Article 1.3 of Circular No. 2 of 2007 issued by the MEC, all companies should keep record of customers’ ID and financial transactions for a period of at least five years. Competent authorities should have access to the records. This recent circular does not appear to be consistently implemented by the DNFBPs met during the visit.

699. Several requirements of R.10 are either lacking or incomplete. Records have to be kept for a period of five years following the completion of the transaction. There is no obligation to keep record of other documents such as business correspondence for a similar period of time, and no requirement to ensure that all information is available on a timely basis to domestic competent authorities. Finally, as previously shown, Circular No. 2 of 2007 is not enforceable, as it does not set out sanctions for noncompliance.

700. Accountants: Pursuant to Article 3 of the second section of Circular No.3 of 2007 issued by the MEC, all auditing offices should keep records of contracts concluded with customers and due diligence documents, for a period of five years. Competent authorities should have access to the documents.

701. The wording of Article 3 is unclear. It also refers to the obligation to keep record of “all other document and records covered by the law”, but there is no information as to which law it refers to. Moreover, the AML Law does not cover accountants. There is no clear requirement to keep documents related to the verification of the transaction or documents such as business correspondence. There is no requirement to ensure that all information is available on a timely basis to competent authorities. As for Circular No.2, Circular No. 3 is not enforceable, as it does not set out sanctions for non-compliance.

702. Lawyers: Pursuant to instruction 7 of the Resolution of the MOJ No. 108 of 2006, lawyers and law firms have to maintain an integrated database of all their business cases and relationship. However, this requirement is not sufficient. Indeed, the types of documents that have to be recorded are not detailed enough and the duration of the requirement is not determined. There is no provision concerning the necessity for the information to be available on a timely basis to domestic competent authorities upon appropriate authority. Moreover, as shown above, Resolution No. 108 of 2006 is not enforceable.

703. Applying R. 11 (unusual transactions)—Real estate agents, dealers in precious metals and stones and TCSP. Pursuant to Circular No. 2 of 2007 issued by the Minister of Economy and Commerce, all companies are requested to “verify the seriousness and safety of financial transactions especially those that have high value to guarantee the absence of suspicious transactions” and “register the transactions in the registers provided in the Qatari law”. Companies are also prohibited to “conclude untrue financial transactions or execution of such transactions with fictitious persons”.

704. The elements on the identification of the transactions are not compliant with R. 11 because they are too general. The scope of the provisions is not clearly defined and does not requires to pay special attention to all complex, unusual large transactions, or unusual patterns of transactions, that have no apparent or visible economic or lawful purpose. There is no information on the elements that have to be examined and to set forth the findings in writing. The reference to the record-keeping in the ‘registers provided by the Qatari law’ is unclear. There is no reference to any register in the AML Law. In addition, there is no requirement to keep those records available for competent authorities and auditors for at least five years. Moreover the enforcement of the implementation of this requirement is weak if existent, and is not enforceable.

705. Accountants. Pursuant to Article 2.2 of the second section of Circular No. 3 of 2007, auditing offices have to ‘give further attention to the verification of valuable transactions and identify their purposes and the dealers’.

706. As for the Circular No. 2 of 2007, the elements on the identification of the transactions are not compliant with R. 11 because they are too general.

707. Lawyers. There is no provision regarding unusual transactions in Resolution No. 108 of 2006.

708. QFC: DNFBPs that are registered in the QFC are relevant persons that have to comply with the AML Regulations and the AML Rulebook. These are the same regulations that apply to the financial institutions registered in the QFC and the description and analysis under section 3 apply (see information on the QFC in 3.3, 3.4, 3.6 and 3.7). Because the QFC is recent, there is no evidence of an effective implementation of those regulations to the DNFBPs.

4.1.2 Recommendations and Comments

  • Domestic sector: The authorities should review the legal framework in order to set out in primary or secondary legislation the basic obligations on customer due diligence and record keeping for DNFBPs. The scope of the CDD and record-keeping requirements should be narrowed from all companies to DNFBPs. This should enable a better supervision and enforcement of these measures. Should the authorities identify other nonfinancial businesses and professions that pose a ML or TF risk, they should certainly consider applying the FATF recommendations to them but this should be done following a risk analysis and not indiscriminately. Provisions regarding PEPs, payments technologies, unusual transactions and introduced business have to be introduced. The provisions regarding CDD and record-keeping have to be reviewed in order to fully comply with the standard and to be enforceable.
  • The authorities should effectively implement the requirements set out in Circular No. 2 of 2007 of the MEC and in Resolution No. 108 of 2006 of the MOJ.
  • QFC: The QFC should address the shortcomings identified in section 3 as they also apply to DNFBPs. The effective implementation of the AML regulations should be ensured.

4.1.3 Compliance with Recommendation 12

RatingSummary of factors relevant to s.4.1 underlying overall rating
R.12NCIn the domestic sector:
  • The requirements on CDD and record-keeping are not set out in primary or secondary legislation.
  • No requirements on PEPs, payment technologies, introduced business and unusual transactions have been set out in law, regulation or other enforceable means. The scope of the professions currently covered is excessively wide;
  • Legal advisers are not covered.
  • Provisions on CDD and record-keeping are not sufficient and do not constitute enforceable requirements with sanction for non-compliance;
  • There are no provisions regarding PEPs, payments technologies, and introduced business;
  • The requirements on unusual transactions are not sufficient and not enforceable for the professions regulated by the MEC. There are no requirements for the legal professions;
  • The implementation is not effective.
In the QFC:
  • The regime is too new to be tested for effective implementation.

4.2 Suspicious transaction reporting (R.16) (applying R.13 to 15 & 21)

4.2.1 Description and Analysis

709. Domestic Sector: The suspicious transaction reporting process is set out in Article 6 of the AML Law. However, it only applies to financial institutions and not to DNFBPs. Some administrative regulations nevertheless require DNFBPs to report suspicious transactions. According to Article 3.1 of the administrative order No. 1 of 2004 establishing the FIU, the FIU may receive suspicious transactions reports related to ML and FT from non-financial professions. Article 2.3 of the Circular No. 2 of 2007 issued by the MEC requires all companies in Qatar to report suspicious transactions to the FIU. Article 5 of the second section of the Circular No. 3 of 2007 issued by the MEC requires auditing offices to notify suspicious operations to the FIU. The Minister of Justice issued a Resolution No. 108 of 2006 that obligates lawyers and law offices and companies to notify the FIU. The DNFBPs met during the onsite visit are generally not fully aware of their AML/CFT obligations. The DNFBPs that are part of foreign groups appear to be more aware of the head office policies than of the domestic obligations.

710. Requirement to Make STRs to FIU (applying c. 13.1 to DNFBPs). Pursuant to Article 6 of the AML Law, the obligation to report suspicious transactions applies to financial institutions only. Article 3 of the same law sets out obligations in case of knowledge of an ML offense: “A person is considered to have committed a ML offense if he has information, due to his work, that is related to ML offense stipulated in the previous Article and does not take the procedures stated in the law”. According to Article 3.1 of the administrative order No. 1 of 2004 establishing the FIU, the FIU may receive suspicious transactions reports related to ML and FT from non-financial professions.

711. Real estate agents, dealers in precious metals and stones, TCSP and accountants: Article 2.3 of the Circular No. 2 of 2007 issued by the MEC requires all companies in Qatar to report suspicious transactions to the FIU. The wording is not exactly the same in Article 5, second section, of the Circular No. 3 concerning the auditing offices. They have to notify the FIU in the event ML/FT suspicious operations are identified during the auditing process.

712. Lawyers: The MOJ issued a Resolution No. 108 of 2006 that obligates lawyers and law offices and companies to notify the FIU of “any suspicious commercial operation as soon as they discover any such suspicious transaction”. Such notification has to be made by using the form attached to the resolution. This requirement applies when they conclude on behalf or for the account of the customer any financial deal relating to the following activities:

  • Buying or selling of real estate properties;
  • Managing the funds, securities or other assets owned by the client;
  • Managing the bank accounts, savings or securities;
  • Organizing participations for the purpose of establishing, operating or managing of companies; and
  • Establishing, operating or managing material or corporate legal entities, in addition to the purchase or sale of entities.

713. Legal privilege is addressed in the Law 23 of 2006. Article 51 provides: “A lawyer is responsible before his client, for performing what he has been entrusted with, in accordance with the provisions of the law and conditions of proxy. He has to preserve the confidentiality of information which his client tells him about and the documents and papers he receives from him. He should work according to the money he earned from his client”. This is complemented by Article 57 of the same law: “If lawyers know, because of their profession, about facts or information, he should not disclose it, even after his proxy terminates, if this is not aimed at preventing the perpetration of a crime or offense or reporting a crime that has taken place”. The lawyers met by the mission had different views on these two provisions. Some of them consider difficult to file an STR as they consider that their confidentiality requirement would be breached. Others consider that an STR is necessary in order to avoid to be treated as an accomplice in a potential ML or FT scheme.

714. The Ministerial decisions do not cover all R. 13 requirements and they do not clearly address FT. They do not cover the proceeds of all offenses that are required to be included as predicate offense under R.1, and the obligation to make a STR does not include attempted transactions. Legal advisers are not included in the scope of Resolution No. 108 of 2006. Moreover, the current provisions on legal privilege in the law 23 of 2006 prevent the lawyer of any reporting of suspicion on the basis of the Resolution No. 108 of 2006 because Article 57 of law 23 of 2006 only enables a disclosure in case of knowledge of a crime or offense that is under perpetration or has taken place. Finally, the Circular of the MEC does not refer to supervision and sanction and the sanctions provided by the Resolution of the MOJ do not apply (see analysis of recommendation 24). No STR has been transmitted to the FIU by DNFBPs at the time of the visit.

715. As described in section 2.8 (R.26), under the current legal framework the DNFBPs are not obliged to send STRs to the FIU and the FIU has no power to receive, analyze and disseminate those STRs.

716. STRs Related to Terrorism and its Financing (applying c. 13.2 to DNFBPs). Concerning the legal framework, the shortcomings noted in the ML framework are valid for STRs related to terrorism and its financing. According to Article 3.1 of the administrative order No. 1 of 2004 establishing the FIU, the FIU may receive suspicious transactions reports related to FT from non-financial professions, but the ministerial decisions do not clearly address FT.

717. No Reporting Threshold for STRs (applying c. 13.3 & IV.2 to DNFBPs). There is no reporting threshold for STRs in the AML Law or in the Ministerial decisions.

718. Making of ML and TF STRs Regardless of Possible Involvement of Tax Matters (applying c. 13.4 and c. IV.2 to DNFBPs). The AML Law does not apply to DNFBPs and there are no provisions in the Ministerial decisions that prevent the requirement to report suspicious transactions to apply whether they are thought, among other things, to involve tax matters.

719. Additional Element—Reporting of All Criminal Acts (applying c. 13.5 to DNFBPs): The AML Law does not apply to DNFBPs and the Ministerial decisions do not cover the proceeds of all criminal acts.

720. Protection for Making STRs (applying c. 14.1 to DNFBPs). Pursuant to Article 2.3 of Circular No. 2 of 2007 of the MEC applying to all businesses, the STR is not regarded as a breach of secrecy of the transactions and it should not entail any kind of liability on the company or its employees. Concerning the Lawyers, according to instruction 5 of Resolution 108 of 2006 of the MOJ, the STR shall not be regarded as a breach of professional secrecy. Pursuant to section 2, Article 4 of Circular No. 3 of 2007 of the MEC, the STRs notified by the auditing offices to the FIU are not regarded as a breach of secrecy of the transactions and it should not entail any kind of liability on the company or its auditing office staff.

721. The requirements are not in line with the recommendation. Concerning liability, the concept of good faith is not included for any of the DNFBPs.

722. Prohibition against Tipping-Off (applying c. 14.2 to DNFBPs). Pursuant to Article 2.4 of Circular No. 2 of 2007 of the MEC, a company and its employees should not warn the customer about any suspicion on the transactions. According to instruction 9 of Resolution 108 of 2006 of the MOJ, penalties have to be imposed following the provisions of the AML Law when employees of law offices and firms alert the clients on the procedures being taken concerning them. Pursuant Article 13 of the AML Law, this behavior is punished by imprisonment for a period not exceeding one year and a fine not exceeding QR 3000. Pursuant to Article 2.6 of Circular No. 3 of 2007 of the MEC, the auditing office or its staff should not warn the customer about any suspicion on the transactions. The DNFBPs met by the mission are generally not aware of this requirement and no penalties have ever been imposed.

723. The requirements are not in line with R. 14. In addition to the legal persons and their employees, they have to apply to directors and officers. Concerning liability and for every DNFBPs, the concept of good faith is not included. Concerning ‘tipping off’, in addition to being unclear and incomplete concerning the information related to the STR, the provisions of the Circular No.2 of 2007 do not take into account the prohibition from disclosing the fact that information related to an STR is provided to the FIU. Resolution 108 of 2006 indicates that penalties have to be imposed following the provision of the AML Law. But the Article in the law that may be considered to deal with tipping off is unclear. Indeed, according to Article 4 of the AML Law “workers at a financial establishment are prohibited from informing their customers of the measures taken against them to combat money laundering”. Lawyers are not workers in a financial establishment and there is no reference to the disclosure of an STR or related information. So there is no legal basis for any penalties on lawyers concerning tipping off. In any event, the current requirements are not enforceable in the absence of a STR obligation.

724. Additional Element—Confidentiality of Reporting Staff (applying c. 14.3 to DNFBPs). There are no legal or regulatory provisions to ensure that the names and personal details of staff of financial institutions that make a STR are kept confidential by the FIU.

725. Establish and Maintain Internal Controls to Prevent ML and TF (applying c. 15.1, 15.1.1 & 15.1.2 to DNFBPs). Pursuant to Article 2.2 of Circular No.2 of 2007 of the MEC, all companies have to set policies and plans to combat economic offenses including the establishment of internal supervisory measures and controls. Law offices and firms are required by Resolution No. 108 of 2006 of the MOJ to lay down an internal system for combating money laundering and the financing of terrorism, by implementing effective internal control procedures. They also have to follow up international developments in the field of combating money laundering and terrorism financing. Pursuant to Article 2.4 of Circular No.3 of 2007 of the MEC, all auditing offices have to set internal auditing policies.

726. There are no elements showing an effective implementation of those provisions. In addition, circular No.2 of 2007 covers internal controls in relation to economic offenses, not specifically ML and FT. Moreover, there is no reference to internal procedures and policies for the lawyers, to the scope of the control and to the consideration of risk in the requirement of internal control for all DNFBPs. In addition, there are no provisions that require to develop appropriate compliance management arrangements, such as at a minimum the designation of an AML/CFT compliance officer at the management level.

727. Independent Audit of Internal Controls to Prevent ML and TF (applying c. 15.2 to DNFBPs). There are no requirements for any DNFBPs to maintain an adequately resourced and independent audit function to test compliance (including sample testing) with the internal procedures, policies and controls to prevent ML and TF.

728. Ongoing Employee Training on AML/CFT Matters (applying c. 15.3 to DNFBPs). Article 2.2 of Circular No.2 of 2007 of the MEC, sets out an obligation for all companies to organize training sessions for the employees. Article 2.4 of Circular No.3 of 2007 of the MEC, sets out an obligation for auditing offices to organize training programs for the auditing staff. There is no requirement of ongoing employee training concerning lawyers in the Resolution No. 108 of 2006 of the MOJ, but only the obligation to follow up international developments in the field of combating money laundering and terrorism financing, according to instruction 8.

729. Employee Screening Procedures (applying c. 15.4 to DNFBPs). There are no provisions requiring DNFBPs to put in place screening procedures to ensure high standards when hiring employees.

730. Additional Element Independence of Compliance Officer (applying c. 15.5 to DNFBPs). There are no provisions asking for the AML/CFT compliance officer to be able to act independently and to report to senior management above the compliance officer’s next reporting level or the board of directors.

731. Special Attention to Countries Not Sufficiently Applying FATF Recommendations (c. 21.1 & 21.1.1). Pursuant to Article 2.5 of Circular No.2 of 2007 of the MEC, all companies have “to give particular attention to the examination of financial relations and transactions concluded with countries that do not apply or insufficiently apply those provisions”. Lawyers and law firms are required by Resolution No.108 of 2006 to “give special attention to the business relations of persons or entities from countries that do not implement these provisions or whose implementation thereof is insufficient”. There are not such references in Circular No. 3 of 2007 concerning accounting offices.

732. When they exist, the requirements are not clear. They refer to ‘countries that do not implement these provisions’ and not to countries that do not or insufficiently apply the FATF recommendations, as requested by the standards. Moreover, there is no evidence of effective implementation. There is no information on the effective measures in place to ensure that DNFBPs are advised of concerns about weaknesses in the AML/CFT systems of other countries. There is no requirement on actions to be performed in case of transactions with no apparent economic or visible lawful purpose with those countries.

733. Examinations of Transactions with no Apparent Economic or Visible Lawful Purpose from Countries Not Sufficiently Applying FATF Recommendations (c. 21.2): There are no specific provisions to ensure that the background of transactions that have no apparent economic or visible lawful purpose is, as far as possible, be examined, and that written findings should be available to assist competent authorities.

734. Ability to Apply Counter Measures with Regard to Countries Not Sufficiently Applying FATF Recommendations (c. 21.3). There is no indication that Qatari authorities have the power to apply counter-measures when a country continues not to apply or insufficiently applies the FATF Recommendations.

735. QFC: DNFBPs that are registered in the QFC are considered as “relevant persons” and have to comply with the AML Regulations and the AML Rulebook. It is the same regulations that apply to the financial institutions registered in the QFC and the description and analysis under Section 3 apply. According to Article 13 of QFC AML Regulations, reporting obligations do not apply where the “relevant person” is a professional legal adviser and if the knowledge or suspicion or the reasonable grounds for knowing or suspecting are based on information or other matter which came to it in privileged circumstances. Privileged circumstances occurs when an information is communicated or given by the client in connection with the giving of legal advice, when seeking legal advice or in connection with legal proceedings or contemplated legal proceedings. The definition of “Professional legal adviser” includes any person who may come into possession of information or other matter in privileged circumstances.

736. The current definition of privilege circumstances may prevent the legal advisers licensed in the QFC to report information related to the activities prepared for the client which are listed in R. 13 relatively to trust and company services. Overall, there is no evidence of effective implementation of the requirements of R. 16 to the DNFBPs and no STR has ever been sent to the FIU. Moreover, as for DNFBPs in the domestic sector, there is no legal basis for the FIU to receive and handle STRs from DNFBPs of the QFC.

4.2.2 Recommendations and Comments

  • The law should be amended in order to require all relevant DNFBPs to report suspicious transactions to the FIU and to enable the FIU to receive, analyze and disseminate those reports. The amendment should also take into account the shortcomings identified in section 3 regarding the STR mechanism for financial institutions, especially concerning the current absence of requirements to report transactions linked relate to terrorism and the absence of obligation to report attempted transactions not established by primary or secondary legislation.
  • For the domestic sector, the requirements concerning protection from liability and tipping off should also be fully incorporated in the law. Regulations concerning internal controls and countries that insufficiently apply the FATF Recommendations have to be significantly strengthened. The scope of the MEC Circular No. 2 of 2007 has to be reviewed in order to address all relevant DNFBPs and other professions where a risk of ML or FT has been identified by the authorities. The MOJ should review the legal framework on legal privilege in order for the lawyers to be able to report when performing the activities listed in R.16 even in the case where there is no proof of crime or offense but only a suspicion. The Resolution of the MOJ should also cover legal advisers. Both regulations have to be reviewed in order to set out sanctions for noncompliance. The AML/CFT compliance officer and other appropriate staff should have timely access to customer identification data and other CDD information, transaction records, and other relevant information.
  • Concerning the QFC, the recommendations made in section 3 concerning the application of R. 13, 14, 15 and 21 to financial institutions should also be implemented with respect to DNFBPs. Lack of requirement to report regardless of whether transactions are thought, among other things, to involve tax matters. In addition, the framework of the legal privilege should be refined in order to avoid a lawyer from reporting suspicious information he handles when providing the services to companies and trust that are listed under R. 16.

4.2.3 Compliance with Recommendation 16

RatingSummary of factors relevant to s.4.2 underlying overall rating
R.16NCIn the domestic sector:
  • No STR obligations set out in primary or secondary legislation.
  • Ministerial regulations are not implemented and not enforceable.
  • There are no adequate measures to prohibit a DNFBP from disclosing to third parties the information it provides to the FIU.
  • Provisions on internal controls and countries that insufficiently apply the FATF recommendations are incomplete and not implemented.
  • Legal advisers are not subject to the STR obligations.
  • Provisions on the legal privilege of lawyers should be introduced.
In the QFC:
  • Provisions on the legal privilege of lawyers should be refined.

4.3 Regulation, supervision and monitoring (R.24–25)

4.3.1 Description and Analysis

737. The State of Qatar criminalized gambling under Article 275 of the Criminal code. According to chapter 11 of the Law No. 5 of 2002, the MEC is empowered to the supervision of companies. The MEC is in charge of implementing Law No.30 of 2004 on the organization of the profession of verifying and monitoring accounts. The MOJ is involved in exercising a monitoring role over the legal profession, as per the Law on the Profession of Lawyer No.23 of 2006. In the QFC, the firms conducting authorized activities are supervised by the QFCRA following the same AML Regulations than for the financial institutions.

738. Regulation and Supervision of Casinos (c. 24.1, 24.1.1, 24.1.2 & 24.1.3). There is no casino in Qatar because this activity is prohibited and therefore there is no supervisory framework.

739. Monitoring Systems for Other DNFBPs (c. 24.2 & 24.2.1). Domestic sector—General framework of the monitoring systems: All companies in Qatar should be registered in the commercial register held by the MEC. In order to operate, a registered company must then obtain a commercial authorization issued by the Ministry of Municipal Affairs and Agriculture. A company also needs to be a member of the Qatar Chamber of Commerce and Industry. The MEC is the main monitoring authority. This consists in the authorization and renewal of licenses. Pursuant to Article 101 of Law No. 5 of 2002 on commercial companies, every company should submit annually to the Ministry the names of the Chairman and members of the Board of Directors, their capacities, and their nationalities. Any company should also notify the Ministry any change that might take place as soon as it occurs. Pursuant to Article 126, a company must submit to the Ministry the financial statements every year before the General Assembly. The company must be audited by an internal auditor. He should submit a written report to the Ministry in case he can not perform the tasks and obligations assigned to him.

740. Chapter 11 of the Law No. 5 of 2002, empowers the MEC to conduct general supervision of companies but does not address AML/CFT supervision. Employees designated by a resolution of the Minister have the capacity of judicial officers and may verify violations of the provisions of the Law No. 5 of 2002 or its implementing decisions. In case of the occurrence of any of the offenses stipulated in the law, the judicial officers must report it in writing to the competent police station. The authorized employees have the right to inspect the companies and examine their accounts. Chapter 12 of the Law No.5 of 2002 lists penalties for non-compliance, including fines, jail and liquidation of the company.

741. The implementation of the powers of monitoring and supervision of the MEC is weak if existent. The unit in charge of the supervision of all companies and accountants in the country has only 5 staff. It does not address AML/CFT and the circulars No.2 of 2007 to all companies and No.3 of 2007 to accountants are not enforced. Practically the scope of Circular No.2 is so wide that it is not possible to apply and to monitor it. Legally, those two circulars do not provide for any sanction. The authorized employees of the MEC are not empowered to perform on-site supervision other than for the control of accounts. The following paragraphs address the specific monitoring of each DNFBP authorized in Qatar. With the exception of the legal professions, all other DNFBPs are subject to the MEC main supervision.

742. Real Estate Agents. In addition to the rules applicable to all companies, real estate agents have to be authorized by the real estate registration department of the MOJ. No specific obligations or supervision on AML/CFT requirements apply to them and there is no SRO of real estate agents. Nevertheless, the MOJ issued Circular 13 of 2006 to the Registration Department’s employees. The Circular provides for the necessity of listed officials to report any suspicious case directly to the Manager of Department. He is empowered to send STRs to the FIU. The Circular includes the “Suspicion Report” form and a statement of the names of persons authorized to report STRs.

743. Circular 13 of 2006 constitutes an attempt to include real estate transactions within the AML/CFT reporting system. However, no STR has ever been submitted to the FIU. Moreover, the MOJ does not have a full view of the financial transactions, may hardly be aware of the beneficial ownership and has only a formal contact with real estate buyers and sellers. Hence, the control by the real estate registration department cannot be considered as a substitute for the AML/CFT regulation and supervision of real estate agents.

744. Dealers in Precious Metals. As other companies, precious metals dealers have to be registered in the commercial register held by the MEC. In addition, the Public Qatari Authority for Specifications and Criteria is in charge of the control of the quality of the metals sold, the MOI gives an authorization to sell gold. Exchange houses are permitted to engage in the purchase or sale of precious metals and gold bullions. They are licensed and supervised by the QCB and are subject to the QCB supervision (see section 3). There is no SRO for dealers in precious metals.

745. The regulatory situation of precious metals dealers is uncertain. According to the QCB regulations, a business that buys or sells gold should be regulated by the QCB but this does not appear to be the case for all the businesses that buy or sell gold in Qatar.

746. Dealers in Precious Stones. There is no specific AML/CFT regulatory or supervisory framework for dealers in precious stones. They are regulated by the general rules that apply to all companies, as described above.

747. Accountants. The MEC is in charge of implementing Law No.30 of 2004 on the Organization of the Profession of Verifying and Monitoring Accounts. The legal accountant has to obtain a license, granted by the ‘Statutory Accountants’ Admission Committee’. The disciplinary board is in charge of sanctioning accountants who violates their professional duties. Pursuant to Article 42, it may be seized by the Ministry voluntarily or upon a complaint including the case of breaching the provisions of a regulation respective to the Law No. 30 of 2004. A professional association of accountants was recently created in Qatar. The membership is not mandatory and it has no self regulatory powers.

748. Compliance with the obligations created by the circular of the Minister of Economy and Commerce No. 3 of 2007 on AML/CFT procedures may not be enforced by the disciplinary board because the circular does not provide any sanctions for non compliance and is not grounded in Law No. 30 of 2004.

749. Trust and company service providers. There is no specific regulatory or supervisory framework for the trust and company service providers. They are regulated by the general rules that apply to all companies. Authorities were unaware of the existence of TCSP in Qatar but evidence from domestic TCSP websites was confirmed by domestic lawyers and accountants.

Domestic Sector—Monitoring system for Legal Professions

750. Lawyers. The MOJ is involved in exercising a monitoring role over the legal profession, as per the Law on the Profession of Lawyer No.23 of 2006. As such, the MOJ is responsible for the licensing of the Lawyers that have to be authorized by the Commission for the Admission of Attorneys. The Minister of Justice issued a resolution No. 108 of 2006 regarding AML/CFT procedures in November 2006. Under instructions 9 and 10 of Resolution No. 108 of 2006, lawyers and law firms are subject to penalties and sanctions for not complying with this resolution. There is no bar association in Qatar, but there is an association of lawyers with voluntary membership. Its principal objective is to promote the profession and it has no regulatory powers.

751. The general supervisory powers of the Department of Disciplinary Cases at the MOJ are very limited. It only has the power to investigate attorneys for disciplinary violations committed by them at the request of the Committee for the Admission of Attorneys, or any judge with regard to the attorneys’ acts towards the court, or at the request of stakeholders. There is no possible on-site supervision without an external request. So, the possibilities of AML/CFT supervision are limited. The possibility of sanction is inexistent because the references to obligations and penalties referred to in instruction 9 of the resolution are only for the observance of the AML Law and Law No. 23 of 2006 concerning the Advocacy Law. But the AML Law and the Advocacy Law do not envisage sanctions for non-compliance with Ministerial Resolutions. Instruction 10 does not provide for specific sanctions or legal basis either.

752. Legal advisers. The legal advisers working for branches of international law firms are authorized by the MOJ pursuant to a specific Resolution. They are subject to the supervision of the department of disciplinary cases of the MOJ. But as for lawyers this supervision does not consist in on-site inspections. Moreover, Resolution 108 of 2006 of the MOJ only applies to Lawyers. Accordingly, there is no legal basis for the supervision of Legal advisers on AML/CFT requirements.

753. QFC: The activities performed by lawyers, accountants and trust and company service providers are the only DNFBPs permitted and may operate in or from the QFC. While QFC Law provides for dealing in precious metals as a permitted activity, the QFC Financial Services Regulations do not identify dealing in precious metals as a regulated activity so this activity may not be conducted in or from the QFC. Buying or selling real estate may only be performed on an ancillary basis. Firms that are licensed by the QFCA and that are relevant persons are subject to the same AML/CFT requirements as authorized financial institutions and are also supervised, in respect of AML/CFT by the QFCRA.

754. There does not appear to be a clear strategy and sufficient human resources for the supervision of the sector over the longer term. DNFBPs have to submit their AML/CFT procedures and are made aware by the QFCRA of their obligations under the QFC AML Regulations. But the specificities of these activities are not addressed at this point and no risk assessment of the sector has been performed. Some weaknesses have also been identified in the monitoring process and particularly concerning the review of the AML/CFT procedures during the licensing process.

755. Except for the QFC and for the precious metals dealers supervised by the QCB, there is no designated competent authority responsible for monitoring and ensuring compliance of DNFBPs with AML/CFT requirements. In the case of Lawyers there is only a mechanism of sanction but it needs to be activated by an external party and there is no legal basis to sanction non-compliance with AML/CFT requirements. There is no SRO in the State of Qatar. The following table summarizes the situation in Qatar regarding supervision of DNFBPs:

Table 10.Monitoring System of DNFBPs
DNFBPsSupervisory or

monitoring authority
Basis of the AML/CFT

requirements
Licensing process
Casinos-Prohibited-
Real Estate AgentsMEC

MOJ
Circular No. 2 of 2007 -

MEC
MEC

MOJ
Dealers in Precious

Stones
QCB (Exchange

houses)
QCB AML/CFT

Regulations
QCB
MECCircular No. 2 of 2007 -

MEC
MEC
LawyersMOJ

QFCRA
Resolution 108 of 2006

QFC AML Regulations
MOJ

QFCA (licensing

process delegated to

QFCRA)
Legal advisersMOJNo basisMOJ
Notaries-Not a DNFBP in Qatar-
AccountantsMEC

QFCRA
Circular No. 3 of 2007 -

MEC

QFC AML regulations
MEC

QFCA (licensing

process delegated to

QFCRA)
TCSPMEC

QFCRA
Circular No. 2 of 2007 -

MEC

QFC AML regulations
MEC

QFCA (licensing

process delegated to

QFCRA)

756. Sanctions: With the exception of the Exchange houses dealing with precious metals and regulated by the QCB, no sanctions apply to DNFBPs for non-compliance with AML/CFT requirements in the domestic sector. Circulars No. 2 and 3 of 2007 of the MEC make no reference to sanctions and Resolution 108 of 2006 of the MOJ does not identify sanctions to be applied in case of non-compliance. One possible sanction in relation with AML/CFT that could be applied to DNFBPs in Qatar is based on the Article 186 of the Criminal code, which states that any person who knows about a crime or knows about an attempt to perpetrate a crime at a time when he can prevent its perpetration, and has unjustifiably abstained from reporting the crime to the competent authorities, shall be sanctioned by imprisonment for a period that does not exceed 3 years and a fine not exceeding 10,000 riyals, or by one of these two sanctions. In the same spirit, pursuant to Article 3 of the AML Law “a person is considered to have committed a ML offense if that person has information, due to her work, that is related to a ML offense stipulated in the previous Article and does not take the procedures stated in the law”. But these criminal sanctions are not relevant sanctions for a supervisor that has to ensure the compliance of a DNFBP with the AML/CFT requirements.

757. The QFCRA is empowered to impose sanctions on DNFBPs it supervises, in the same ways as for financial institutions. The assessment of those sanctions is covered in section 3. At the time of the assessment, no sanction had been pronounced against a DNFBP in the QFC.

758. Guidelines for DNFBPs (applying c. 25.1). Outside the QFC, no guidelines have been issued to assist the DNFBPs to implement and comply with AML/CFT requirements. No feedback has been provided by the FIU to the DNFBPs. The AML Rulebook sets out guidance, common to all relevant persons, essentially in the Appendix 2 on risk assessment.

759. In the absence of any STRs from DNFBPs, no specific or general feedback has been given by the FIU (c.25.2).

4.3.2 Recommendations and Comments

  • The authorities should consider reviewing their AML/CFT legal framework in order to introduce requirements and sanctions compliant with the standard, and introduce a supervisory framework.
  • A designated competent authority responsible for monitoring and ensuring compliance of each DNFBP with AML/CFT requirements should be established in Qatar, with adequate powers and resources to perform its functions. As there is no legal basis for supervision and no implementation, the authorities face different choices in order to supervise the DNFBPs. They may consider creating a unique supervisor for all DNFBPs. It could be faster and more efficient to implement than the establishment of a specific supervisor for each profession. It could enable a better programming of controls and allocation of resources according to a risk assessment of the whole DNFBP sector. The MOJ should be the only exception to this unique supervisor. It should implement a mechanism enabling the supervision of the compliance of lawyers and legal advisers with AML/CFT requirements.
  • Guidelines should be established by the FIU and the QFCRA in order to specifically assist DNFBPs to implement and comply with their respective AML/CFT requirements. Feedback has to be given to DNFBPs on the STRs received by the FIU. Regardless of the STR received, the FIU should provide general information on current techniques, methods and trends or sanitized examples of actual money laundering and FT cases.

4.3.3 Compliance with Recommendations 24 & 25 (criteria 25.1, DNFBP)

RatingSummary of factors relevant to s.4.3 underlying overall rating
R.24PC
  • No supervision and no sanction for non-compliance with the AML/CFT requirements in the domestic sector for all DNFBPs present in the country.
  • The QFC regime is too new to be tested for effective implementation 17.
R.25NC
  • No specific guidelines have been issued to assist DNFBPs.
  • No feedback has been provided by the FIU.

4.4 Other Non-Financial Businesses And Professions & Modern-Secure Transaction Techniques (R.20)

4.4.1 Description and Analysis

760. Circular No. 2 of 2007 of the MEC covers all companies operating in Qatar.

761. Other Vulnerable DNFBPs (applying R. 5, 6, 8–11, 13–15, 17 &21 c. 20.1). Domestic sector: Car dealers are explicitly mentioned in the STR form elaborated by the FIU. But for the domestic sector, the Qatari authorities have not conducted an assessment of the risk of professions other than DNFBPs of being misused for ML or FT. The current approach taken by the MEC with its Circular No.2 covers all companies operating in Qatar on an indiscriminate basis. It is not efficient because it puts an unnecessary burden on some businesses where there are clearly no major risks of ML or FT. Moreover, it is not implemented and the MEC has no power of supervision and sanction in case of non-compliance.

762. QFC: The QFC authorities have decided to apply the AML Regulations and AML rulebook to a broader range of activities than DNFBPs like tax and consulting services. The QFC has developed a risk based approach in assessing the possibility to require other non-regulated professions to comply with the AML/CFT obligations. The QFCRA has assessed that other firms licensed by the QFC, like executive search firms and media relations firms constitute a significantly low ML/FT risk. The assessment is more nuanced for ship broking and shipping agents. They are currently not considered “relevant persons” but no company has ever requested any license to perform this activity and the QFC may review its policy if the activity develops and risks are identified.

763. Modernization of Conduct of Financial Transactions (c. 20.2). Doha’s Securities Market Committee’s Decision No. 16/3 of 2005 on the instructions concerning the procedures for the prohibition and combating of ML and FT is intended to reduce the reliance on cash. Indeed, pursuant to this decision, cash payments to companies and brokerage firms shall not exceed 30,000 riyals or the equivalent in foreign currency and the companies and brokerage firms shall notify the Market in case of any cash payment below this threshold. But no reports have been submitted to the Market. On a general perspective, the economy is still strongly reliant on cash. The highest bill denomination is 500 riyals. From 2002 to 2005, the share of this denomination in the total currency in circulation has increased and now accounts for more than 77% of the total value. The currency in circulation increased of more than 60% during the same time.

764. With the exception of the DSM, the authorities did not provide any other information on measures taken to encourage the development and use of modern and secure techniques for conducting financial transactions that are less vulnerable to ML.

4.4.2 Recommendations and Comments

  • The authorities should conduct a risk assessment for the other non-financial professions. This should enable to focus AML/CFT efforts on the professions that pose a money laundering or terrorist financing risk and to move away from the indiscriminate approach illustrated by Circular No. 2 of 2007 of the MEC.
  • The authorities should introduce measures to reduce reliance on cash. They should also assess the risks associated with the currency changeover following the Gulf monetary union planned for 2010.

4.4.3 Compliance with Recommendation 20

RatingSummary of factors underlying rating
R.20PC
  • No risk assessment has been conducted in the domestic sector.
  • Qatar has not taken meaningful steps to encourage the development of modern and secure techniques for conducting financial transactions that are less vulnerable to money laundering.

5 Legal Persons And Arrangements And Non-Profit Organizations

5.1 Legal Persons—Access to beneficial ownership and control information (R.33)

5.1.1 Description and Analysis

765. Measures to Prevent Unlawful Use of Legal Persons (c. 33.1). Domestic Sector: A description of the types of legal persons that may be created in the State of Qatar is contained in Part 1 of this report. Registration of Companies is governed by Law No.(5) of 2002 as amended by law No.(16) of 2006. This Law allows the creation of joint partnership companies, simple partnership companies, joint venture companies, shareholding companies, limited share partnership companies, limited liability companies, individual companies and holding companies.

766. Pursuant to the law mentioned above, legal persons must register with the MEC and, in order to do so, must provide the following information: (i) the name of the company, its purpose, headquarter, and branches if any; (ii) the name of every partner, his or her profession, title, and surname when available, nationality, date and place of birth; (iii) the company’s capital, its distribution and the share each partner is committed to submit in cash, in kind, or rights with others; (iv) the date of the company’s establishment and its duration; (v) the method applied in managing the company and a statement of the names of those who are authorized to sign for the company and the extent of their powers; (vi) the beginning and end of the company’s fiscal year; and (vii) the procedure applicable to the distribution of profit and loss.

767. According to the authorities, when a company is registered the commercial register must also seek all the appropriate information on nominees, authorized representatives and ensure that they do not act as “fronts” for other intermediaries o on their behalf. The identity of the underlying beneficial owners should be obtained.

768. The commercial register verifies the information provided against valid identity documents at the time of registration. The law requires any change to be notified to the commercial register annually and approved by the authorities.

769. Branches of foreign companies: Companies may be registered in Qatar without having to incorporate locally but at least 51% of the shares must be held by Qatari residents. Branches may be registered on the basis of their Memorandum of Association and must provide a proof of the commercial registration in their country of origin. In such cases, a copy of the company’s decision to establish a branch the Power of Attorney issued in favor of the resident and a guarantee from the parent company to meet all of the obligations of the company in the State of Qatar, are required and must all be legalized.

770. QFC: The QFCRA regulates and supervises the full spectrum of financial services activities conducted in or from the QFC. At the time of the visit, few companies were licensed under the QFC. Article 11 of the QFC Law provides that to operate in or from the QFC, a firm must be (i) incorporated or registered with the QFC Companies Registration Office (CRO); (ii) licensed by the Qatar Financial Center Authority, and (iii) in the case of regulated activities, authorized by the QFCRA. The applicant firm must demonstrate their ability to comply with the QFC’s standards and requirements. Only one submission to the QFCRA is necessary. The QFCRA then co-ordinates the process, including that for licenses issued by the QFC Authority. Authorized firms (i.e. those authorized to conduct relevant financial services activities) are supervised by the QFCRA which may take enforcement or disciplinary action for non-compliance with applicable laws and rules.

771. The CRO maintains a central register of all LLCs, LLPs and branches operating in or from the QFC. This register provides details on ownership, management, registered office, principal representatives etc, and is available, free of charge, to the public through the website of the QFC Authority (www.qfc.com.qa).

772. Access to Information on Beneficial Owners of Legal Persons (c. 33.2). Domestic Sector. As mentioned above, legal persons are required to be registered in the commercial register which is held by the MEC. The commercial register is a system of central registration where the main ownership and control details for all companies registered in the domestic sector are maintained. All information stored in the commercial register database is accessible to the investigatory authorities (see Recommendation 27). Furthermore, the QCB developed a direct link with the commercial register, which enables it to have immediate access to all relevant information on the ownership of legal persons. This link will also be made available to the FIU in the near future. When this is set up, it should enable the FIU, in addition to all law enforcement agencies and the QCB, to have timely and adequate access to information on beneficial ownership and control for legal persons. Such an access could also prove useful to other authorities, such as the DSM.

773. QFC: The information on ownership and control of entities in the QFC is publicly available, and therefore immediately accessible to all relevant authorities, on the QFCRA’s website (www.qfcra.com).

774. Prevention of Misuse of Bearer Shares (c. 33.3). Domestic Sector: Article 97, paragraph 2 of the Qatari Commercial Code expressly stipulates that the shares of companies established in Qatar must be nominal. Consequently, the issuance of shares in bearer form is not permitted in Qatar.

775. QFC: Bearer shares are not recognized in the QFC either. The Companies Regulations require each LLC to maintain a register of all of its members (Article 19 of the Regulation). A person must be included in the register to be a member of the company and therefore to be the owner of the shares.

776. Additional Element - Access to Information on Beneficial Owners of Legal Persons by Financial Institutions (c. 33.4). Domestic sector: Access to commercial register is not accessible to financial institutions through Internet, but information on beneficial owners can be retrieved from the commercial register premises.

777. QFC: The CRO, providing details on ownership, management, registered office, principal representatives etc, is available, free of charge, to the public through the website of the QFC Authority (www.qfc.com.qa).

5.1.2 Recommendations and Comments

  • All relevant authorities currently have access to the information on control and beneficial ownership of legal persons, either through the powers granted to the law enforcement agencies, or, in the case of the QCB, through a direct electronic link to the central register; the authorities are nevertheless encouraged to enhance the timeliness of the access by providing the FIU and the DSM an electronic link to the register of commerce’s database (as is already the case for the QCB).

5.1.3 Compliance with Recommendations 33

RatingSummary of factors underlying rating
R.33LC
  • Domestic sector: timeliness of the FIU’s and DSM’s access to beneficial ownership and control information should be improved by establishing a direct electronic link to the commercial register database.

5.2 Legal Arrangements—Access to beneficial ownership and control information (R.34)

5.2.1 Description and Analysis

778. Domestic sector: The Qatari legislation does not provide for the creation of trusts or other similar legal arrangements. At the time of the assessment, there was no information available that would indicate that the private sector holds funds under foreign trusts and/or provides other trust services.

779. Measures to Prevent Unlawful Use of Legal Arrangements (c. 34.1). QFC: The Trust Regulations No 12 was issued by the QFC Authority on 26 February 2007. It provides for the creation of trusts under the QFC laws. The Trust Regulations, consisting of 13 parts and 68 articles, sets out inter alia the requirements for the creation of trusts, the duties and powers of the trustee, and the rights and interests of the beneficiaries and the termination of trusts. It also specifies the role of the QFC Tribunal in the administration of QFC trusts. The Trust Regulations defines trusts as “a right, enforceable solely in equity, to the beneficial enjoyment of property to which another person holds the legal title” and is applicable to express trusts, charitable trusts, non-charitable trusts and trusts created pursuant to law or judgment that requires the trust to be administered in the manner of an express trust. The Trust Regulations also provides for the creation of trusts under another governing law, as well as for the recognition of foreign trusts.

780. There are no requirements set out under the Trust Regulations to obtain, verify, or retain information on the beneficial ownership and control of trusts. In particular the settlor, trustee, and beneficiaries of trusts are not recorded anywhere and there are no requirements as to where the trust deeds should be kept 18.

781. Access to Information on Beneficial Owners of Legal Arrangements (c. 34.2): The Trust Regulations does not set out any measures that would enable the competent authorities to have adequate, timely and accurate information on express trusts, including information on the settlor, trustee and beneficiaries.

782. As discussed under Recommendation 28 and according to the CPC, law enforcement agencies such as the SSB and the ECPD have powers to compel production of financial records, trace property ownership, search premises for evidential material and summons a person to give evidence under oath. Accordingly, law enforcement agencies have some powers to obtain access to information on the beneficial ownership and control of certain legal arrangements.

5.2.2 Recommendations and Comments

783. According to the CPC, law enforcement agencies have the powers to compel production of financial records, trace property ownership, search premises for evidential material and summons a person to give evidence under oath which will allow them to access information on beneficial ownership and control of trusts. However, the mechanisms to obtain and have access in a timely manner to beneficial ownership and control of trusts, and in particular the settlor, the trustee, and the beneficiaries of trusts are not in place. There is considerable scope to improve the process to enable competent authorities to obtain or have access in a timely fashion to such information. Considering the above, it is recommended that the QFC Authority and the QFCRA:

  • Review the CDD requirements with respect to trusts to ensure that they are in conformity with the new Trust regulations.
  • Take measures that enable the competent authorities to have adequate, accurate and timely information on trusts created under QFC, including accurate, current and adequate information on the settlor, trustee and beneficiaries.

5.2.3 Compliance with Recommendations 34

RatingSummary of factors underlying rating
R.34PC
  • Absence of mechanisms to obtain, verify, or retain information on the beneficial ownership and control of trusts in a timely manner, and in particular with regard to the settlor, the trustee, and the beneficiaries of trusts.
  • Absence of measures to enable the competent authorities to have adequate, timely and accurate information on trusts, including information on settlor, trustee and beneficiaries.

5.3 Non-profit organisations (SR.VIII)

5.3.1 Description and Analysis

784. Types of NPOs. Law 12 of 2004 on private institutions and associations distinguishes between three different types of NPOs: the associations, the professional associations and the private institutions. The associations are defined as “a team including normal or considerate people participating altogether in a humane, social, cultural, scientific, professional or charitable activity, the purpose of which does not include material profits or political affairs.” A sub-group of associations, the “licensed charitable associations”, was created by an instruction issued by the Civil service and housing affairs Ministry on Charitable societies. There are 11 listed licensed charitable associations. The professional associations are defined as “an assembly joining people working in the same field organized by the law.” The private institutions are defined as “private facility established by one or more normal or considerate people in order to achieve one purpose or more purposes of the private or public utility for an unlimited period of time. Its goals do not include achieving material profits or working in the political affairs.”

785. The QFC enables NPOs to be established in the form of a charitable trust under the Trust Regulations. According to Article 25 of the Trust Regulations, “A Charitable Trust may be created for the relief of poverty, the advancement of education or religion, the promotion of health or art, the protection of the environment, or any other purposes which are beneficial to the general public.”

786. Review of the NPOs that can be abused for FT (applying c. VIII.1). Domestic sector. In light of international developments, the authorities reviewed the domestic laws and regulations on NPOs and decided to enact the Law 12 of 2004 on Private Institutions and Associations and the Law 13 of 2004 on the Foundation of the Qatari Authority for Charitable Activities (QACA). In 2006, a further review led the authorities to impose new obligations on NPOs that are considered at risk of being misused for FT, the charitable and humanitarian societies (charities). This decision resulted in Resolution 17 of June 11, 2006 issuing instructions related to the combating of ML and FT. As a registration authority, the Ministry of Civil Service and Housing Affairs has information on the general evolution and size of the NPO sector. The QACA has relevant information on the activities and size of the charities. Regular meetings with the FIU, the charities and foreign bodies involved in charities supervision, enable the QACA to have access to updated information on the sector’s potential vulnerabilities to terrorist activities. At the beginning of 2007, the QACA signed a Memorandum of Understanding with the Charities Commission for England and Wales, aiming to promote institutional cooperation and training.

787. QFC. At the time of the visit, the Trust Regulations was open for consultation. The QFC did not conduct any review of the domestic non-profit sector.

788. Outreach to the NPO sector concerning FT issues (Applying c. VIII.2). Domestic sector. Several measures have been taken by the authorities to raise awareness of the charities sector about the risks of terrorist abuse. This has mainly been done through the issuance of Resolution 17 of 2006 and meetings with all the charities to explain the objectives of the legal framework. On an ongoing basis, a working group composed of the FIU and the QACA has been established to ensure that charities understand the AML/CFT regulations. The charities also took part in a national workshop organized in February 2007 by the UNODC on the promotion of the universal instruments against terrorism. The creation of the QACA as a supervisory authority for the charities in 2004 and the supervision and communication that followed have enhanced the transparency. The QACA provides guidance for the associations and regularly holds coordinating meetings. It encourages charities to provide donors with a better understanding of the charity sector and monitors fundraising activities. Moreover, the QACA regularly issues warnings in the media on the rules and risks of fundraising.

789. QFC. At the time of the on-site visit, charitable trust were not authorized in the QFC. The Trust Regulations was issued on February 26, 2007 enabling the creation of QFC Trusts. The QFCRA did not undertake outreach to the NPO sector concerning FT issues during the drafting process of the QFC Regulation No. 12 and the QFCRA did not plan any outreach at the time of the visit.

790. Supervision or monitoring of the NPO sector (Applying c. VIII.3). Domestic sector. Law 12 of 2004 requires for NPOs to be registered and sets out a general monitoring framework. Pursuant to Article 8 of the Law, the Ministry of Civil affairs and housing accepts the request for registration and declaration on the basis of a decision made by the Minister and adopted by the Council of Ministers. NPOs have to maintain information on the purpose and objectives of their stated activities (Articles 4 and 5) and the identity of the founders (Article 4). Any modification of the purpose has to be notified to the Ministry of Civil Service and Housing Affairs. According to Article 22 of Law 12 of 2004, the Minister has to be informed about the session of the general assembly of every NPOs, and should send a representative to attend the general assembly sessions. The general assembly is typically in charge of the election of the members of the board of directors and of the adoption of annual financial statements (Article 19). All activities and accounts of the assembly are subject to the supervision of the Ministry (Article 32). If the purpose of an NPO is humanitarian or charitable, it has to be authorized by the QACA. The Ministry records all the information submitted by the NPOs. If NPOs do not comply with the obligations set out in the Law, the Minister can dissolve or suspend its board of directors and assign a temporary board for no more than a year if that serves the public interest and achieves the NPO’s purposes (Law 12 of 2004, Article 35). Finally, Article 31 of the Law imposes strict monitoring measures of all NPOs’ international activities. It requires a written approval by the Ministry of Civil Service and Housing Affairs, as well as communication of documents, for every financial transaction conducted with a foreign counterpart.

791. According to the QACA Resolution 17 of 2006, the private institutions and associations which have charitable and humanitarian objectives shall record all financial transactions, both locally and internationally and maintain them for a period of at least fifteen years. They have to respond promptly to requests for information received from the QACA, the courts or any other body authorized by law. These records must allow for the retrieval of all relevant information including the amount, currencies, type and date of the operation, place to which the remittance is made, the identity of the beneficiary, as well as any other required documents such as photocopy of the passport or identity card and the account number. These documents should be made available for inspection by the competent bodies upon request. The QACA has established an archive for documents relevant to charities including the identity of all NPOs’ personnel, members of the Board of directors and other officials and annual financial statements. A database maintained by the QACA includes all the correspondence. The authority keeps these documents for 15 years. Pursuant to the QACA Circular 1 of 2005, every transaction outside the country has to be documented and justified, the beneficiary has to be identified and the identity verified by the local Qatari or GCC embassy. The documents are communicated to the QACA for approval.

792. In addition to the 11 licensed charitable societies, six other institutions are under QACA’s supervision. Four of those 17 NPOs are developing projects abroad. According to Article 24 of the Law 13 of 2004, a decision of the Emir may exempt any NPO from the supervision of the QACA. On-site supervisions were originally conducted by the QACA alone and more recently in conjunction with a major auditing firm. The on-site audit done by QACA extends to international projects, with an assessment of the completion of the project in the receiving countries. In addition to the request for monthly completion reports, QACA’s department of projects made on-site visits to Yemen, Afghanistan and Mauritania in 2006. The staff of the department of projects has been trained with regard to ML and TF threats and staff of the internal audit department of the QACA has taken part in some missions.

793. Article 18 of Law 13 of 2004 establishing the QACA criminalizes with a maximum imprisonment of one year and a fine not exceeding fifty thousand Riyals the “collection of grants or the transfer of money abroad or granting or accepting loans, donations, grants, legacies, or entails, in violation of this law”. In all cases, the funds in dispute must be seized. On-site inspections have already taken place with regard to about two thirds of the charities. After the inspection a draft report is submitted to the senior management of the NPO for feedback and comments. If an issue is not solved at this point the violations are mentioned in the final report that is submitted to the president of the QACA, who may then apply a sanction. The QACA has already imposed steps to be taken in order to address shortcomings with sanction if they are not followed upon. So far, all recommended action have been followed up and therefore there was no need for additional sanctions. The imposition of sanctions would not prevent other legal measures, including penal measures.

794. The Qatari framework regarding monitoring and supervision of NPOs is well developed and the effective implementation has already begun. The on-site supervision of the international projects, which is already performed, may benefit from being conducted in a more systematic and structured basis, to ensure that funds have been spent in a manner consistent with the purpose and objectives of the charities. In addition, Article 6.6 of the Resolution No. 17 of 2006 is unclear. It refers to a team composed of FIU and QACA staff that inspects charities’ AML/CFT procedures and verifies the compliance with the Resolution. This article is currently not implemented and the supervisory power is exercised by the QACA only, whereas the joint FIU-QACA team is currently dedicated to raising the awareness of the sector to ML and FT risks. Finally, the possibility offered in Article 24 of Law 13 of 2004 to exempt an NPO from the QACA supervision may prevent the full transparency of the charities sector.

795. QFC. There is no monitoring and supervision of charitable trusts that are governed by QFC Law 19. There is no obligation for charitable trusts created in the QFC to report to QACA or the QFCRA or to make publicly available the information on their purpose and objectives or the identity of persons who own, control or direct their activities. Moreover, no specific oversight measures or rules have been established for charitable trusts. They are not licensed or registered and there is no obligation to keep records.

796. Information gathering and investigation (Applying c. VIII.4). Domestic sector: Resolution No.17 of 2006 which sets out instructions related to the combating of money laundering and terrorism financing also requires charities to verify the identity of any natural and legal person they are in relation with, and to conduct ongoing diligence. The Resolution further imposes on charities the obligation to verify the seriousness and validity of all financial transactions whose amounts exceed 100 000 Riyals. In addition, charities have to set up control procedures and training programs, appoint a compliance officer and report to the FIU when a suspicious financial transaction is detected. In case of breach of any of these obligations, the offending charity shall be punished according to the provisions of Chapter 5 of the Law No. 13 of 2004 (that includes seizure of funds, fines and prison) and the AML Law concerning the combating of money laundering. Domestic cooperation, coordination and information sharing take place under the NAMLC, and also on a bilateral basis between the QACA, the FIU, the PPO and the Qatari embassies abroad.

797. In addition, QACA receives the lists issued by the former Coordination Committee and the current NCT to implement Resolution 1373 and it circulates them among the associations and private institutions, requiring abidance by them, adoption of due diligence and suspensions of any dealing with the individuals, entities or organizations identified in the lists. In case of a positive match, the information must be forwarded to the NCT for the implementation of UNSCR 1373 to take the appropriate measures. At the time of the mission, no case had been transmitted to the Coordination Committee.

798. Resolution 17 of 2006 sets up a comprehensive framework for information gathering and investigation that goes beyond the standards. These provisions may assist the effective investigation and information gathering within the charities sector. To date, no STR has been sent to the FIU. Some elements may require further attention. Indeed, the identification process has some shortcomings. Under Resolution 17 of 2006, every donor has to be fully identified even for a one-riyal donation. This obligation does not appear to be enforced or realistically enforceable. Currently, the charity takes the name, address and phone number of the donor and the full identification required by the Resolution is effective above a 100 000 Riyals threshold. Moreover, the requirement to send STRs to the FIU is not supported in the AML Law. According to Article 3.1 of the administrative order No. 1 of 2004 establishing the FIU, the FIU may receive suspicious transactions reports related to ML and FT from non-financial professions. But the administrative order No.1 of 2004 does not conform with the AML Law. According to the law, it is the coordinator that should receive the STRs, whereas in the administrative order it is the FIU. There are no legal or regulatory explanation of the relationship between the FIU and the coordinator. But more importantly, the administrative order No.1 has no legal basis. Indeed, Article 20 of the AML Law only authorizes the MOI to issue executive resolutions of the provisions of this law. No legal provisions give any power to the Committee to issue resolutions. Consequently, even if the charities are obliged to send STRs under Resolution 17 of 2006, the FIU has no power to receive, analyze and disseminate those STRs.

799. QFC. Concerning charitable trusts whose governing law is QFC law, there is no possible effective information gathering or investigation since there is no registration, licensing or reporting requirements.

800. Capacity to respond to international requests for information about an NPO of concern (Applying c. VIII.5). Domestic sector: The authorities have designated the FIU as the administrative point of contact for international requests for information about an NPO suspected of terrorist financing or other forms of terrorist support. The FIU has ongoing relations with the QACA and information on a particular NPO can be transmitted promptly.

801. QFC. The FIU will not be able to respond to international requests for information about charitable trusts whose governing law is QFC law. The QFC will not be in a position to answer these requests because there is no obligation for a charitable trust to be registered or licensed in the QFC.

5.3.2 Recommendations and Comments

802. Domestic sector: Overall, the measures which are being implemented in the domestic sector to ensure that the NPOs cannot be abused by terrorist or terrorist financiers go beyond the requirements of the standards and appear to be effectively implemented. The comprehensive regulations in place do not appear to have had an adverse effect on the donations, as the total turnover of the sector is constantly growing. The high level of transparency appears indeed to have contributed to increase the trust of donors. Nevertheless, Qatar could continue to improve its framework, particularly by taking the following actions:

  • Review Resolution 17 of 2006 to make the identification requirements more realistic and enforceable. The current working identification (name, address, phone number) should be maintained for all transactions but charities should be required to undertake full identification and verification above a particular threshold and/or when there is a suspicion of money laundering or terrorism financing. This review should also clarify the role of the QACA-FIU team;
  • Review Law 13 of 2004 to suppress the possibility of exempting a charity from the QACA supervision; and
  • Systematize on-site inspection of international projects to ensure that funds have been spent in a manner consistent with the purpose and objectives of the charities. A risk assessment of the projects could effectively enable the QACA to tailor the extent of such on-site inspection and the staffing of the mission.

803. Although it is not a requirement under the standards, review the AML Law to empower the FIU to analyze and disseminate the STRs that the NPOs are currently required to file.

804. QFC: The Trust Regulations is not compliant with the requirements of SR VIII. It appears to be inconsistent with the domestic sector’s strict legal and regulatory framework, which does not provide the possibility for a QFC charitable trust to be domiciled in Qatar. Law 12 of 2004 defines private institutions and associations strictly and QFC charitable trusts are not captured by these definitions. Law 13 of 2004 only gives QACA the power to control “the humane and charitable works done by the associations and the private institutions” (article 4.2), and to control “the process of grant collection legalized for the humane and charitable associations and private institutions, the individuals, and the other authorities that are designated by a decision issued by the Council of Ministers” (article 4.4). This does not apply to the QFC charitable trusts. In addition, the current legal framework for charitable trusts in the QFC creates an opportunity to bypass regulations compliant with SR VIII in the legal framework of other jurisdictions.

805. In this context, it is recommended that the authorities:

  • Revise Law 12 of 2004 with a view to broaden the definition of NPO in order to include the QFC charitable trusts.
  • Revise Law 13 of 2004 with a view to enable QACA to regulate and monitor charitable trusts domiciled in Qatar.
  • Revise the QFC Trust Regulations in order to comply with SR VIII, including in particular, to license or register QFC charitable trusts and provide for appropriate measures to sanction violations of oversight measures or rules by QFC charitable trusts.
  • Promote effective supervision or monitoring of QFC charitable trusts. A memorandum of understanding between the QFCRA and the QACA could be contemplated to delineate the responsibilities of these bodies. The memorandum of understanding should also ensure that the authorities can effectively investigate and gather information on QFC charitable trusts, and enable them to respond to international requests for information about a QFC charitable trust of concern.

5.3.3 Compliance with Special Recommendation VIII

RatingSummary of factors underlying rating
SR.VIIILCDomestic sector:
  • Recent enactment of Resolution 17 of 2006 does not allow to fully assess the effectiveness of supervision of the NPO sector 20.
  • There is a regulatory possibility of exempting a charity from QACA supervision.
QFC:
  • The Trust Regulations creating charitable trusts is not compliant with SR VIII.

6 National And International Co-Operation

6.1 National co-operation and coordination (R.31)

6.1.1 Description and Analysis

806. Mechanisms for Domestic Cooperation and Coordination in AML/CFT (c. 31.1). Two mechanisms were put in place to ensure the cooperation amongst the relevant authorities in the fight against money laundering and terrorist financing, the NAMLC and the Coordination Committee in 2002 that was replaced in 2007 by the NCT.

807. NAMLC was established under the presidency of the Deputy Governor of the Central Bank. In accordance with Article 8 of the AML Law as amended by Decree Law No 21 of 2003, the NAMLC comprises two representatives of the MOI, including a director from the ministry’s specialized department (currently the Director of the General administration of Immigration), a representative of the Ministries of Civil Service Affairs and Housing, Economy and Commerce, Finance and Justice, as well as additional representative of the QCB and the Customs and Ports general Authority. Although not specified in the AML Law, the State Security Bureau (which is an independent body that reports directly to the Emir) is also represented in the NAMLC.

808. The statutory functions of NAMLC are the following: to prepare, adopt and follow-up the implementation of AML plans and programs, to ensure coordination amongst the competent entities in order to implement the provisions of the legislation and agreements related to AML issues, to follow the international trends, propose the necessary measures in this regard, and prepare the necessary reports, statistics and data on AML efforts (Article 9 of the AML Law).

809. NAMLC is currently chaired by the Deputy Governor of the QCB. The Director of the MoI’s Immigration Department acts as deputy chairman. The head of the FIU acts as coordinator for the NAMLC and spear-heads the dialogue amongst the members as well as communication with other relevant bodies and agencies. The full NAMLC membership meets four times a year and additional bilateral contacts between the individual members of the Committee occur on a frequent basis.

810. NAMLC is empowered by the AML Law to issue its own regulation (Article 8 as amended by Article 1 of the Decree Law No. 21 of 2003). It used this prerogative on one occasion, with the issuance of Resolution No.1 of 2004 which established the FIU (see write-up on Recommendation 26).

811. Representatives of NAMLC (in most cases the head of the FIU acting as coordinator and/or the deputy chairman of NAMLC) visited all the ministries of the Qatari government with a view to raise awareness on AML/CFT issues, as well as to provide guidance on the AML/CFT framework and information on the NAMLC’s role.

812. The establishment of NAMLC in 2002 was timely and the Committee provides a useful platform for an effective inter-ministerial dialogue and overall, the communication and coordination amongst the members of the NAMLC appeared to be frequent. However, the NAMLC membership does not include all the relevant authorities in the fight against money laundering and terrorist financing; in particular, the Public Prosecutor’s Office, the securities market regulator 21 and the recently established QFC. The Head of the FIU, acting as coordinator for NAMLC, ensures that regular dialogue with these authorities nevertheless takes place and that cooperation is effective. As an example of such cooperation, the authorities mentioned that the draft QFC Regulation on AML/CFT was submitted to the head of the FIU for comments before its finalization In practice, the information flow from NAMLC, on the one hand, to the Public Prosecutor’s Office, the securities market regulator and the QFC, on the other, seems effective, despite that fact that it relies solely on a purely informal basis. It nevertheless remains unclear to what extent the input from these three authorities is sought and considered by the NAMLC before a decision is taken. It would therefore prove useful to formalize the coordination and cooperation, for example, by including representatives from all three authorities in NAMLC. The fact that the QFC is an independent body which may adopt its own framework of civil laws should not be raised as an obstacle to closer cooperation with the domestic authorities, because, pursuant to the Law No 7 of 2005, the QFC remains bound by the Qatari criminal laws; it is therefore responsible for the implementation of the AML and the CT Laws within its territory and is directly affected by the decisions taken by NAMLC. In these circumstances, it would be appropriate to enable the QFC to partake in the national efforts to develop and implement the AML and CFT laws, regardless of its independent status.

813. A second platform was established initially, in January 2002, with the establishment of an interdepartmental committee, the Coordination Committee, in charge of the coordination of the implementation of the UN resolutions on the fight against terrorism (Council of Ministers’ decisions of January 12, July 7 and July 21 of 2002), then replaced by the National Committee for Fighting Terrorism (the NCT), created pursuant to the Council of Ministers’ decision of March 26, 2007.

814. The Coordination Committee which was in place from January 2002 until March 2007 comprised representatives from the Ministries of Civil Service Affairs and Housing, Finance, Economy and Commerce, Interior, and Justice, as well as representatives of the Islamic Affairs department and Awqaf, the QCB and the Chamber of Commerce and Industry. Although it is not a permanent member of the Committee, the MOFA is usually invited to attend the meetings. All members received the UNSCR 1267 lists of designated terrorist and the requests made under UNSCR 1373. The new NCT is composed of representatives from the MOI, the Qatar Armed Forces, the State Security Bureau, the Internal Security Force, the Ministry of Civil Service and Housing Affairs, the Ministry of Finance, the MEC, the MOJ, the Ministry of Endowment and Islamic Affairs, the General Secretariat of the Council of Ministers, the QCB, the General Authority of Customs and Ports, and of the Qatar Chamber of Commerce and Industry (Article 1 of the abovementioned decision).

815. The main functions of the NCT are to make plans and programs to fight terrorism, to coordinate national efforts in the implementation of the obligations arising from UNSCR 1373 and to take action to implement the obligations set out in the international conventions against terrorism to which Qatar is a party (Article 3 of the same decision). The implementation of other relevant UNSCR, and in particular of UNSCR 1267 and its successor resolutions, does not fall within the remit of the new NCT and is currently unaddressed.

816. The membership of the former Coordination Committee and of the current NCT represents all the relevant authorities in the fight against money laundering and terrorist financing, with the notable exception of the PPO, the DSM and the QFC. The authorities established that the QFC nevertheless receives the updates to the 1267 list and the requests made by other countries through one of the members of the NCT (and, previously, of the Coordination Committee). Since the QFC and the DSM are responsible for the implementation of the AML/CFT measures, including the UNSC resolutions, within their remit, it would nevertheless prove useful to include them in the NCT membership in order to allow them to participate in the discussions and be informed at the same time as the other members of the NCT. This would ensure that no time is lost between the moment when the NCT receives the UN updates or takes a decision on other designations and the moment when it informs the QFC and DSM.

817. Operational coordination with respect to the implementation of the UNSCRs is in place but should be further enhanced as mentioned above (and in the write-up for SR III).

818. In conclusion, the two coordination committees, and NAMLC in particular, offer an appropriate framework for domestic cooperation amongst most of the relevant authorities on ML and TF issues, with the exception of coordination and implementation of UNSCR 1267. They would nevertheless benefit from an enlarged membership and, in the case of the NCT, focus as a matter of priority on enhancing the operational cooperation in the implementation of the UNSCRs.

819. Additional Element—Mechanisms for Consultation between Competent Authorities and Regulated Institutions (c. 31.2). No mechanisms have been put in place to ensure adequate consultation of the financial and non-financial sectors that are subject to the AML/CFT measures.

820. Statistics (applying R.32). No comprehensive statistics are held in this respect.

6.1.2 Recommendations and Comments

  • The authorities should formalize the cooperation with, the QFC, the securities market regulator and, if necessary, the Public Prosecutor’s Office, and seek to include them in their efforts to develop and implement policies to combat money laundering and terrorist financing.
  • The authorities should ensure as a matter of priority enhanced cooperation in the implementation of UNSCRs 1267 and 1373 (and their successor resolutions).
  • Comprehensive statistics should be maintained.

6.1.3 Compliance with Recommendation 31

RatingSummary of factors underlying rating
R.31LC
  • There are mechanisms in place to ensure effective cooperation and coordination amongst most of the relevant authorities in AML but they could be enhanced by formally including the QFC, the DSM and, if necessary, the PPO.
  • The coordination mechanism in place for the implementation of the UNSCR 1373 could be enhanced in a similar way.
  • There is no mechanism for the implementation of the UNSCR 1267.

6.2 The Conventions and UN Special Resolutions (R.35 & SR.I)

6.2.1 Description and Analysis

821. Implementation of Vienna Convention (Articles 3–11, 15, 17 & 19, c. 35.1). The Vienna Convention has been ratified by the Qatari government through Decree No. 130 of 1990. The production, manufacture, extraction, preparation, offering, offering for sale, distribution, sale, delivery, brokerage, dispatch in transit, transport, importation or exportation of any narcotic drug and psychotropic substances have been criminalized through Law No. 9 of 1987 (as amended by Law No. 7 of 1998 pertaining to combating drugs and dangerous mental effects and regulating their use and trade), in compliance with Article 3 of the Convention. The money laundering offense also partially meets the requirements set out in the Palermo Convention (see write-up on Recommendations 1 and 2). The State of Qatar has taken measures to ensure that it has jurisdiction over the offenses committed in its territory (including vessel/ships) by amending its criminal Code as well as to cooperate with other countries in a way which broadly complies with Articles 4 to 10 of the Vienna Convention. It has also created the legal basis to allow for the appropriate use of controlled delivery as required under Article 11 of the Conventions (Article 425 of the CPC). It has not, however, taken measures with respect to commercial carriers, traffic by sea, use of mail in compliance with Article 15, 17 and 19 of the Vienna Convention.

822. Implementation of Palermo Convention (Articles 5–7, 10–16, 18–20, 24–27, 29–31 & 34, c. 35.1). The Palermo Convention has not been ratified by the State of Qatar and participation in an organized criminal group (Article 5 of the Convention) has not been criminalized.

823. Money laundering has been criminalized and AML measures have been adopted but neither the AML offense nor the relevant preventive measures are in full compliance with Articles 6 and 7 of the Palermo Convention (see write-up on relevant recommendations). Legal persons may be subject to criminal liability but this liability is only available for the money laundering offense, and does not apply to the participation in an organized criminal group per se, nor to cases of corruption and obstruction of justice and, thus, does not comply with Article 10 of the Palermo Convention. Money laundering and the failure to comply with the preventive measures are subject to sanctions which are generally in line with Article 11 of the Convention. Mutual legal assistance may be rendered in a number of cases and confiscation, seizure and extradition are possible and broadly meet the requirements set out in Articles 10 to 16, 18 to 20 of the Palermo Convention, except with respect to organized crime. No measures have been taken to ensure effective protection of witnesses who need and assistance to and protection of the victims as required by Articles 24 and 25 of the Palermo Convention. General dispositions in the Criminal Code aim at encouraging persons who have participated in a crime to cooperate with the law enforcement authorities but in the absence of criminalization of organized crime, they do not apply as required by Article 26 of the Convention. In the absence of ratification, international cooperation may not be rendered on the basis of Article 27 of the Palermo Convention. Furthermore, the general framework for international cooperation is not sufficiently broad to overcome the absence of ratification and, although it provides the framework for international cooperation in the fight against money laundering, it is not applicable in the fight against organized crime because the latter has not been criminalized in Qatar. The absence of criminalization of transnational organized crime also entails that none of the measures required under Articles 29 to 31 of the Palermo Convention have been taken.

824. Implementation of SFT Convention (Articles 2–18, c. 35.1 & c. I.1. The ICSFT has not been ratified by the State of Qatar. 22 Some of the measures it requires have been partially implemented in Qatar through the adoption of the AML and CT Laws (see write-up under SR I).

825. Ratification of CFT Related UN Conventions (c. I.1). Qatar has not yet signed the ICSFT. The Council of Ministers has decided to refer this question to the competent authorities in Qatar to study the provisions of the Convention with a view to Qatar’s accession to the Convention (fourth report of the State of Qatar to the UN CTC, March 2006, S/2006/171). Terrorist financing has been criminalized but lacks the level of detail required to fully comply with the requirements set out in the ICSFT. Other requirements of the ICSFT have been partially implemented in the Qatari legislation with the adoption of the AML Law and the CT Law (see the write-up under SR II for Articles 2–6 and 17–18: SR III for Article 8; and SR V for Articles 7 and 9–18 of the ICSFT).

826. Implementation of UN SCRs relating to Prevention and Suppression of FT (c. I.2). Qatar regularly informs the UNSC of the progress made in the fight against terrorism: It submitted its report to the UNSC 1267 Committee (in accordance with UNSC Resolution 1455 (2003)) on August 18, 2003 23 and its reports to the UNSC 1373 Committee on October 28, 2002 24, March 10, 2004 25 and March 17, 2006. 26

827. An inter-ministerial committee, the NCT has been established amongst other things to ensure the coordination of the implementation of UNSCR 1373, but no legal measures have been taken to ensure that the authorities may rely on an effective freezing mechanism (see write up under SR III and Rec. 31). As also mentioned, the NCT does not address coordination in the implementation of UNSCR 1267.

828. According to the authorities, none of the persons and legal entities listed under UNSCR 1267 have been identified in Qatar. One of the legal entities designated under UNSCR 1267 was purported to have a branch in Doha. A search was conducted and it appeared that the branch had been closed down and that the legal entity listed had no accounts in the banks operating in Qatar. However, it would appear that at least in one case the authorities did not provide the assistance required under UNSCR 1267 and offered safe harbor to a foreign national listed under UNSCR 1267, in violation of their obligations under the resolution (see also write-up under SR II).

829. Additional Element—Ratification or Implementation of Other relevant international conventions (c. 35.2). Qatar is also party to the 1998 Arab Convention for the Suppression of Terrorism.

6.2.2 Recommendations and Comments

830. The authorities are encouraged to:

  • Take the necessary measures to fully implement the Vienna Convention;
  • Sign, become party to and fully implement the Palermo Convention;
  • Sign, become party to and fully implement the International Convention for the Suppression of Terrorist Financing; and
  • Take the necessary measures to comply with and fully implement UNSCR 1267 and 1373 (and their successor resolutions) as recommended under SR III.

6.2.3 Compliance with Recommendation 35 and Special Recommendation I

RatingSummary of factors underlying rating
R.35PC
  • Qatar has partially implemented the Vienna Convention.
  • It has not ratified nor fully implemented the Palermo Convention and the 1999 ICST.
SR.INC
  • Qatar is not party to and has not implemented the ICST.
  • Qatar has not fully implemented the UNSCR 1267 and 1373. Moreover, it acted in violation of UNSCR 1267 on one occasion.

6.3 Mutual Legal Assistance (R.36–38, SR.V)

6.3.1 Description and Analysis

831. Widest Possible Range of Mutual Assistance (c. 36.1). The AML Law specifically provides that legal assistance, coordination, joint cooperation and extradition should be provided in money laundering investigations in accordance with the international agreements concluded by the State of Qatar (Article 17 of the AML Law). The general framework for mutual legal assistance is set out in the Criminal Procedure Code (CPC; Book V) and applies to the fight against money laundering.

832. Other than extradition, the types of measures that may be taken on behalf of a foreign jurisdiction are not clearly defined in the law. Article 427 of the CPC merely refers to a foreign country’s request “to conduct an investigation through the Qatari judicial bodies”. The limitations are similarly broad; Article 428 of the CPC provides that a request for mutual legal assistance must be rejected when the procedures sought are prohibited by law or in conflict with the principles of the general order of Qatar. It would therefore appear that, subject to reciprocal agreement (Article 407 of the CPC), all the measures permitted under the general dispositions of the CPC may be taken on behalf of a foreign State. This includes all of the following acts:

  • the production, search and seizure of information, documents, or evidence from financial institutions, or other natural or legal persons (Article 29 of the CPC). It has to be noted however that the production of banking records (including those held by QFC banks) requires an authorization from the Governor of the QCB: neither the PPO nor the police may order a bank to provide information on a customer’s bank account;
  • the taking of evidence or statements from persons (Article 34 of the CPC);
  • providing originals or copies of relevant documents and records as well as any other information and evidentiary items;
  • effecting service of judicial documents;
  • facilitating the voluntary appearance of persons for the purpose of providing information or testimony to the requesting country; and
  • identification, freezing, seizure, or confiscation of assets laundered or intended to be laundered, the proceeds of money laundering and assets used for or intended to be used to finance terrorist groups or organizations, as well as the instrumentalities of the money laundering offense, and assets of corresponding value (Article 12 and 13 of the AML Law; Article 15 and 21 of the CT Law).

833. On this last point, it is worth mentioning that the AML Law does not specifically address the instrumentalities of the predicate offense. Consequently, the identification, freezing, seizure or confiscation of these instrumentalities would have to be the object of a separate request for mutual legal assistance based on the predicate crime, thus creating an additional hurdle for the requesting State.

834. Provision of Assistance in Timely, Constructive and Effective Manner (c. 36.1.1). The authorities did not provide any information that would enable the assessors to establish that Qatar is able to provide such assistance in a timely and effective manner.

835. No Unreasonable or Unduly Restrictive Conditions on Mutual Assistance (c. 36.2). Pursuant to Article 428 of the CPC, requests for mutual legal assistance are to be rejected if:

  • a. the required procedures are prohibited by law or in conflict with the general principles applicable in Qatar;
  • b. the acts in respect of which the request is made does not constitute a crime under Qatari law (unless the defendant agrees to the procedure, in which case the authorities may undertake the measures required by the requesting State); or
  • c. the crime investigated is one for which extradition is not allowed under the Qatari legislation (i.e., under the circumstances listed under Article 410 of the CPC. See write up on R 39 below).

836. It results from the above (and from letter (b) in particular) that the Qatari authorities are not entitled to grant the requested assistance in the absence of dual criminality. This entails that, although money laundering is a crime under Qatari law, a request for mutual legal assistance will not be followed upon if the underlying crime of the money laundering offense investigated or prosecuted in the foreign State is not one of the predicate offenses listed under Article 2 of the AML Law.

837. Although the conditions set out in the law are not unreasonable, disproportionate or unduly restrictive per se, the combination of a strict dual criminality requirement and of the limited list of predicate offense under Article 2 of the AML Law greatly limits the scope of the assistance that they authorities may provide.

838. Efficiency of Processes (c. 36.3). Request for mutual legal assistance are forwarded to the PPO through the diplomatic channels (Article 427 of the CPC). The request must state the procedures and investigations that are sought to be carried out as well as the legal provisions that apply, and must be accompanied by any relevant document. The Public Prosecutor may then refer the request to the competent judicial authority as appropriate. The law specifically provides that where prompt action is requested, “the actions that are warranted by necessity may be taken before reception of the request and its attachment”, thus enabling the authorities to act even in the absence of all necessary documents (Article 427 of the CPC).

839. Provision of Assistance Regardless of Possible Involvement of Fiscal Matters (c. 36.4). The conditions under which a request is to be rejected are defined under Article 428 of the Criminal Procedure Law and do not encompass elements of a fiscal nature. A contrario, mutual legal assistance may be granted even when the offense on which the request is made involves fiscal matters. This view was shared by the authorities during the on-site visit.

840. Provision of Assistance Regardless of Existence of Secrecy and Confidentiality Laws (c. 36.5). The banking secrecy applies to the relationship between a domestic bank and its customers and covers any document or information received by the banks in conducting their services. The authorities may nevertheless have access to the relevant information, providing however that the Governor of the QCB agrees to lift the banking secrecy or, if criminal proceedings have been initiated, that the competent court delivers the appropriate order on request of the public prosecutor. If the conditions for granting mutual legal assistance are met, the Governor and the court cannot deny the authorities access to the information.

841. No other secrecy requirement may be opposed to the authorities in the other relevant sectors (both domestic and within the QFC). The authorities may therefore have access to the information held by the insurances companies, exchange houses, DSM, QFC companies other than banks (where the process described above applies) and by the relevant DNFBPs (other than the information covered by the legal professional privilege).

842. Availability of Powers of Competent Authorities (applying R.28, c. 36.6). If the conditions for rendering mutual legal assistance are met, the powers of the relevant authorities are also available for use in response to requests for mutual legal assistance.

843. Avoiding Conflicts of Jurisdiction (c. 36.7). The Criminal Procedure Code provides the procedure applicable when the extradition of a person is requested by different jurisdictions (Article 416) but does not deal with multiple requests for other types of mutual legal assistance.

844. Additional Element—Availability of Powers of Competent Authorities Required under R28 (c. 36.8). There is no mechanism in place to ensure direct cooperation between the judicial and law enforcement authorities of a foreign jurisdiction and the Qatari authorities other than through the Interpol channels.

845. International Cooperation under SR V (Criterion V.1 applying c. 36.1–36.6 in R. 36). The CT Law does not specifically address international cooperation in the fight against terrorism and its financing. The general framework for mutual legal assistance set out in the CPC (Book V) would therefore apply. As mentioned above, this would entail that, subject to reciprocal agreement (Article 407 of the CPC), all the measures permitted under the general dispositions of the CPC may be taken on behalf of a foreign State (see write-up under c. 36.1). However, it is worth mentioning the following on the identification, freezing, seizure, or confiscation of funds and assets (Article 15 and 21 of the CT Law): Since the TF offense does not refer to terrorist acts, nor to individual terrorists, the freezing, seizing and confiscation measures that may be requested could not be granted in the case of terrorist funds other than those collected for or provided to a terrorist organization. Furthermore, the scope of the TF offense is limited to the financing of terrorist acts which are defined under the CT Law in a way that does not fully comply with the standard. These shortcomings also restrict the scope of the assistance that the authorities may grant to another country.

846. It has been established that the authorities have signed a few reciprocal agreements with other countries to enable them to cooperate more effectively in the fight against terrorism and its financing. Furthermore, on one occasion, the authorities refused to cooperate in the arrest of a persons designated by the UNSC Committee established pursuant to Resolution 1267 (see write-up under SR II).

847. Criterion V.I applying 36.2. Article 428 of the CPC provides that a request for mutual legal assistance is to be rejected if the required procedures are prohibited by law or in conflict with the general principles applicable in Qatar (see write-up under 36.2 for remaining conditions). As mentioned under SR II, the protection of the right of people to self-determination is anchored in the Qatari Constitution. It may therefore be considered a fundamental principal under Qatari law. This principle was raised as an obstacle to extradition in the case of a person against whom an arrest warrant was issued by Interpol and who was subsequently designated by the UNSC 1267 Committee (see write-up under Recommendation 39). It is unclear whether requests for mutual legal assistance other than extradition were made but it seems likely that, had such requests been addressed to the Qatari authorities, the latter would have refused to provide their assistance as they did with respect to the request for extradition.

848. In conclusion, although the restrictions mentioned in art. 428 CPC are not unreasonable or unduly restrictive per se, the interpretation made by the authorities in the case mentioned above clearly is. Effective implementation of UNSCR 1267 is mandatory and the UN member states have no discretion with respect to the designations made under UNSCR 1267.

849. Criterion V. I applying 36.1.1., 36.3, 36.4, 36.5, 36.6. In the absence of any specific disposition in the CT Law (or other relevant text), the conditions under which the authorities may provide mutual legal assistance in the fight against terrorist financing are the same as for any other type of crime: the requests are forwarded to the PPO and the assistance may be granted under the conditions listed in the CPC (Article 427 and 428); the fact that fiscal elements may be involved does not seem to be an obstacle to the provision of mutual legal assistance. The shortcomings identified under recommendation 36 apply equally under SR V. With respect to information regarding bank accounts, Article 20 of the CT Law enables the public prosecutor to obtain “any information related to accounts or deposits or trusts or treasuries or any transactions in the banks or other financial institutions if this is necessary to reveal the truth in the cases to which the provisions of this law apply”. This would suggest that, in the fight against terrorism and its financing, unlike the fight against money laundering, there is no need require the Governor of the QCB to lift the banking secrecy in order to gain access to the relevant information. However, it is unclear whether this faculty is also available when the information is requested by a foreign state.

850. The authorities did not provide any information on cases where mutual legal assistance has been granted in the fight against terrorism and its financing. It has therefore not been established to the assessors’ satisfaction that Qatar is able to provide mutual legal assistance in a timely and effective manner, nor that the overall mutual legal assistance framework is implemented in an effective way.

851. Additional Element under SR V (applying c. 36.7 & 36.8 in R.36, c. V.6). As is the case in the AML framework, there are no dispositions that address multiple requests for mutual legal assistance and no mechanism in place to ensure direct cooperation with foreign counterparts other than through the Interpol channels.

852. Dual Criminality and Mutual Assistance (c. 37.1 & 37.2). Based on the discussions conducted during the on-site visit, it seems that the Qatari authorities are reluctant to accede to a mutual legal assistance request when the dual criminality requirement is not met, even for less intrusive and non compulsory measures. It is unclear whether technical differences between the Qatari laws and those of the requesting States have an impact on the delivery of mutual legal assistance.

853. International Cooperation under SR V (applying c. 37.1–37.2 in R. 37, c. V.2). In the absence of any indication to the contrary, these comments apply to the fight against terrorist financing.

854. Timeliness to Requests for Provisional Measures including Confiscation (c. 38.1). The Qatari authorities may freeze, seize, and confiscate on behalf of a foreign jurisdiction the assets laundered or intended to be laundered, the proceeds of money laundering and assets used for or intended to be used to finance terrorist groups or organizations, as well as the instrumentalities of the money laundering offense, and assets of corresponding value (Article 12 and 13 of the AML Law as amended by Decree Law (21) of 2003; Article 15 and 21 of the CT Law). They are not, however, entitled to take similar measures with respect to the instrumentalities of the predicate offense unless a separate request is made. Like other measures taken at the request of a foreign State, the freezing, seizing and confiscation are subject to the dual criminality requirement and could not be taken if the predicate offense is not criminalized in Qatar. There is no requirement in the law to provide a response to a request for freezing, seizing and confiscation in a timely fashion. No information was provided as to the effective timing of the responses.

855. Property of Corresponding Value (c. 38.2). Should the object of the request no longer be available for seizure, freezing or confiscation, the authorities do not seize, freeze or confiscate property of a corresponding value.

856. Coordination of Seizure and Confiscation Actions (c. 38.3). There are no arrangements in place dealing with coordination of seizure and confiscation actions with other countries.

857. International Cooperation under SR V (applying c. 38.1–38.3 in R. 38, c. V.3). Tracing of funds may be conducted under Article 20 of the CT Law but, as mentioned under c.V.I, it is unclear whether the public prosecutor may have access to financial records detained by banks or other financial institutions when acting on behalf of a foreign state.

858. If “sufficient information is available on the seriousness of the accusation”, the public prosecutor is entitled to order provisional measures with a view “to preventing the accused from disposing of his assets or managing them” (Article 21 of the CT Law). The law also provides that the freezing order “may encompass the assets of the spouse of the accused [and/or] his minor children “if these assets were in his possession. It does not however provide further guidance on the notion of assets, nor on the level of seriousness required. The law is equally silent on whether freezing orders may be taken at the request of a foreign state, be it for the actual funds or property of corresponding value.

859. Article 15 of the CT Law explicitly provides for confiscation in these terms: “it shall be ruled to confiscate the seized things, assets, weapons and machinery resulting from or used in or could be used in one of the crimes to which the provisions of this law apply taking into consideration the rights of bona fide others”. Assets, however, are not clearly defined in the law which could entail that the practical implementation of Article 15 may be somewhat difficult.

860. Asset Forfeiture Fund (c. 38.4) and Sharing of Confiscated Assets (c. 38.5). The authorities have not considered establishing an asset forfeiture fund into which all or a portion of the confiscated property would be deposited with a view to be used for law enforcement, health, education or other appropriate purposes, nor have they considered the sharing of confiscated property between the agencies whose coordinated action have led to the confiscation.

861. Additional Element (R 38)—Recognition of Foreign Orders for (a) confiscation of assets from organizations principally criminal in nature; (b) civil forfeiture; and (c) confiscation of property which reverses burden of proof (applying c. 3.7 in R.3, c. 38.6). Article 18 of the AML Law specifically provides for the execution of final decisions issued by foreign jurisdictions to confiscate the instrumentalities, proceeds or returns related a money laundering crime. However, the reference to “the provisions of any agreements concluded or ratified by the State” entails that the conclusion of such an agreement is a prerequisite to the enforcement of the confiscation order.

862. Additional Element under SR V (applying c. 38.4–38.6 in R. 38, c V.7). No consideration was given to establishing an asset forfeiture fund or to sharing confiscated assets. The recognition and enforcement of foreign non criminal confiscation orders in the ambit of the fight against terrorist financing remain unaddressed.

863. Statistics (applying R.32). No specific statistics are held.

864. Effectiveness. Overall, the CPC enables the Qatari authorities to provide a wide range of mutual legal assistance in the fight against money laundering. Some limitations nevertheless result from other pieces of legislation, in particular with respect to the fight against terrorist financing:

  • Since the CT Law does not address the financing of terrorist acts and of individual terrorists, it seems unlikely that mutual legal assistance would be granted outside an investigation conducted against a specific terrorist organization.
  • The combination of a strict dual criminality requirement and of the limited list of predicate offense under Article 2 of the AML Law greatly limits the scope of the assistance that the authorities may provide.
  • Furthermore, the dual criminality requirement may impede the authorities from providing assistance to requesting state, even on measures that are less intrusive.

865. The assistance that may be granted is further limited by the absence of:

  • Clear mechanisms dealing with the freezing, seizing and confiscation on behalf of property of corresponding value; and
  • Arrangements for coordinating seizure and confiscation actions with other countries.

866. Other areas remain unclear. This is in particular the case with respect to the consequences of technical differences between the laws of Qatar and of the requesting States.

867. Other measures recommended to enhance the cooperation between states (such as concluding arrangements for coordination of seizure and confiscation actions with other countries) and to ensure an adequate use of confiscated property (such as arrangements on the sharing of confiscated property and establishing an asset forfeiture fund) have not been considered.

868. No statistics have been provided to the assessors, neither on the requests received nor on the responses given. The authorities were also unable to provide the assessors with other information that would indicate that they collaborate with other countries in the fight against money laundering and terrorist financing. The extent to which the Qatari authorities make use of the mutual legal assistance tools that are available and the timeliness of their responses therefore remain unclear, thus making it impossible to assess the overall effectiveness of the mutual legal assistance framework. The only piece of anecdotal evidence known to the assessors indicates that the authorities did not collaborate in the fight against terrorism and its financing and refused to extradite a person designated by the UNSC as having links with Al Qaeda, Osama Ben Laden and/or the Talibans, in violation of UNSCR 1267.

6.3.2 Recommendations and Comments

869. It is recommended that the authorities:

  • Specify in the law the types of assistance that may be granted in such a way that it covers assistance of the following nature:
    • the production, search and seizure of information, documents, or evidence from financial institutions, or other natural or legal persons;
    • the taking of evidence or statements from persons;
    • the provisional originals or copies of relevant documents and records as well as any other information and evidentiary items;
    • the service of judicial documents;
    • facilitating the voluntary appearance of persons for the purpose of providing information or testimony to the requesting country; and
    • identification, freezing, seizure, or confiscation of assets laundered or intended to be laundered, the proceeds of money laundering and assets used for or intended to be used to finance terrorist acts, terrorist groups or organizations and terrorist individuals, as well as the instrumentalities of the money laundering offense and of the predicate offense, and assets of corresponding value.
  • Allow for the delivery of mutual legal assistance on non-intrusive measures even in the absence of dual criminality.
  • Ensure that the mutual legal assistance requests are dealt with in a timely manner and without undue delay.
  • Devise mechanisms that determine the best venue when defendants are subject to prosecutions in more than one country.
  • Ensure that technical differences in the laws in Qatar and in the requesting State do not impede the provision of mutual legal assistance.
  • Conclude arrangements where necessary for coordination of seizure and confiscation actions with other countries.
  • Fully implement the UNSCR 1267 and 1373 with respect to international cooperation.
  • Criminalize terrorist financing as recommended under SR II and ensure that the widest range of international cooperation may be granted in the fight against the financing of terrorism.
  • Consider establishing a confiscated assets funds into which all or portion of confiscated property will be deposited and will be used for law enforcement, health, education or other appropriate purposes.
  • Consider authorizing the sharing of confiscated assets between law enforcement agencies that have contributed to the confiscation of assets.
  • Maintain statistics of the requests for mutual legal assistance and the response given.

6.3.3 Compliance with Recommendations 36 to 38 and Special Recommendation V

RatingSummary of factors relevant to s.6.3 underlying overall rating
R.36LC
  • A broad range of mutual legal assistance may be granted but it is undermined by the application of strict dual criminality and the limited list of predicate offenses;.
  • There are no mechanisms that determine the best venue on cases where the defendants are subject to prosecutions in more than one country.
  • There is no evidence that mutual legal assistance is granted in practice and, if so, that it is granted in a timely and effective way.
R.37PC
  • The authorities rely strongly on dual criminality even for less intrusive measures which, given the limited list of predicate offenses to money laundering under Qatari law, may considerably limit the scope of the assistance that may be provided.
R.38PC
  • Freezing, seizing and confiscation at the request of a foreign State are possible but limited and do not apply to property of corresponding value.
  • There is no evidence that such measures have been taken on request of a foreign state and, if they have, that this was done in a timely and effective way.
  • No arrangements for coordination of seizure and confiscation with other countries.
  • Establishment of asset forfeiture fund and sharing of confiscated assets have not been considered.
SR.VNC
  • The provisions contained in the CPC (which also apply in the fight against terrorist financing) are too broad to ensure full compliance with the standard.
  • International cooperation is limited by the shortcomings identified in the terrorist financing offense.
  • The authorities did not provide assistance in the case of a foreign national designated by the UNSC Committee established pursuant to Resolution 1267.

6.4 Extradition (R.37, 39, SR.V)

6.4.1 Description and Analysis

870. Dual Criminality and Mutual Assistance (c. 37.1 & 37.2). Dual criminality applies as defined below see write-up under 39.1.

871. Money Laundering as Extraditable Offense (c. 39.1): The AML Law specifically provides that money laundering is an extraditable offense. The procedure is set out in Article 408 to 424 of the CPC. Like the other measures undertaken in the ambit of international cooperation, extradition is subject to reciprocity agreement between the requesting State and Qatar (Article 407 of the CPC). So far, Qatar has only concluded one extradition agreement (with the Kingdom of Saudi Arabia).

872. Extradition can only be granted for a crime which is punishable, both in Qatar and in the requesting jurisdiction, of imprisonment for a period of at least two years, or if the person to be extradited has been sentenced to imprisonment for a period of at least six months. It is also a requirement that the crime upon which the extradition request is based took place within the territory of the requesting State or, if committed outside, is nevertheless punishable under the legislation of the requesting State (Article 409 of the CPC).

873. In the absence of dual criminality, the extradition is not mandatory, unless the person whose extradition has been sought is a citizen of the requesting State or of another country “that applied the same penalty” (Article 409 of the CPC). The authorities confirmed that, due to the dual criminality requirement, a request for extradition would be rejected if the underlying offense were not listed in the AML law.

874. Pursuant to Article 410 of the Criminal Procedure Code, a request for extradition will be refused:

  • if the person to be extradited is a Qatari national;
  • if the crime, on which the requested extradition in based, is a political crime or linked to a political crime, or if the person, object of extradition request, is a political refugee at the time of submitting an extradition application;
  • if the crime that underlies the extradition request related to the violation of military duties;
  • if there are serious reasons to believe that the extradition request has been submitted with a view to prosecute and punish a person for considerations related to this person’s race, religion, nationality or political opinion;
  • if the person whose extradition has been requested was previously put to trial for the same crime, and was pronounced innocent or was charged and guilty and the sentence has been implemented, or if the criminal lawsuit or the punishment have terminated or annulled with prescription, or an amnesty has been granted; and
  • If Qatari Law entitles the trial of the person for the crime underlying of the extradition request before the judicial parties in Qatar.

875. The Arab Convention for the Suppression of Terrorism, to which Qatar is party, facilitates the extradition of terrorists amongst the signatory States by providing that terrorism is not considered a political crime for the purposes of extradition. Outside the framework of the Arab Convention, it is unclear whether Qatar would refuse the extradition of terrorists in application of the second paragraph of Article 410.

876. Extradition of Nationals (c. 39.2) and Cooperation for Prosecution of Nationals (applying c. 39.2(b), c. 39.3). Extradition of Qatari nationals is not allowed under the CPC (Article 410). Extradition may also be refused if the Qatari law entitles the domestic courts to try the persons whose extradition has been requested. The law does not expound on these two grounds for refusal and does not provide a timeframe for the submission of the cases to the Qatari courts. The authorities informed the mission that, while no extradition of a Qatari national has been requested in a money laundering case, requests have been made in the past on the basis of other types of offenses, and that the Qatari nationals whose extradition was requested (and denied on the grounds of their nationality) were sent before and convicted by the Qatari courts for crimes committed abroad. The extent to which the authorities cooperated with the requesting State on procedural and evidentiary aspects was not documented and, as a result, is not entirely clear.

877. Efficiency of Extradition Process (c. 39.4). There are no requirements in the CPC to examine the extradition requests and conduct the proceedings without delay.

878. Additional Element (R.39)–Existence of Simplified Procedures relating to Extradition (c. 39.5). There are no mechanisms in place for simplified extradition procedures.

879. Terrorist financing and extradition (c. V.4 applying c. 39.1–39.4). The CT Law does not address extradition and no additional information was provided. The framework provided for under Article 408 to 424 of the CPC described above (and the shortcomings identified) apply equally in the fight against terrorism and its financing. There was no evidence that the Qatari authorities have extradited anyone under the terrorist financing provision.

880. In one case, the Qatari authorities refused to extradite a foreign national who had been qualified as a terrorist by the requesting State. It would appear that the reasons evoked in their refusal was the protection of the right for self-determination and the protection of freedom fighters. In June 2003, the UNSC Committee established pursuant to Resolution 1267 added the name of the individual in question to the list of persons and entities suspected of having links with Al Qaeda, Usama Ben Laden and/or the Talibans. In February 2004, the suspect was killed in Doha. It would therefore appear that the Qatari authorities unduly refused to extradite the individual and acted in violation of their obligations under UNSCR 1267. It is unclear whether the request for extradition was also made with a view to prosecute the individual for terrorist financing as well as for other terrorist crimes, but it seems likely that, had this been the case, the Qatari’s response would have been the same.

881. Additional Element under SR V (applying c. 39.5 in R. 39, c V.8). There is no indication that simplified procedures of extradition would apply for terrorist acts and terrorist financing.

882. Statistics (applying R.32). No statistics were provided.

883. Effectiveness. The legal framework provides a sound basis for the extradition of foreign nationals. The information provided by the Public Prosecutor’s office indicates that the Sate of Qatar extradited 29 individuals between 2004 and the time of the on-site visit but also revealed that none of the convictions underlying the extradition request related to money laundering or terrorist financing. Although the law requires the existence of a reciprocity agreement between Qatar and the requesting State, extradition has been conducted in the absence of formal agreements. This would indicate that less formal agreements may also constitute sufficient basis for extradition to take place.

884. No information was provided on the length of time needed to proceed with the extradition requests, nor on the extradition requests that have been denied and on the grounds for the denials.

885. Although money laundering is criminalized in Qatar, the criminalization does not fully meet the standard, mainly because the list of predicate offenses is incomplete. As mentioned above, the authorities confirmed that, due to the dual criminality requirement, a request for extradition would be rejected if the underlying offense is not listed in the AML law. It is therefore recommended to include all the designated categories of predicate offenses in the AML Law in order to allow extradition in all cases covered by the standard.

886. In one instance (mentioned above), the authorities raised the principle of the protection of the right for self-determination as an obstacle to extradite a foreign national designated as a terrorist by the UNSC, in violation of their obligations under UNSCR 1267.

6.4.2 Recommendations and Comments

887. The authorities are recommended to:

  • Extend the list of predicate offenses as noted under Recommendation 1 in order to be able to provide extradition in all the cases contemplated in the standard.
  • Ensure that, where extradition relating to ML and TF is denied, the case is submitted to the relevant Qatari authorities without undue delay in view of the prosecution of the offenses set forth in the request and that the competent authorities cooperate with the requesting state on procedural and evidentiary aspects.
  • Clearly specify the procedure by which extradition for terrorist financing is possible, in line with SR V.
  • Establish a mechanism that ensures that extradition requests and proceedings relating to ML and TF are handled without undue delay.
  • Fully implement the UNSCR dealing with the fight against terrorism and its financing; and
  • Maintain statistics of requests for extradition received and responses given.

6.4.3 Compliance with Recommendations 37 & 39, and Special Recommendation V

RatingSummary of factors relevant to s.6.4 underlying overall rating
R.39LC
  • The dual criminality requirement may impede extradition where the request relates to the laundering of proceeds of a designated predicate offense which is not covered by the AML Law.
  • There are no specific provisions to allow extradition requests and proceedings relating to TF to be handled without undue delay.
  • No individuals charged with a money laundering offense have been extradited.
  • The statistical system is not comprehensive.
R.37NC
  • No indication that technical differences between the laws of Qatar and the requesting state would not pose an impediment to the extradition proceedings.
SR.VNC
  • There are no specific provisions to allow extradition requests and proceedings relating to TF to be handled without undue delay.
  • The authorities refused to extradite a foreign individual listed under UNSCR 1267.

6.5 Other Forms of International Co-operation (R.40 & SR.V)

6.5.1 Description and Analysis

888. Law enforcement cooperation. The law enforcement authorities in Qatar are able to provide international cooperation to their foreign counterparts through a number of fora, including Interpol, as well as direct police to police contact. The department of international cooperation in the MOI receives and requests information from counterparts. It was established that the SSB has exchanged information on TF with some foreign counterparts.

889. FIU. Pursuant to Article 3 of the Administrative Order, the FIU is able to exchange information with other FIUs according to Egmont principles. According to the authorities, the FIU takes account of the Egmont principles in practice when exchanging information with its overseas counterparts. It requested information from other FIUs in 4 cases, one of them through the Egmont Secure Web. Qatar’s FIU did not sign any bilateral or multilateral MOUs for cooperation with other foreign FIUs. The FIU received only two requests from foreign counterparts. The limited number of requests received and made by the FIU indicates a modest level of exchange with foreign counterparts at this stage.

890. Supervisors. Domestic Sector. There are no legal or regulatory provisions in the QCB Law and DSM Law that allow these institutions to exchange information and cooperate with their foreign counterparts.

891. QFC. The power to engage in a wide range of cooperation with overseas regulators and international regulatory associations is contained in Article 20 of the FSR. The FSR also contains provisions which allow the QFCRA to request and to provide assistance to overseas regulators. Article 20 allows the QFCRA to enter into MOU, protocols or similar arrangements as it considers appropriate. Paragraphs (3) and (4) of article 20 provide that the QFCRA may exercise its power under the QFC Law and FSR as it considers appropriate to cooperate with and provide assistance to overseas regulators in the exercise of their functions or in connection with the prevention or detection of financial crime. The QFCRA has established an ongoing MOU program. To date, it has established MOUs with the Jersey Financial Services Commission, the Central Bank of Bahrain, and the Central Bank of Jordan. These MOUs provide mechanisms for exchanges of information. Parties to MOUs are subject to confidentiality provisions contained in their respective laws. Information received should only be used for lawful supervisory purposes and/or those purposes for which it was provided and requested.

892. In addition, the QFCRA has developed close contacts with the Swiss Federal Banking Commission for purposes of assisting one another in the course of carrying out their supervisory functions of cross border establishments. The authorities indicated that arrangements contained in the MOU enable the QFCRA and its counterparts to exchange confidential information when the situation requires and also upon request. The measures contained in the MOU ensure that information is exchanged promptly and constructively between parties. As of the mission visit, the authorities were in the process of seeking to establish cooperative relationships with other overseas regulators including the Central Bank of UAE, the Central Bank of Bahrain (insurance) and the Central Bank of Lebanon.

893. For jurisdictions where an MOU has not been yet established, Article 46 of the FSR provides that the QFCRA may exercise disciplinary powers contained in Article 46(2) when it receives a request from an overseas regulator and Article 48 allows the QFCRA to request overseas regulators to assist in requiring a person to produce information or documents.

894. Law enforcement authorities, the FIU and the supervisory authorities do not maintain statistics on the number of requests for assistance made or received nor on the treatment of such requests.

6.5.2 Recommendations and Comments

  • Law enforcement agencies and the FIU should be more proactive in requesting information on ML/FT from their counterparts.
  • QCB and DSM Laws should be amended to allow the QCB and DSM to provide the widest range of international cooperation with their foreign counterparts.
  • Authorities should maintain statistics on the number of requests for assistance made or received by law enforcement authorities, the FIU, including whether the request was granted or refused.

6.5.3 Compliance with Recommendation 40 and Special Recommendation V

RatingSummary of factors relevant to s.6.5 underlying overall rating
R.40PC
  • Lack of international engagement in active exchange of ML information.
  • Lack of overall effectiveness.
SR.VPC
  • Lack of sufficient international engagement in active exchange of FT information.
  • Lack of overall effectiveness of the exchange of information relating to the financing of terrorism.

7 Other Issues

7.1 Resources and statistics

RatingSummary of factors relevant to Recommendations 30 and 32 and underlying overall rating
R.30PC
  • Overall, the allocation of resources is uneven, particularly in view of the rapid development and diversification of the economy.
  • Overall, professional standards, including confidentiality standards are not fully developed.
  • Lack of specialist skills training in law enforcement authorities including prosecution agencies, FIU, supervisors and other competent authorities involved in combating ML/FT.
R.32NC
  • Competent authorities have yet to develop comprehensive statistics in all relevant areas of the fight against ML and TF (including statistics on domestic investigations, prosecutions, convictions, and on international cooperation).
Table 1.Ratings of Compliance with FATF Recommendations
Forty

Recommendations
RatingSummary of factors underlying rating
Legal Systems
1. ML offensePC
  • The mental element of the ML offense does not cover acts conducted with a view to conceal of the true nature, location, disposition, movement or ownership of or rights with respect to proceeds.
  • The list of predicate offenses is incomplete with only seven of the FATF designated categories of offenses being covered.
  • With a few exceptions, the authorities have no jurisdiction over predicate offenses that were entirely committed in another country, even if there is dual criminality.
  • Lack of evidence on the effectiveness of the law.
2. ML offense—mental element and corporate liabilityLC
  • Lack of evidence on the effectiveness of the law.
3. Confiscation and provisional measuresLC
  • Lack of evidence of the effectiveness of the confiscation framework.
Preventive Measures
4. Secrecy laws consistent with the RecommendationsLC
  • Lack of measures to share information between financial institutions in line with recommendations R.7, R. 9, and SR VII.
5. Customer due diligenceNCDomestic sector:
  • Lack of explicit obligations imposed by law (primary or secondary legislation) for:
    • Explicitly prohibiting anonymous accounts or accounts in fictitious names.
    • Customer identification and due diligence process when:
      • Carrying out occasional transactions above the applicable designated threshold, including situations where the transaction is carried out in a single operation or in several operations that appear to be linked.
      • Carrying out occasional transactions that are wire transfers in the circumstances covered by the Interpretative Note to SR VII.
      • There is a suspicion of money laundering or terrorist financing, regardless of any exemptions or thresholds.
      • The financial institution has doubts about the veracity or adequacy of previously obtained customer identification data.
      • Identifying the customer (whether permanent or occasional, and whether natural or legal persons or legal arrangements) and verifying that customer’s identity using reliable, independent source documents, data or information (identification data).
      • Verifying, for customers that are legal persons or legal arrangements, that any person purporting to act on behalf of the customer is so authorized, and identify and verify the identity of that person.
      • Identifying the beneficial owner, and take reasonable measures to verify the identity of the beneficial owner using relevant information or data obtained from a reliable source such that the financial institution is satisfied that it knows who the beneficial owner is.
      • Determining for all customers whether the customer is acting on behalf of another person, and should then take reasonable steps to obtain sufficient identification data to verify the identity of that other person.
      • Conducting ongoing due diligence on the business relationship.
  • Lack of measures in law, regulation, or other enforceable means that require financial institutions to:
    • Obtain information on the purpose and intended nature of the business relationship.
    • Perform enhanced due diligence for higher risk categories of customer, business relationships or transactions.
    • Reject opening an account when unable to comply with CDD requirements and to consider making a suspicious transaction report.
    • Apply CDD measures on existing customers on the basis of materiality and risk and to conduct due diligence on such relationships at appropriate times.


QFC:
  • Lack of measures in the AML Regulations that would require relevant persons to:
  • Identify all customers, regardless of the exception contained in Rule 3.9; and
  • Consider making a suspicious transaction report when unable to complete CDD measures.
6. Politically Exposed PersonsNC
  • Lack of measures for the financial institutions supervised by the QCB, the DSM and the MEC with respect to customer due diligence procedures for politically exposed persons.
  • Lack of requirements in the QFCRA AML Regulation (and Rulebook) for relevant persons to obtain senior management approval to continue business relationship where a customer has been accepted and the customer or beneficial owner is found to be or subsequently becomes a PEP, and to take reasonable measures to establish the source of funds of customers and beneficial owners identified as PEPs.
7. Correspondent BankingNC
  • Lack of measures for the financial institutions supervised by the QCB, the DSM and the MEC dealing with establishment of cross-border correspondent banking or other similar relationships.
  • Lack of requirements in the QFC AML Regulations and Rulebook for relevant persons to gather sufficient information about a respondent institution to understand fully the reputation and quality of supervision, including whether is has been subject to a money laundering or terrorist financing investigation or regulatory action; and to document the respective AML/CFT responsibilities of each institution.
8. New technologies & non face-to-face businessPC
  • Lack of requirements on financial institutions under the supervision of the QCB, the DSM and the MEC to establish adequate policies and procedures designed to prevent and protect the financial institutions from money laundering and terrorist financing from new or developing technologies or specific CDD measures that apply to non face-to-face business relationships or transactions.
9. Third parties and introducersNC
  • Lack of legal or regulatory requirements when there is no prohibition imposed by the QCB, the DSM and the MEC for banking and financial institutions to rely on intermediaries or other third parties to perform some of the elements of the CDD process.
  • Lack of specific measures imposed by the QFCRA to require relevant persons to ensure that the third party is regulated and supervised; and to determine in which countries the third party that meets the conditions can be based taking into account information available on whether those countries adequately apply the FATF Recommendations.
  • Broad CDD exemption provided by the QFCRA when a customer is a member of the relevant person’s group or equivalent international standards are applied in FATF countries.
10. Record-keepingPCDomestic sector:
  • Record keeping requirement not established by primary or secondary legislation by DSM and MEC.
11. Unusual transactionsPCDomestic sector:
  • Lack of requirements imposed by the QCB to make the findings of examination of complex and unusual transactions available to auditors.
  • Lack of requirements imposed by the DSM and the MEC on financial institutions to pay special attention to all unusual large transactions or unusual patterns of transactions that have no apparent or visible economic or lawful purpose; to examine as far as possible the background and purpose of such transactions and set forth their findings in writing; and to maintain them for at least five years.
  • QFC:
  • Lack of specific requirements imposed by the QFCRA on relevant persons to make the findings of examination of complex and unusual transactions available to competent authorities and auditors.
12. DNFBP—R.5, 6, 8–11NCDomestic sector:
  • The requirements on CDD and record-keeping are not set out in primary or secondary legislation.
  • No requirements on PEPs, payment technologies, introduced business and unusual transactions have been set out in law, regulation or other enforceable means. The scope of the professions currently covered is excessively wide.
  • Legal advisers are not covered.
  • Provisions on CDD and record-keeping are not sufficient and do not constitute enforceable requirements with sanction for non-compliance.
  • There are no provisions regarding PEPs, payments technologies, and introduced business.
  • The requirements on unusual transactions are not sufficient and not enforceable for the professions regulated by the MEC. There are no requirements for the legal professions.
  • The implementation is not effective.
  • QFC:
  • The regime is too new to be tested for effective implementation.
13. Suspicious transaction reportingPC
  • Vague requirement to report transactions with respect to DSM and MEC and limited scope of reporting in light of the few predicate offenses.
  • Obligation to report transactions linked to terrorist financing, terrorist acts or organizations or those who finance terrorism not established by primary or secondary legislation.
  • Obligation to report transactions, including attempted transactions, not established by primary or secondary legislation.
  • Lack of requirements to report transactions regardless of whether transactions are thought to involve tax matters.
14. Protection & no tipping-offLC
  • Lack of legal basis to support protection from STR reporting and tipping off in the insurance sector.
15. Internal controls, compliance auditPC
  • Inconsistencies with respect to QCB and DSM requirements and the MEC non-binding measures for financial institutions to comply with the same requirements including adequate procedures, policies and controls for customer due diligence, record retention, detection of unusual and suspicious transactions and the reporting obligation.
  • Lack of specific QCB requirement to provide for timely and unrestricted access to all customer information to the staff supporting the compliance officer.
  • Lack of specific DSM and MEC requirement to provide for timely and unrestricted access to all customer information to the compliance officer as well as his/her staff.
  • Lack of DSM and MEC requirement for internal audit function to assess the adequacy of internal control systems and policies with respect to AML/CFT and to maintain an adequately resourced and independent audit function.
  • Lack of legal or regulatory requirements imposed by QCB, DSM and MEC for financial institutions to put in place screening procedures to ensure high standards when hiring employees.
16. DNFBP—R.13–15 & 21NCDomestic sector:
  • No STR obligations set out in primary or secondary legislation.
  • Ministerial regulations are not implemented and not enforceable.
  • There are no adequate measures to prohibit a DNFBP from disclosing to third parties the information it provides to the FIU.
  • Provisions on internal controls and countries that insufficiently apply the FATF recommendations are incomplete and not implemented.
  • Legal advisers are not subject to the STR obligations.
  • Provisions on the legal privilege of lawyers should be introduced.
  • QFC:
  • Provisions on the legal privilege of lawyers should be refined.
17. SanctionsNC
  • Inadequate penalties, in particular with respect to the criminal sanctions for tipping off provided in the AML law.
  • Inadequate sanction regime with respect to the severity of the sanction that the QCB and DSM may issue. Absence of legal framework for sanctions in the insurance sector.
  • No penalties/sanctions imposed related to AML/CFT.
18. Shell banksPC
  • Measures in place in the domestic sector are not sufficient to effectively prohibit the establishment of shell banks and do not prevent domestic banks from having dealings with foreign shell banks.
19. Other forms of reportingC
20. Other NFBP & secure transaction techniquesPC
  • No risk assessment has been conducted in the domestic sector.
  • Qatar has not taken meaningful steps to encourage the development of modern and secure techniques for conducting financial transactions that are less vulnerable to money laundering.
21. Special attention for higher risk countriesNC
  • Lack of requirements imposed by the DSM and the MEC on financial institutions to pay special attention to business relationships and transactions with persons from or in countries which do not or insufficiently apply the FATF Recommendations.
  • Lack of apparent authority at the QCB, the DSM, the MEC, and the QFCRA to apply counter-measures to address instances where a country continues not to apply or insufficiently applies the FATF Recommendations.
22. Foreign branches & subsidiariesPC
  • Lack of obligation imposed by the QCB financial institutions with branches and subsidiaries to apply the higher standard, to the extent that local laws and regulations permit.
  • No legal or regulatory requirements established by the DSM and MEC for financial institutions to comply with the provisions of this recommendation.
23. Regulation, supervision and monitoringPC
  • No licensing procedures available for review for insurance companies licensed by the MEC.
  • No designated entity responsible for AML/CFT supervision for the insurance sector.
24. DNFBP—regulation, supervision and monitoringPC
  • No supervision and no sanction for non-compliance with the AML/CFT requirements in the domestic sector for all DNFBPs present in the country.
  • The QFC regime is too new to be tested for effective implementation.
25. Guidelines & FeedbackPC
  • Lack of guidelines established by the DSM and the MEC for their respective sectors.
  • Lack of adequate and appropriate feedback from competent authorities.
  • Limited guidelines on AML/CFT issues provided by the QFCRA to relevant persons.
  • Lack of guidance and feedback to DNFBPs.
Institutional and other Measures
26. The FIULC
  • Absence of a clear legal basis for establishing the FIU and providing it with its powers and functions.
  • Absence of a legal basis to request additional information from DNFBPs.
  • Poor quality of and insufficient resources allocated to STRs analysis.
  • No guidance on filing STRs has been issued by the FIU.
  • Inadequate protection of information and premises.
  • No periodic review of system’s effectiveness in combating ML and FT.
27. Law enforcement authoritiesPC
  • Overall, investigation and prosecution authorities do not appear to adequately pursue money laundering cases.
  • Shortage in evidence of effectiveness of law enforcement authorities and lack of statistics.
  • Lack of implementation of laws and use of law enforcement techniques in support of ML/FT investigations across various law enforcement agencies.
  • Inadequate AML/CFT training.
28. Powers of competent authoritiesC
29. SupervisorsPC
  • Lack of adequate MEC supervisory authority/powers for AML/CFT matters in insurance sector.
  • Lack of AML/CFT inspections of insurance companies to monitor compliance.
30. Resources, integrity, and trainingPC
  • Overall, the allocation of resources is uneven, particularly in view of the rapid development and diversification of the economy.
  • Overall, professional standards, including confidentiality standards are not fully developed.
  • Lack of specialist skills training in law enforcement authorities including prosecution agencies, FIU, supervisors and other competent authorities involved in combating ML/FT.
31. National co-operationLC
  • There are mechanisms in place to ensure effective cooperation and coordination amongst most of the relevant authorities in AML but they could be enhanced by formally including the QFC, the DSM and, if necessary, the public prosecutor’s office.
  • The coordination mechanism in place for the implementation of the UNSCR 1373 could be enhanced in a similar way.
  • There is no mechanism for the implementation of the UNSCR 1267.
32. StatisticsNC
  • Competent authorities have yet to develop comprehensive statistics in all relevant areas of the fight against ML and TF (including statistics on domestic investigations, prosecutions, convictions and on international cooperation).
33. Legal persons—beneficial ownersLC
  • Domestic sector: timeliness of the FIU’s and DSM’s access to beneficial ownership and control information should be improved by establishing a direct electronic link to the commercial register database.
34. Legal arrangements—beneficial ownersPC
  • Absence of mechanisms to obtain, verify, or retain information on the beneficial ownership and control of trusts in a timely manner, and in particular with regard to the settlor, the trustee, and the beneficiaries of trusts.
  • Absence of measures to enable the competent authorities to have adequate, timely and accurate information on trusts, including information on settlor, trustee and beneficiaries.
International Cooperation
35. ConventionsPC
  • Qatar has partially implemented the Vienna Convention.
  • It has not ratified nor fully implemented the Palermo Convention and the 1999 ICST.
36. Mutual legal assistance (MLA)LC
  • A broad range of mutual legal assistance may be granted but it is undermined by the application of strict dual criminality and the limited list of predicate offenses.
  • There are no mechanisms that determine the best venue on cases where the defendants are subject to prosecutions in more than one country.
  • There is no evidence that mutual legal assistance is granted in practice and, if so, that it is granted in a timely and effective way.
37. Dual criminalityPC
  • The authorities rely strongly on dual criminality even for less intrusive measures which, given the limited list of predicate offenses to money laundering under Qatari law, may considerably limit the scope of the assistance that may be provided.
  • No indication that technical differences between the laws of Qatar and the requesting state would not pose an impediment to the extradition proceedings.
38. MLA on confiscation and freezingPC
  • Freezing, seizing and confiscation at the request of a foreign State are possible but limited and do not apply to property of corresponding value.
  • There is no evidence that such measures have been taken on request of a foreign State and, if they have, that this was done in a timely and effective way.
  • No arrangements for coordination of seizure and confiscation with other countries.
  • Establishment of asset forfeiture fund and sharing of confiscated assets have not been considered.
39. ExtraditionLC
  • The dual criminality requirement may impede extradition where the request relates to the laundering of proceeds of a designated predicate offense which is not covered by the AML Law.
  • There are no specific provisions to allow extradition requests and proceedings relating to TF to be handled without undue delay.
  • No individuals charged with a money laundering offense have been extradited.
  • The statistical system is not comprehensive.
40. Other forms of cooperationPC
  • Lack of international engagement in active exchange of ML information.
  • Lack of overall effectiveness.
Nine Special Recommendations
SR.I Implement UN instrumentsNC
  • Qatar is not party to and has not implemented the ICST.
  • Qatar has not fully implemented the UNSCR 1267 and 1373. Moreover, it acted in violation of UNSCR 1267 on one occasion.
SR.II Criminalize terrorist financingPC
  • The offense applies to all terrorist acts listed in Art. 2 para. 1 (b) of the ISCFT but the motive required in the CT Law is not in line with all the treaties mentioned in Art. 2 para. 1 (b).
  • The provision/collection of funds to individual terrorists and/or for terrorist acts are not covered by the offense.
  • Lack of overall effectiveness: No investigations or prosecutions have been conducted despite the fact that several investigations and prosecutions have been/are being conducted for other terrorist crimes.
SR.III Freeze and confiscate terrorist assetsNC
  • No coordination mechanism in place for the implementation of UNSCR 1267.
  • There is no authority responsible for the designations, disseminations and no legal basis for the freezing/seizing orders.
  • With the exception of the protection of the rights of bona fide third parties, none of the other measures provided under SR III have been adopted. • No funds have been frozen under UNSCR 1267, despite the presence in Qatar for several months of a person designated by the UNSC 1267 Committee, or under UNSCR1373.
SR.IV Suspicious transaction reportingNC
  • Reporting requirement not imposed by primary or secondary legislation.
SR.V International cooperationNC
  • International cooperation is limited by the shortcomings identified in the terrorist financing offense.
  • The authorities did not provide assistance in the case of a foreign national designated by the UNSC Committee established pursuant to Resolution 1267.
  • The general framework seems to provide for the extradition of individuals charged with a TF offense in a way that broadly meets the standard, but:
  • There are no specific provisions to allow extradition requests and proceedings relating to TF to be handled without undue delay.
  • The authorities refused to extradite a foreign individual listed under UNSCR 1267.
  • Lack of sufficient international engagement in active exchange of FT information.
  • The provisions contained in the CPC (which also apply in the fight against terrorist financing) are too broad to ensure full compliance with the standard.
  • Lack of overall effectiveness of the exchange of information relating to the financing of terrorism.
SR.VI AML/CFT requirements for money/value transfer servicesPC
  • Potential informal money/value transfer system operating in Qatar without effective monitoring.
  • Number of shortcomings identified in other recommendations related to CDD, sanctions, supervision and regulation.
SR.VII Wire transfer rulesNC
  • Lack of specific measures imposed by the QCB on financial institutions to address all the requirements of this recommendation.
  • Lack of requirements imposed by the QFCRA on relevant persons to ensure that beneficiary financial institutions adopt an effective risk-based procedures for identifying and handling wire transfers that are not accompanied by complete originator information.
SR.VIII Nonprofit organizationsLC
  • Domestic sector:
  • Recent enactment of Resolution 17 of 2006 does not allow to fully assess the effectiveness of supervision of the NPO sector.
  • There is a regulatory possibility of exempting a charity from QACA supervision.
  • QFC:
  • The Trust Regulations creating charitable trusts is not compliant with SR VIII.
SR.IX Cash Border Declaration & DisclosureNC
  • Absence of implementation of the disclosure system for cross-border transportation of cash and bearer negotiable instruments.
  • Lack of retention of records
  • Lack of trained customs officials.
  • Lack of clear sanctions for false disclosure, failure to disclose, or cross-border transportation for money laundering and financing of terrorism purposes.
  • Lack of clear safeguards to ensure proper use of disclosed information.
  • Insufficient statistics upon which to assess the effectiveness of the measures in place.
Table 2.Recommended Action Plan to Improve the AML/CFT System
FATF 40+9 RecommendationsRecommended Action (in order of priority within each section)
1. General
2. Legal System and Related Institutional Measures
Criminalization of Money Laundering (R.1, 2, & 32)
  • Amend the AML Law to clarify and extend the scope of the money laundering offense in order to cover all intentional acts aiming to conceal or disguise not only the source of the funds but also the true nature, location, disposition, movement, or ownership of or rights with respect to proceeds of crime. This could be achieved either by clearly specifying the purpose in the AML or by deleting altogether the intended purpose.
  • Criminalize, where necessary, the following conducts and add them to the list of predicate offenses in the AML Law: participation in an organized (non terrorist) criminal group and racketeering; trafficking in human beings and migrant smuggling; sexual exploitation, including sexual exploitation of children; illicit trafficking in stolen and other goods; corruption and bribery; fraud; counterfeiting and piracy of products; environmental crime; murder, grievous bodily injury; kidnapping, illegal restraint and hostage-taking; robbery or theft; smuggling; forgery; piracy; and insider trading and market manipulation.
  • Ensure that predicate offenses for money laundering all extend to conduct that occurred in another country when there is dual criminality.
  • Provide in-depth training to the law enforcement agencies on the requirements of the AML Law and on money laundering trends and typologies, as well as training on investigations into and prosecutions of money laundering offenses.
  • For the sake of clarity, to specifically mention the terrorist financing offense in the list of predicate offenses.
Criminalization of Terrorist
Financing (SR.II & R.32)
  • Amend the CT Law to ensure that the acts covered by Article 2 Paragraph 1 (a) of the ICSFT are criminalized in line with the conventions and that the provision or collection of funds with the intention that they should be used, in full or in part, to commit any of the acts mentioned in Article 2 Paragraph 1 (a) of the ICSFT are considered as terrorist acts even when the motive mentioned in Article 1 of the CT Law is not established.
  • Amend the CT Law to ensure that the terrorist financing offense is considered to have been committed by any person who by any means, directly or indirectly, willfully, provides or collects funds, or attempts to do so, with the intention that they should be used or in the knowledge that they are to be used in full or in part to carry out a terrorist act; or by an individual terrorist.
  • Ensure that investigations into and prosecutions for terrorist crimes also cover the financing of these crimes.
  • Provide training to all relevant authorities on the fight against TF.
Confiscation, freezing, and seizing of proceeds of crime (R.3 & 32)
  • Reconsider the role of the Governor of the QCB in the application of provisional measures under the AML Law.
  • Maintain comprehensive statistics on the freezing, seizing and confiscation measures ordered.
Freezing of funds used for terrorist financing (SR.III & R.32)
  • Designate an authority responsible for analyzing the requests made under UNSCR 1373 and for the designation of terrorists.
  • Designate an authority responsible for receiving and disseminating the updates to the consolidated list established pursuant to UNSCR 1267.
  • Include the QFC and consider including the PPO and the DSM in the NCT.
  • Establish the necessary legal basis for the issuance by a competent authority of mandatory freezing orders of funds or other assets owned or controlled by designated persons, terrorists and those who finance terrorism or terrorist organizations, as well as funds or other assets that are derived or generated from funds or other assets owned or controlled by these same persons and entities.
  • Establish an effective mechanism for the dissemination of UNSCR 1267 lists and actions taken under UNSCR 1373 to the financial institutions and DNFBPs immediately upon reception of the lists and upon taking decisions under UNSCR 1373.
  • Provide guidance to the financial institutions and DNFBPs regarding their obligations in taking action in the freezing mechanisms.
  • Issue effective and publicly-known procedures for considering de-listing requests and unfreezing the funds and other assets of de-listed persons or entities in a timely manner.
  • Issue effective and publicly-known procedures for unfreezing in a timely manner the funds and other assets of persons or entities inadvertently affected by the freezing mechanisms upon verification that that person or entity is not the designated person.
  • Issue appropriate procedure for determining upon request the funds needed to cover basic expenses and for authorizing access to the funds or other assets frozen pursuant to UNSCR 1267 and that have been determined to be necessary to cover basic expenses.
  • Establish the necessary legal basis for ordering the necessary provisional measures.
  • Establish appropriate procedures for challenging the freezing measures before the courts.
  • Define the funds and other assets that may be confiscated in a manner consistent with the international standard.
  • Establish an effective mechanism to monitor compliance with the relevant laws and regulation governing the freezing mechanisms under UNSCR 1267 and 1373.
The Financial Intelligence Unit and its functions (R.26, 30 & 32)
  • Address the legal basis that established the FIU as a national centre for receiving, analyzing and disseminating disclosures of STRs and other relevant information concerning suspected ML or FT activities.
  • Ensure that the QFCRA removes the third point from the letters disseminated to DNFBPs that includes the obligation to notify QFCRA of any suspicion of ML notwithstanding that an STR has not been made to the local FIU.
  • Ensure that the FIU provides financial institutions and other reporting parties with guidance regarding the manner of reporting, including the procedures to be followed when reporting.
  • Ensure that the FIU (i) enhances the depth and quality of its STRs analysis, in particular by accessing the CRS and requesting on regular basis additional information from reporting entities and the ECPD; (ii) uses, when necessary, the CRS, the link to the commercial register developed by the QCB, the real estate register and all available databases to enhance its STR analysis; (iii) undertakes a study focusing specifically on the risks of ML and FT associated with certain businesses.
  • Ensure that the FIU establishes mechanisms for cooperation with regulators, supervisors, reporting entities and law enforcement authorities to optimize its analysis and establishes an information flow that protects confidentiality while enhancing its analysis capacity.
  • Grant the FIU the power to ask the DNFBPs whether they have had transactions with a person who was the subject of an STR, or to demand additional information from them.
  • Ensure that the FIU periodically reviews the effectiveness of the system to combat ML and FT and improves its collection of statistics.
  • Ensure that the FIU publishes periodically annual reports, typologies and trends of ML/FT.
  • Ensure that the FIU provides additional specialized and practical in-depth training to its employees. This training should cover, for example, the scope of predicate offenses, analysis and investigation techniques and familiarization with prosecution of ML/FT techniques, and other areas relevant to the execution of the FIU staff functions.
Law enforcement, prosecution and other competent authorities (R.27, 28, 30 & 32)
  • Ensure that law enforcement authorities keep statistics on the amount of criminal proceeds seized and confiscated and on the number of ML/TF investigations, prosecutions, and judgments to measure the effectiveness and competence of the AML/CFT system.
  • Provide additional specialized and practical training to law enforcement and prosecution personnel as well as to police officers and customs agents on the fight against ML/FT. This training should cover, for example, the scope of predicate offenses, ML and FT typologies, investigation techniques and familiarization with prosecution of ML/FT techniques and the use of information technology and other areas relevant to the execution of the law enforcement staff functions.
  • Take a more proactive approach to investigating and prosecuting ML/FT.
Cross Border Declaration or disclosure (SR IX)
  • Adopt a national strategic approach to detect the physical cross-boarder transportation of currency and bearer negotiable instruments and amend Resolution 37-2006 to provide a clear legal basis for a disclosure system. An internally consistent regulation should be issued reflecting the following characteristics:
    • The system should apply to both incoming and outgoing transportation of currency and bearer negotiable instruments and extend to the shipment of currency through containerized cargo and mailing of currency or bearer negotiable instruments.
    • Article 6 of Resolution 5-2005 should be amended to give the power to customs to request and obtain further information from the carrier with regard to the origin of the currency or bearer negotiable instruments and their intended use in case of suspicion of money laundering or terrorist financing.
    • Customs should be able to stop or restrain cash or bearer negotiable instruments for a reasonable time in order to ascertain whether evidence of money laundering or terrorist financing may be found, where there is a suspicion of money laundering or terrorist financing; or where there is a false declaration or false disclosure.
  • Enhance exchange of information between the customs and the FIU and create a database at the customs to record all declared data related to currencies and bearer financial instruments.
3. Preventive Measures—Financial Institutions
Risk of money laundering or terrorist financing
Customer due diligence, including enhanced or reduced measures (R.5–8)Domestic sector:
Establish, through law or regulation, clear requirements for financial institutions to:
  • Undertake customer due diligence (CDD) measures when:
    • Carrying out occasional transactions above the applicable designated threshold, including situations where the transaction is carried out in a single operation or in several operations that appear to be linked.
    • Carrying out occasional transactions that are wire transfers in the circumstances covered by the Interpretative Note to SR VII.
    • There is a suspicion of money laundering or terrorist financing, regardless of any exemptions or thresholds.
    • The financial institution has doubts about the veracity or adequacy of previously obtained customer identification data.
  • Identify the customer (whether permanent or occasional, and whether natural or legal persons or legal arrangements) and verify that customer’s identity using reliable, independent source documents, data or information (identification data) following the examples of the types of customer information that could be obtained, and the identification data that could be used to verify that information as set out in the paper entitled General Guide to Account Opening and Customer Identification issued by the Basel Committee’s Working Group on Cross Border Banking.
  • Verify, for customers that are legal persons or legal arrangements, that any person purporting to act on behalf of the customer is so authorized, and identify and verify the identity of that person.
  • Identify the beneficial owner, and take reasonable measures to verify the identity of the beneficial owner using relevant information or data obtained from a reliable source such that the financial institution is satisfied that it knows who the beneficial owner is.
  • Determine for all customers whether the customer is acting on behalf of another person, and should then take reasonable steps to obtain sufficient identification data to verify the identity of that other person.
  • Conduct ongoing due diligence on the business relationship. Establish, through law, regulation, or other enforceable means, clear obligations/requirements for financial institutions to:
  • Obtain information on the purpose and intended nature of the business relationship.
  • Perform enhanced due diligence for higher risk categories of customer, business relationships or transactions.
  • Reject opening an account when unable to comply with CDD requirements and to consider making a suspicious report.
  • Apply CDD measures on existing customers on the basis of materiality and risk and to conduct due diligence on such relationships at appropriate times.
  • Have appropriate risk management systems to determine whether the customer is a politically exposed person; obtain senior management approval for establishing business relationships with such customers; take reasonable measures to establish the source of wealth and source of funds; and conduct enhanced ongoing monitoring of the business relationship.
  • Establish requirements for financial institutions to have measures in place for establishing cross-border correspondent banking and other similar relationships.
  • Require financial institutions to establish measures including policies and procedures designed to prevent and protect the financial institutions from money laundering and terrorist financing threats that may arise from new or developing technologies or specific CDD measures that apply to non face-to-face business relationships or transactions.
QFC:
Strengthen the AML Regulation and Rulebook by requiring relevant persons to:
  • Remove the broad exception to customer identification requirements contained in Rule 3.9 of the Rulebook by implementing a process for conducting a risk sensitive assessment of customers and FATF countries where such customers are located to determine compliance with and the level of implementation of Rec. 5.
  • Require institutions to consider making a suspicious transaction report when unable to complete CDD measures, including when the business relationship has already commenced and the institution is not able to conduct required CDD measures.
  • Take reasonable measures to establish the source of funds of customers and beneficial owners identified as PEPs and obtain senior management approval to continue the business relationship where a customer has been accepted and the customer or beneficial owner is subsequently found to be, or subsequently becomes a PEP.
  • Incorporate into the existing requirements the obligation to gather sufficient information about a respondent institution to understand fully the reputation and quality of supervision, including whether it has been subject to a money laundering or terrorist financing investigation or regulatory action; and to document the respective AML/CFT responsibilities of each institution.
Third parties and introduced business (R.9)Domestic sector:
  • Introduce provisions/measures in the event that financial institutions supervised by the QCB, DSM, and MEC rely on intermediaries or other third parties to perform some of the elements of the CDD process.
  • Specify that the final responsibility for CDD measures remains with the financial institution opening/initiating the relationship.
QFC:
  • Expand the requirements to include measures: to require a relevant person to evaluate that the third party is regulated and supervised; and determine in which countries the third party that meets the conditions can be based; and take into account information available on whether those countries adequately apply the FATF Recommendations.
  • Abolish or re-evaluate the broad customer identification exemption granted when a customer is a member of the relevant person’s group or equivalent international standards are applied in FATF countries with a view to establish the risk and the conditions for implementing this waiver.
Financial institution secrecy or confidentiality (R.4)
  • Establish measures for the competent authorities to be able to share information between financial institutions.
Record keeping and wire transfer rules (R.10 & SR.VII)Domestic sector:
  • Set in primary or secondary legislation requirements for financial institutions under the DSM’s and MEC’s supervision.
  • Provide additional guidance to financial institutions the QCB’s and DSM’s supervision as to when the record retention/keeping requirement starts, that is, following the termination of an account or business relationship or longer if requested by a competent authority.
  • Require banks (i) to ensure that all originator information that accompanies a wire transfer is transmitted with the transfer by each intermediary and beneficiary financial institution in the payment chain; (ii) when technical limitations prevent full originator information accompanying a cross-border wire transfer from being transmitted with a related domestic wire transfer, to keep a record for five years of all the information received from the ordering financial information.
  • Require banks to adopt effective risk-based procedures for identifying and handling wire transfers that are not accompanied by complete originator information. The lack of complete originator information may be considered a factor in assessing whether they are thus required to be reported to the financial intelligence unit or other competent authorities. In some cases, the beneficiary financial institution should consider restricting or even terminating its business relationship with financial institutions that fail to meet the SR.VII standards.
  • Establish a mechanism to monitor effectively the compliance of financial institutions with rules and regulations implementing SR.VII.
  • Ensure that sanctions (in line with R.17) also apply in relation to the obligations under SR.VII.
QFC:
  • Ensure that non-routine batched transactions are not batched where this would increase the risk of money laundering or terrorist financing.
  • Establish explicit measures to ensure that beneficiary financial institutions adopt an effective risk-based procedures for identifying and handling wire transfers that are not accompanied by complete originator information.
Monitoring of transactions and relationships (R.11 & 21)Domestic sector:
  • Require banking and financial institutions under the QCB’s supervision to make the findings of examinations of complex and unusual transactions available to auditors.
  • Require financial institutions under the DSM’s and MEC’s supervision (i) to pay special attention to all complex, unusual large transactions, or unusual patterns of transactions, that have no apparent or visible economic or lawful purpose; (ii) to examine as far as possible the background and purpose of such transactions and to set forth their findings in writing; and (iii) to maintain them for competent authorities and auditors for at least five years.
  • Ensure that the DSM provides guidance indicating whether transactions exceeding QR. 100,000 or the equivalent in foreign currency should be considered large, unusual large or complex.
  • Ensure that the DSM establishes a legal or regulatory requirement for financial institutions to give special attention to business relationships and transactions with persons form or in countries which do not or insufficiently apply the FATF Recommendations.
  • Expand the requirement for financial institutions under the QCB’s supervision to pay attention to business relationships and transactions with persons from or in countries that insufficiently apply the FATF Recommendations.
QFC:
  • Establish a specific requirement for relevant persons to make the findings of examinations of complex and unusual transactions available to competent authorities and auditors.
Both sectors:
  • Ensure that all the supervisory authorities may apply counter-measures to address instances where a country continues not to apply or insufficiently applies the FATF Recommendations.
Suspicious transaction reports and other reporting (R.13, 14, 19, 25, & SR.IV)
  • Establish, in primary or secondary legislation, the requirement for all financial institutions to report to the FIU transactions, including attempted transactions, when a financial institution suspects or has reasonable grounds to suspect that the funds are the proceeds of a criminal activity, or are related or linked to terrorist financing, terrorist acts or terrorist organizations or those who finance terrorism.
  • Address the protection of financial institutions under the supervision of the DSM and MEC, and their staff from liability for filing suspicious transaction reports and prohibit “tipping off” in the insurance sector.
  • Consider re-assessing the study conducted with respect to Rec. 19 to provide for a more comprehensive analysis and details as to how the decision to establish or not the cash reporting system was achieved.
  • Provide guidance to assist financial institutions on AML/CFT issues covered under the FATF recommendations, including at a minimum a description of ML and FT techniques and methods, and any additional measures that these institutions could take to ensure that their AML/CFT procedures are effective.
  • Establish communication standards and a mechanism for providing feedback to reporting institutions including general and specific or case-by-case feedback.
  • Consider reviewing the guidance provided by the FATF Best Practice Guidelines on Providing Feedback to Reporting Financial Institutions and Other Persons.
Internal controls, compliance, audit and foreign branches (R.15 & 22)
  • Set out clear requirements for all financial institutions to establish and maintain internal procedures, policies, and controls so that the same requirements apply uniformly to policies and controls addressing customer due diligence, record retention, detection of unusual and suspicious transactions and the reporting obligation.
  • Strengthen the QCB requirement to ensure that AML/CFT compliance officer has timely and unrestricted access to customer information data and other customer due diligence information, transaction records, and other relevant information.
  • Impose a similar requirement on the financial institutions that are regulated by the DSM and MEC.
  • Require all financial institutions to ensure that the scope of the internal audit function (or outsourcing of this function) includes AML/CFT reviews/audits and an overall assessment of the financial institutions’ adequacy of the internal control systems and policies with respect to AML/CFT.
  • Require financial institutions under the supervision of the DSM and MEC to maintain an adequately resourced and independent audit function to test compliance with the procedures, policies and controls.
  • Require banking and financial institutions to put screening procedures in place to ensure high standards when hiring employees.
  • Expand the existing QCB measures that establish an explicit obligation for financial institutions to apply the higher AML/CFT standard, to the extent that local laws and regulations permit.
  • Require foreign branches and subsidiaries of financial institutions under the supervision of the DSM and MEC to observe AML/CFT measures consistent with home country requirements and the FATF Recommendations, to the extent that local (i.e. host country) laws and regulations permit; require financial institutions to pay particular attention that this principle is observed with respect to their branches and subsidiaries in countries which do not or insufficiently apply the FATF Recommendations; and where the minimum AML/CFT requirements of the home and host countries differ, to apply the higher standard, to the extent that local (i.e. host country) laws and regulations permit.
Shell banks (R.18)Domestic sector:
  • Amend the QCB licensing requirements with a view to clearly prevent the establishment of shell banks in Qatar.
  • Prohibit banks from entering into or continuing correspondent relationships with shell banks.
  • Require financial institutions to satisfy themselves that respondent financial institutions in a foreign country do not permit their accounts to be used by shell banks.
The supervisory and oversight system–competent authorities and SROs
  • Establish the legal basis for AML/CFT supervision of the financial institutions currently regulated by the MEC.
Role, functions, duties and powers (including sanctions) (R.23, 30, 29, 17, 25, & 32)
  • Strengthen the QCB, DSM and MEC overall AML/CFT supervision and develop formal examination procedures for AML/CFT matters.
  • Re-evaluate the adequacy of the penalties regime, in particular with respect to the criminal sanction for tipping-off provided in the AML Law, and provide the domestic supervisory authorities with an adequate range of sanctions.
Money value transfer services (SR.VI)
  • Investigate the possibility of an informal MVT system operating in Qatar and consider effective measures for monitoring these activities, if identified.
  • Address the shortcomings identified in recommendations 4–11, 13–15, and 21–23, as applicable to this recommendation.
4. Preventive Measures–Nonfinancial Businesses and Professions
Customer due diligence and record-keeping (R.12)
  • Set out in primary or secondary legislation the basic obligations on customer due diligence and record keeping for all DNFBPs.
  • Set out in law, regulation or by other enforceable means the obligations on PEPs, payment technologies, introduced business and unusual transactions.
  • Effectively implement Circular No. 2 of 2007 of the MEC, Resolution No. 108 of 2006 of the MOJ and QFC AML Regulations.
Suspicious transaction reporting (R.16)
  • Set out STR obligations in primary or secondary legislation for all DNFBPs.
  • Review the provisions on legal privilege in order not to prevent lawyers and legal advisers from filing STRs.
  • Implement adequate measures to prohibit a DNFBP from disclosing information it provides to the FIU.
  • Implement provisions on internal controls and countries that insufficiently apply the FATF recommendations are incomplete and not implemented.
  • Refine the QFC framework regarding the legal privilege of lawyers.
Regulation, supervision, monitoring, and sanctions (R.17, 24, & 25)
  • Re-evaluate the adequacy of the penalties regime, in particular with respect to the criminal sanction for tipping-off provided in the AML Law, and provide the domestic supervisory authorities with an adequate range of sanctions.
  • FIU and QFCRA: issue guidelines and provide specific feedback to DNFBPs.
Other designated non-financial businesses and professions (R.20)
  • Conduct a risk assessment of the other businesses and professions in the domestic sector.
  • Take steps in order to reduce the reliance on cash.
5. Legal Persons and Arrangements & Nonprofit Organizations
Legal Persons—Access to beneficial ownership and control information (R.33)
  • Enhance the timeliness of the FIU’s and DSM’s access to the relevant information by providing both authorities with an electronic link to the register of commerce’s database.
Legal Arrangements—Access to beneficial ownership and control information (R.34)QFC:
  • Review the CDD requirements with respect to trusts to ensure that they are in conformity with the new Trust regulations.
  • Take measures that enable the competent authorities to have adequate, accurate and timely information on trusts created under QFC, including accurate, current and adequate information on the settlor, trustee and beneficiaries.
Nonprofit organizations (SR.VIII)
  • Suppress the possibility of exempting a charity from QACA supervision.
  • Make the identification requirements more realistic and enforceable and clarify the role of the QACA-FIU work team.
  • Systematize on-site inspection of international projects.
  • Revise the QFC Trust Regulations No. 12, Law 12 of 2004 and Law 13 of 2004 to bring the charitable trust regime in compliance with SR VIII.
  • Promote effective supervision or monitoring of QFC charitable trusts.
6. National and International Cooperation
National cooperation and coordination (R.31 & 32)
  • Formalize the cooperation with, the QFC, the securities market regulator and, if necessary, the Public Prosecutor’s Office, and seek to include them in their efforts to develop and implement policies to combat money laundering and terrorist financing.
  • Ensure as a matter of priority enhanced cooperation in the implementation of UNSCRs 1267 and 1373 (and their successor resolutions).
  • Maintain comprehensive statistics.
The Conventions and UN Special Resolutions (R.35 & SR.I)
  • Take the necessary measures to fully implement the Vienna Convention.
  • Sign, become party to and fully implement the Palermo Convention.
  • Sign, become party to and fully implement the International Convention for the Suppression of Terrorist Financing.
  • Take the necessary measures to comply with and fully implement UNSCR 1267 and 1373 (and their successor resolutions) as recommended under SR III.
Mutual Legal Assistance (R.36, 37, 38, SR.V & 32)
  • Specify in the law the types of assistance that may be granted in such a way that it covers assistance of the following nature:
    • the production, search and seizure of information, documents, or evidence from financial institutions, or other natural or legal persons;
    • the taking of evidence or statements from persons;
    • the provisional originals or copies of relevant documents and records as well as any other information and evidentiary items;
    • the service of judicial documents;
    • facilitating the voluntary appearance of persons for the purpose of providing information or testimony to the requesting country; and
    • identification, freezing, seizure, or confiscation of assets laundered or intended to be laundered, the proceeds of money laundering and assets used for or intended to be used to finance terrorist acts, terrorist groups or organizations and terrorist individuals, as well as the instrumentalities of the money laundering offense and of the predicate offense, and assets of corresponding value.
  • Allow for the delivery of mutual legal assistance on nonintrusive measures even in the absence of dual criminality.
  • Ensure that the mutual legal assistance requests are dealt with in a timely manner and without undue delay.
  • Devise mechanisms that determine the best venue when defendants are subject to prosecutions in more than one country.
  • Ensure that technical differences in the laws in Qatar and in the requesting State do not impede the provision of mutual legal assistance.
  • Conclude arrangements where necessary for coordination of seizure and confiscation actions with other countries.
  • Fully implement the UNSCR 1267 and 1373 with respect to international cooperation.
  • Criminalize terrorist financing as recommended under SR II and ensure that the widest range of international cooperation may be granted in the fight against the financing of terrorism.
  • Consider establishing a confiscated assets funds into which all or portion of confiscated property will be deposited and will be used for law enforcement, health, education or other appropriate purposes.
  • Consider authorizing the sharing of confiscated assets between law enforcement agencies that have contributed to the confiscation of assets.
  • Maintain statistics of the requests for mutual legal assistance and the response given.
Extradition (R. 39, 37, SR.V & R.32)
  • Extend the list of predicate offenses as noted under Recommendation 1 in order to be able to provide extradition in all the cases contemplated in the standard.
  • Ensure that, where extradition relating to ML and TF is denied, the case is submitted to the relevant Qatari authorities without undue delay in view of the prosecution of the offenses set forth in the request and that the competent authorities cooperate with the requesting state on procedural and evidentiary aspects.
  • Clearly specify the procedure by which extradition for terrorist financing is possible, in line with SR V.
  • Establish a mechanism that ensures that extradition requests and proceedings relating to ML and TF are handled without undue delay.
  • Fully implement the UNSCR dealing with the fight against terrorism and its financing.
  • Maintain statistics of requests for extradition received and responses given.
Other Forms of Cooperation (R. 40, SR.V & R.32)
  • Law enforcement agencies and the FIU should be more proactive in requesting information on ML/FT from their counterparts.
  • QCB and DSM Laws should be amended to allow the QCB and DSM to provide the widest range of international cooperation with their foreign counterparts.
  • Authorities should maintain statistics on the number of requests for assistance made or received by law enforcement authorities, the FIU, including whether the request was granted or refused.
7. Other Issues
Other relevant AML/CFT measures or issues
  • Authorities should allocate additional resources to competent authorities.
  • Authorities should develop the professional standards, including confidentiality standards.
  • Authorities should develop specialist skills training in law enforcement authorities including prosecution agencies, FIU, supervisors and other competent authorities involved in combating ML/FT.
  • Competent authorities have yet to develop comprehensive statistics.
Annex 1. Authorities’ Response to the Assessment

1. The Qatari authorities acknowledge and appreciate the important contribution the Financial Action Task Force continues to make in the international fight against ML/TF and would also like to express their gratitude to the International Monetary Fund’s assessor team for its commitment and valuable contribution to Qatar’s ongoing AML/CFT efforts.

2. The government of Qatar is pleased that the Assessment report highlights the fact that there is currently no evidence of significant money laundering in Qatar, that the level of predicate offences is low compared to other countries and that Qatar ranks among the less corrupt countries in the region. The government also welcomes the acknowledgement in the Assessment report that the Qatari authorities are very conscious of the risks posed by money laundering and the financing of terrorism.

3. The Qatari authorities are acutely aware of the risks attendant on a rapidly growing financial sector and are committed to the continued development of a robust AML/CFT framework including the development of a legal and regulatory regime that will ensure ongoing high level compliance with the FATF 40 + 9 Recommendations.

4. Qatar places the highest importance on AML/CFT and has worked hard over the last few years to address ML/TF risks. The Qatari authorities are pleased that the Assessment demonstrates that the main deficiencies identified in Qatar’s 2002 Mutual Assessment Report have been addressed and that the country is continuing to make positive progress in the fight against ML/TF.

5. As part of this commitment, the Qatar government has decided to merge Qatar’s two financial services legal and regulatory regimes and to introduce a single financial services regulator that will oversee all financial institutions (with the Qatar Central Bank retaining a focus on core central bank functions including monetary policy and the operation of the payment systems). The decision to create a new single regulator will mean that all financial institutions in Qatar will be subject to the measures (including on AML/CFT) currently upheld by the QFC.

6. The Qatari authorities recognize the crucial role that the National Anti Money Laundering & Counter Terrorist Financing Committee and the FIU play in the fight against ML/TF and are continuing to implement new strategies to enhance their effectiveness, including establishing a strong legal foundation for the FIU, and strengthening cooperation between all Qatari authorities involved in AML/CFT.

7. A number of initiatives have already been undertaken or are under way to enhance Qatar’s AML/CFT framework, including:

  • Drafting a new Anti Money Laundering & Counter Terrorist Financing Law to extend the scope of the ML and the TF offences and to ensure full compliance with the FATF 40+9 Recommendations, relevant international conventions and UNSC resolutions;
  • Implementing AML/CFT measures by each of the supervisory authorities, including amendments to regulations and rulebooks, to enhance the preventive measures for all financial institutions and DNFBPs;
  • Taking steps to accede to the Palermo Convention and the International Convention for the Suppression of the Financing of Terrorism (ICSFT);
  • Creating a Central Committee on Training to implement a comprehensive AML/CFT training program for all financial institutions and authorities with AML/CFT responsibility; and
  • Establishing measures to ensure that law enforcement agencies, financial institutions, DNFBPs and other competent authorities involved in combating ML/TF prepare and maintain qualitative and comprehensive statistics related to combating ML/TF.

8. Qatar is genuinely pleased with the timing of this Assessment and sees it as complementing the development of its AML/CFT strategy. The Assessment has helped to clarify Qatar’s AML/CFT vision and each authority is committed to implementing measures to address the recommendations made by the assessors and ensuring ongoing compliance with the FATF 40+9 Recommendations and international standards.

Annex 2. Details of all bodies met on the on-site mission—Ministries, other Government Authorities or Bodies, Private Sector Representatives, and others.
  • 1. Association of commercial banks
  • 2. Association (s) of Compliance Officers
  • 3. Coordination Committee for the implementation if UNSCR 1373 and relevant authorities responsible for the implementation of the UNSC Resolutions
  • 4. Customs & Ports General Authority
  • 5. DNFBPs
    • a) Representatives from lawyers
    • b) Representatives from the real estate agents
    • c) Representatives from dealers in precious metals and precious stones
    • d) Representatives of accountants
  • 6. Financial Institutions
    • a) Representative from the banking industry i) Qatar National Bank
      • ii) International Bank of Qatar
      • iii) BNP Paribas (Foreign Bank Branch)
      • iv) First Investment
    • b) Representatives from Investment companies
      • i) First Investment
    • c) Representatives of the exchange houses
      • i) Gulf Exchange Co.
      • ii) Al Mana
    • d) Representatives from the insurance Companies
      • i) Arabian Insurance Co
    • e) Representatives of financial firms supervised by QFCA
      • i) Arab Jordan Investment Bank
    • f) Representatives of financial firms supervised by QFCA
      • i) United Gulf Financial Services Company LLC
    • g) Representatives from the Doha Securities Market
      • i) Delala Islamic
      • ii) Qatar Securities Company
      • iii) Qatar Insurance and Reinsurance Co
    • h) Representatives from alternative remittance systems
  • 7. Financial Intelligence Unit
  • 8. Law enforcement agencies
    • a) Prosecutor, judges
    • b) Police
  • 9. Ministry of Civil Service & Housing
    • a) Qatari authority for charitable activities
    • b) Qatari Post
  • 10. Ministry of Economy & Commerce
    • a) Commercial Affairs Department
  • 11. Ministry of Finance
  • 12. MOFA
  • 13. MOI
    • a) Department of Prevention of Economic Crimes
  • 14. Ministry of Municipal Affairs & Agriculture
  • 15. MOJ
    • a) Prosecutor’s Office
    • b) Judges
  • 16. National Committee on AML/CFT
  • 17. Public Qatari Authority for Specification & Criteria
  • 18. Qatar Chamber of Commerce & Industry
  • 19. QCB
    • a) AML/CFT policy and supervision
    • b) Banking Supervision Department
    • c) Legal Affairs Department
  • 20. Qatar Financial Centre Authority
  • 21. Qatar Financial Centre Regulatory Authority
  • 22. State Security Bureau
  • 23. Representatives from non-profit organizations
  • 24. Doha Securities Market Committee
Annex 3. List of all laws, regulations and other material received

I. Laws

1. Law No. 2 of 1962: regulation of General Monetary Policy in Qatar (Ar.)

2. Law No. 14 of 1964: Real Estate Registration

3. Law No. 5 of 1989: State Public Treasury (Ar.)

4. Law No. 14 of 1991: Regulation of the MOJ and its competence (Ar.)

5. Decree Law No. 15 of the year 1993 establishing Qatar Central Bank and amendments

6. Law No. 14 of 1995: Doha Stock Market

7. Law No. 36 of 1995: Money Exchange

8. Decree Law No. 15 of the year 1993 establishing Qatar Central Bank as amended by the Law No. 19 of the year 1997

9. Law No. 8 of 1998: Non Profit Organizations and private companies (Ar.) Cancelled

10. Law No. 14 of 1999: Weapons, ammunitions and explosives.

11. Law No. 13 of 2000: Investment of Foreign Capital in the Economic Activity

12. Law No. 3 of 2001 amending Articles of Law No. 8 of 1998 on Non Profit Organizations and private companies. (Ar.)

13. Law No. 2 of 2002: Real Estate Possession by the GCC Citizens

14. Law No. 5 of 2002: Commercial Companies Law

15. Law No. 8 of 2002: Regulation of Commercial Agents

16. Law No. 10 of 2002: General Prosecutor (Ar.)

17. Law No. 11 of 2002 amending Articles of Law No. 4 of 1991: regulation of the MOJ and determining its competences. (Ar.)

18. Law No. 28 of 2002: Fighting Money Laundering (Ar.)

19. Law No. 40 of 2002: Customs Law

20. Law No. 5 of 2003 establishing State Security Bureau.

21. Decree Law No. 21 of 2003 amending some provisions of Law No. 28 of 2002 on Anti-Money Laundering

22. Law No. 3 of 2004: Combating Terrorism

23. Law No. 11 of 2004: Penal Code

24. Law No. 12 of 2004: Non Profit Organizations and private companies (Ar.)

25. Law No. 13 of 2004: Foundation of Charities Qatar Organization

26. Law No. 22 of 2004: the Civil Code

27. Law No. 23 of 2004: Penal Procedure Code (Ar. except Chap.V)

28. Law No. 25 of 2004: The Harboring Confrontation of Non-Qatari Commercial, Economical and Professional activities practice in contrary to the Law.

29. Law No. 30 of 2004: regulating Accountants profession (Ar.)

30. Law No. 31 of 2004 amending provisions of Law No. 13 of 2000 regulating Investment of Foreign Capital in the Economic Activity (Ar.)

31. Law No. 5 of 2005: The protection of Trade Secrets.

32. Law No. 6 of 2005: Protection of Layout Design of Integrated Circuits

33. Law No. 7 of 2005: On the Promulgation of Law for the Qatar Financial Center

34. Law No. 11 of 2005 regulating the Ministry of Finance and its competences (Ar).

35. Law No. 33 of 2005: Qatar Financial Center Authority and Qatar Financial Center (Ar).

36. Law No. 23 of 2006 Law of Lawyers.

37. Law No. 33 of the year 2006: Qatar Central Bank.

II. Ministerial Resolutions

1. Ministerial Resolution of the Minister of Finance, Economy and Trade No. (10) of 1999 issuing internal list of Qatar Financial Center Authority

2. Ministerial Resolution of the Minister of Justice No. (27) of 2000 amending provisions of decision No. (6) of 1994 establishing units in administrative departments in the MOJ and determining its competences. (Ar.)

III. Circulars, Decisions & Instructions

Qatari Public Authority for Customs and Ports:

1. Instructions of the Public Authority for Customs and Ports, Resolution of the Director General of the Public Authority for Customs and Ports No. (5) of 2005 concerning the procedures and rules for declaration and inspection of luggage and property accompanying travelers or belonging to them.

2. Instructions issued by the customs Authority, Administrative Circular No. (40) year 2001 concerning Money Laundering and suspicious operations.

3. Resolution of the Chairman of Customs and Ports General Authority No. (37) of 2006 amending Decision No. (5) of 2005 regarding the procedure of disclosure and principles of licensing and inspection of traveler’s accompanied luggage.

QCB Instructions:

Chapter 6: Combating ML and FT

Doha Securities Market Committee:

Doha Securities Market Committee’ Decision No. (16/3) for the Year 2005 on the instructions concerning the procedures for the prohibition and combating of Money Laundering and Financing of Terrorism.

Charities:

1. Instruction issued by the Qatari Public Authority for Charitable Works circular No. 1 of 2005: controls for financial dealings and transfers with Charitable and Humanitarian bodies abroad.

2. Resolution No. (17) of 2006 issuing the instructions related to the combating of Money Laundering and Terrorism Financing- Qatar Authority for charitable works and the MOJ.

3. Instructions issued by Civil Service and Housing Affairs–Ministry of Charitable Societies.

MEC:

1. Circular No. (1) of 2007 to insurance company issued by the MEC (ML instructions)

2. Circular No. (2) of 2007 to all companies operating in the State of Qatar (ML instructions).

3. Circular No. (3) of 2007 to all auditing offices operating in the State of Qatar (ML instructions).

Lawyers and Legal Professions:

1. Circular No. 13 of 2006 addressed by the MOJ-Real Estate Registration Department.

2. Administrative Order No. 108 of 2006–Minister of Justice, chairman of the Committee responsible of registering the Lawyers.

3. AML/CFT instructions, MOJ addressed to Lawyers.

IV. Qatar Financial Centre Regulations

1. QFC Qatar Financial Center Law-Law No. (7) of 2005.

2. QFC-Regulatory Authority- Introducing the Qatar Financial Center Regulatory Authority.

3. QFC Regulation No. (1) of 2005-QFC Financial Services Regulations relating to the management, objectives, duties, functions, powers and constitution of the QFC Regulatory Authority- Ver1–May05.

4. QFC-Regulatory Authority -A guide to our approach to regulation.

5. QFC-Regulatory Authority- A guide to the Financial Services Regulations.

6. QFC Companies Regulations- Qatar Financial Center- Ver1–Sep05.

7. QFC Companies Rules- Qatar Financial Center-Comp- Ver1–Nov05.

8. QFC Limited Liability Partnerships Regulations- Ver1–Nov05.

9. QFC Data Protection Regulations- Qatar Financial Center- Ver1–Oct05.

10. QFC Data Protection Rules- Qatar Financial Center- rules Ver1–Oct05.

11. QFC AML regulations- Ver1- Sep05.

12. QFC-Regulatory Authority–AML Rulebook- Ver1–Oct05.

Annex 4. Copies of key laws, regulations and other measures

I. Laws

1. Law No. 28 of 2002: Fighting Money Laundering (Ar.)

2. Decree Law No. 21 of 2003 amending some provisions of Law No. (28) of 2002 on Anti-Money Laundering

3. Article 3 of Law No. 3 of 2004 on Combating Terrorism

II. Decisions

1. Administrative Decision No. 1 of year 2004: establishment of the FIU.

1Mr. El Khoury joined LEG in September 2007.
2Seventh United Nations Survey of Crime Trends and Operations of Criminal Justice Systems, statistics for year 2000. (http://www.unodc.org/unodc/en/crime_cicp_survey_seventh.html#responses)
3The English translation of the AML Law is slightly inconsistent with respect to the proceeds of crime in the sense that the money laundering offense (Art. 2 of the AML Law) refers to “funds obtained from” the listed predicate crimes, while the list of definition (Art. 1) only defines “proceeds” and not “funds obtained from crime”. The original Arabic version, however, is more precise; both Article 1 and 2 refer to “proceeds”. Arabic being the only official language in Qatar, the Arabic version prevails and the inconsistency in the English translation has no bearing on the assessment.
4The notion of “drugs” includes alcohol trafficking in these statistics.
5The English translation is imprecise in the sense that it only refers to crimes listed in the Criminal Code, while the original Arabic version of Article 1 refers to all crimes enumerated in the Criminal Code as well as in any other law. As mentioned in footnote 3 above, the Arabic version prevails and the lack of precision in the English translation bears no consequence for the purposes of this assessment.
6By decision dated October 11, 2007, the Council of Ministers approved the joining of the International Convention for the Suppression of Terrorist Bombings of 1997 and the International Convention for the Suppression of the Financing of terrorism of 1999, subject to the reservations to some of the provisions regarding the referral to the international arbitration and the International Court of Justice.
7Dates of accession to the Conventions and Protocols:
  • Convention on Offenses and Certain Other Acts Committed on Board Aircraft (Tokyo)-1963, joined by Qatar on 17/6/1981.
  • Convention for the Suppression of Unlawful Acts against the Safety of Civil Aviation (Montreal) -1971, joined by Qatar on 1/7/1981.
  • Protocol for the Suppression of Unlawful Acts of Violence at Airports Serving International Civil Aviation, joined by Qatar on 19/5/2003.
  • Convention for the Suppression of Unlawful Seizure of Aircraft (La Haye)-970, joined by Qatar on 1/7/1981
  • Convention on the Prevention and Punishment of Crimes against Internationally Protected Persons, including Diplomatic Agents (New York)-973, joined by Qatar on 20/12/1996.
  • International Convention on the Marking of Plastic Explosives for the Purpose of Detection (Montreal)-991, joined by Qatar on 7/10/1998.
  • Convention on the Physical Protection of Nuclear Material-980, joined by Qatar on 30/7/2003.
  • Convention for the Suppression of Unlawful Acts against the Safety of Maritime Navigation -1988, joined by Qatar on 30/7/2003.
  • Protocol on the Suppression of Unlawful Acts against the Safety of Fixed Platforms Located on the Continental Shelf, joined by Qatar on 30/7/2003.
  • International Convention against the Taking of Hostages-979, joined by Qatar on 30/7/2003.
8The sanctions applicable to the perpetrators of terrorist crimes range from ten years of imprisonment to the death penalty. The latter applies in all cases that resulted in the death of person as well as in all cases where a weapon was used in the commission of the crime (Article 2 of the CT Law). The sanctions applicable to the persons who assist the terrorists in the ways prescribed in the law range from five years to life imprisonment.
9The English translation of Article 4 is incomplete and omits the reference to the sanction applicable to the acts that it covers (i.e., life imprisonment).
10The English translation of Article 4 refers to the “collection of money” but the original Arabic text mentions “amwal”, which is broader than “money” and encompasses all means of financial assistance.
11With respect to the QFC, Article 18 para. 1 of the QFC Law specifically mentions that the criminal laws and sanctions of the State of Qatar apply in the QFC.
12The first Coordination Committee included representatives from the Ministries of Civil Service Affairs and Housing, Finance, Economy and Commerce, Interior, and Justice, as well as representatives from the Islamic Affairs Department and Awqaf, the QCB, and the Chamber of Commerce and Industry.
13N. B.: although the English translation of the text refers to “money”, the Arabic version refers more broadly to “assets.”
14In both the original Arabic text and the English translation.
15The English translation of the QCB Instructions refers to “extraordinary banking operations”. The original Arabic version, however, is more precise and refers to “unusual transactions”. Arabic being the official language in Qatar, the Arabic version prevails and the inconsistency in the English translation has no bearing on the assessment.
16The original Arabic version provides similar non-binding language.
17In March 2008, the QFCRA informed the assessment team that it had recently conducted a number of supervision visits of DNFBPs.
18In case a trust whose governing law is the QFC Law engages in the business activities specified in schedule 3 of the QFC Law, it would be subject to the legal framework analyzed in the previous sections on financial institutions and DNFBPs.
19In case a charitable trust whose governing law is the QFC Law engages in business activities specified in schedule 3 of the QFC Law, it will be subject, as any other legal person, to the legal framework analyzed in the previous sections on financial institutions and DNFBPs. The QFC Law do not however specifically address the vulnerabilities of charitable trusts to abuse by terrorists as is recommended by SR VIII.
20QACA has conducted a number of periodic and unannounced field inspections visits since the on-site mission, to examine and check the accounts and records of the domestic NPOs. Reports including recommendations have been sent and prohibition of financial assistance or financial transfers to some foreign NPOs have been pronounced. Field visits have been performed abroad in order to verify that financial transfers are actually allocated to humanitarian purposes. This confirms the effectiveness of the measures in place, as witnessed during the on-site visit (see paragraphs 948 and 949).
21At the time of the onsite visit, the DSM was the competent regulator but its successor, the QFMA, was due to start operating in April 2007.
22By decision dated October 11, 2007, the Council of Ministers approved the joining of the International Convention for the Suppression of Terrorist Bombings of 1997 and the International Convention for the Suppression of the Financing of terrorism of 1999, subject to the reservations to some of the provisions regarding the referral to international arbitration and the International Court of Justice.
23S/AC.37/2003/(1455)/66
24S/2002/1211
25S/2004/179
26S/2006/171

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