Thursday, August 06, 2009
UAE praised for helping to crack global laundering racket
A United States court's decision to seize $4.3 million (Dh15.7m) from the Manhattan accounts of a group of Dubai-based businessmen and trading companies has created a new sense of alert among local traders to strictly process transactions through official banking channels, especially when trading with or through the United States.
Late last month, the US Attorneys Office in New York allowed the recovery of $4.3m seized from bank accounts in New York that had been allegedly used to launder proceeds of contraband in Europe.The judgement, issued on June 22, praised law enforcement authorities in the UAE, Europe and the US, whose efforts led to the arrest of 40 individuals in the UAE under the anti-money laundering law for using hawala and money exchange routes for the illegal operation.
The case involved sham commodities trading, which prompted the US Commodities and Futures Trading Commission to file a lawsuit two years ago.The alleged racket involved a gold trading firm listed on Dubai Multi Commodities Center and Indian businessmen and two Dubai-based trading companies.According to DMCC sources, the anti-money laundering campaign has been intensified recently in tune with the UAE anti-money laundering laws and the recent guidelines issued by the Dubai Financial Services Authority that advised all companies operating in the UAE to strictly follow know-your-customer polices and to verify the source of wealth of individual and corporate customers.
The local offices of the companies charged with money laundering by the US court seem to be closed and their telephone numbers allocated to other companies. "On February 20, 2007, Dubai law enforcement authorities arrested NJK Patel and 39 others associated with the extensive money laundering operation. Patel and others have been charged with offences contrary to the UAE's Anti Money Laundering legislation of 2002," said a statement by Lev L Dassin, Acting Attorney for the Southern District of New York."In conjunction with the arrest of Patel, Dubai law enforcement authorities executed numerous search warrants and recovered banking and wire transfer records demonstrating that Patel directed transfers from entities under his control in Dubai, through various banks and exchange houses in Dubai, into various bank accounts at Man Financial in Manhattan," said the statement.
The accused engaged in "layering" a money laundering technique that seeks to disguise the origin of funds by engaging in transactions that are designed merely to make tracing more difficult and sham commodities trades in which Patel and his nominee would always suffer loses and other entities would enjoy profits, the court said, adding that all these transactions were conducted with no real change in traditional position for either party.Such "wash" commodities trades have no commercial justification and resulted in the filing of a civil lawsuit by the US Commodities and Futures Trading Commission (CFTC) on April 5, 2007.
The US Government obtained a seize warrant for the funds in the Man Financial Accounts (May 18, 2007) and the US District Judge Sidney H Stein issued an opinion and order dismissing claims to the forfeited funds filed by the UAE claimants and ordered that the judgement be entered in favour of the US.
