Posted on October 17, 2019

The Union of Arab Banks and the Federal Reserve Bank of New York hosted the US- MENA PSD 2019 at the Federal Reserve Bank of New York, New York on October 15th 2019 on the theme “The Challenges and Opportunities for MENA Banks – Understanding and Meeting US Regulatory Expectations and the Expectations of their Correspondents.”

Dr. R. Seetharaman, CEO of Doha Bank gave insight on risk based approach to sanctions compliance. He said “In the global fight against financial crime, each world region faces unique challenges, and those faced by the Middle East are some of the most complex. Rightly, compliance with AML/CFT legislation is a priority for banks, payment service providers and other NFIs (Non-financial institutions) in the Middle East.By deploying a risk-based approach to client classification, financial institutions can determine the correct level of due diligence on a case-by-case basis, enabling them to tap into a wider market.  63% of financial institutions in the MENA region expect to make more technology investments over the next two years. Technology support is vital in implementing Risk Based Approach to Sanctions Compliance. The potential of emerging new technologies, in the form of Artificial Intelligence (AI), Robotics Process Automation (RPA) and block chain needs be leveraged to further automate routine AML and KYC processes and reduce associated regulatory cost pressures.”

Dr. R. Seetharaman highlighted the key challenges facing financial institutions in the Middle East. He said “Growing influence and scrutiny by Financial Action Task Force (FATF), Rising size and number of fines, Customer Due Diligence challenges and the disruption of FinTech and RegTech firms are the major challenges faced by the regional financial institutions.”

Dr. R. Seetharaman gave insight on the Correspondent Banking Landscape. He said “The overall reduced risk appetite after crisis, Perceived or assessed risk and increased compliance cost for high risk clients. Insufficient Due Diligence information available and Lack of confidence in respondent bank’s ability to manage risk. Sanctions on countries or individual banks. Regulatory pressure, Rising fines and penalties, enhanced corporate and personal accountability and growing reputational concerns. There is also decline in correspondent banking activity as at end of 2018.” He also highlighted the impact of US AML rules on Foreign Financial Institutions and key initiatives on correspondent banking.

Dr. R. Seetharaman highlighted on reforms brought by Qatar. He said “In June 2017, the United States and Qatar signed an agreement aimed at combating the financing of terrorism. In 2017 a legal framework on local classifications was established to identify persons and entities involved in the financing of terrorism.In order to make Qatar 's anti-money laundering and counter-terrorist financing system (AML/CFT) the most effective and robust in the region, the National Anti-Money laundering and Terrorism Financing Committee (NAMLC) has signed a memorandum of understanding (MoU) with Washington based Financial Integrity Network( FIN) to be its principal advisor in 2017.

QCB, Qatar Financial Markets Authority (QFMA) and Qatar Financial Centre Regulatory Authority (QFCRA) have each issued guidance to their financial institutions addressing critical areas of compliance with the regulators’ anti-money laundering and combating terrorism financing (AML/CFT) rules and requirements in 2018. In Sept 2019, Qatar Central Bank (QCB) announced the issuance of Law No. 20 of 2019 on issuing a law on combating money laundering and terrorism financing to replace combating money laundering and terrorism financing law promulgated by Law No. 4 of 2010. The new law reflects Qatar's continued commitment to combating money laundering and terrorist financing in all its forms, in accordance with the latest international standards adopted by major international organizations including Financial Action Task Force (FATF). On the whole Zero tolerance by Qatar for non- compliance with Anti Money Laundering/ Counter terrorism financing.”