The Financial Action Task Force-MENAFATF (FATF), has recently published its mutual evaluation report on Qatar, dated 31 May 2023 . This comprehensive report assesses the effectiveness of Qatar's anti-money laundering and counter-terrorism financing (AML/CTF) measures against compliance with FATF's 40 recommendations. In this article, we will provide an overview of the key outcomes and recommendations highlighted in the Executive-Summary-Mutual-Evaluation-Qatar-2023 of the report.
Key findings and outcomes
Qatar's mutual evaluation provides a detailed assessment of Qatar's AML/CTF framework during a site visit from 19 June to 7 July 2022, highlighting both significant achievements and areas that require further attention. Of the 40 recommendations, FATF rated 32 compliant and 8 largely compliant and of the 11 Immediate Outcomes over half were rated at a Moderate level of effectiveness with terrorist financing investigation and prosecution rated at a Low level of effectiveness.
Qatar's commitment to strengthening its legal and institutional framework at a national level has been identified as a positive outcome. The report acknowledges Qatar's progress in conducting thorough risk assessments, implementing preventive measures to combat financial crimes effectively however, the understanding of certain threats is still developing, with a need to deepen Qatar’s understanding of more complex forms of money laundering and terrorist financing ("ML/TF").
Qatar has demonstrated a robust framework to implement targeted financial sanctions in respect of terrorist financing threats and used this to seize a large amount of assets. Additionally, the report recognizes the efforts made by Qatar's financial intelligence unit ("QFIU"), regulatory authorities, and law enforcement agencies in promoting cooperation and coordination.
Qatar is conducting an increasing number of ML investigations and prosecutions, although the total number of ML cases prosecuted remains low and not targeting the high risk activity in country.
Qatar is effectively confiscating significant sums of money and property being the proceeds of financial crime. Qatar has a targeted national strategy to confiscate all proceeds of crime and assets from higher-risk threats/offences.
The authorities prioritise international co-operation but further progress is necessary to improve Qatar’s overall system for mutual legal assistance and extradition.
Whilst these accomplishments are notable, the report also identifies certain challenges and weaknesses that require focused efforts for improvement. Particularly, the report emphasizes the need to enhance the supervision of non-financial sectors, such as real estate, precious metals, and designated non-financial businesses and professions ("DNFBPs"). It further highlights that Qatar has only secured a small number of terrorist financing convictions and prosecutions and consequently needs to make some major improvements in its judicial system.
It is also identified in the report that the Qatar Central Bank ("QCB") applies a risk-based approach in its AML/CFT supervision of the financial sector, implementing updated risk based supervision procedures. QCB reviews significant information that informs inspections to address risk. The Qatar Financial Centre Regulatory Authority and the Qatar Financial Markets Authority also demonstrate a well-established capacity to conduct risk-based AML/CFT supervision. However, supervision of DNFBPs by the Ministry of Commerce and Industry ("MOCI") and the Ministry of Justice ("MOJ") is still improving. MOCI and MOJ started inspection of some sectors in mid-2020, but the restrictions of COVID-19 affected the full implementation of the plan. However, given that these restrictions are now lifted, MOCI and MOJ should now be able to re-commence with the plan.
It is also worth noting that the report indicates that Qatar has several measures in place to mitigate ML/TF risks, including establishing a central registry for beneficial ownership ("BO") information of all registered legal persons and arrangements (the Unified Economic Register). However, there are insufficient measures to ensure accurate and up-to-date BO information (particularly from MOCI).
Recommendations
In order to strengthen Qatar's AML/CTF national framework and address the challenges identified in the report, the FATF report outlines a series of key recommendations. These recommendations include:
- Enhancing the ability to detect all stages of TF (i.e., raising, moving, using), as well as a wider variety of channels (e.g. banks, exchange houses, NPOs, etc.);
- Enhancing intelligence, investigative, and prosecutorial efforts based on identified TF risks, and prioritize investigations on TF designated individuals or entities in Qatar;
- Enhancing the use of financial intelligence and QFIU analytical products to develop evidence, trace assets and identify suspected cases of TF;
- Achieving more ML prosecutions and convictions in a risk-focused manner, and strengthening the capacities of prosecutors;
- Reinforcing international cooperation between Qatar and other jurisdictions for mutual legal assistance and extradition;
- Improving the quality of basic and BO information available from different sources of information to ensure that it is accurate and up to-date;
- Developing the understanding of ML/TF risks, including new and emerging risks;
- Full implementation of a risk-based approach by MOCI and MOJ, and alongside the QCB focusing on ensuring adequate and sufficient resources and expertise are available.
- Pursuing confiscations as a matter of course in the criminal justice framework and developing more specific policy objectives in relation to recovery strategy, including asset seizure and confiscation targets;
- Increased outreach to Improve compliance of DNFBPs with the AML/CFT obligations; and
- Building awareness amongst DNFBPs on proliferation financing-related TFS to ensure that sanctions obligations are understood and implemented and strengthening the capacity to identify funds and other assets of designated persons and entities.
Conclusion
The mutual evaluation report of FATF, published in May 2023, provides valuable insight on Qatar's AML/CTF progress. Whilst acknowledging the achievements, it highlights the ongoing need for improvements to address identified weaknesses. By implementing the recommendations outlined in the report, Qatar can further strengthen its AML/CTF framework and reinforce its commitment to combating financial crimes.
As Qatar continues to embed many of the initiatives in line with FATF's 40 recommendations, both Financial Institutions and DNFBPs will be required to invest in developing their AML/TF compliance programmes.
