8 July 2010
CIRCULAR BM 1073
To: All Licensed Banks
in the Sultanate of
Re: Law of Combating Money Laundering and Terrorism Financing
1. Reference is invited to Circulars BM 936 dated 7th April 2002 and BM 940 dated 24th July 2002 on Money Laundering Law issued pursuant to Royal Decree 34/2002.
2. Attached is copy of Royal Decree 79/2010 (Arabic and English), issued on 28th June 2010, promulgating Law of Combating Money Laundering and Terrorism Financing, gazetted on 3rd July 2010 and effective from 4th July 2010.
Please note that the attached English translation is unofficial and provisional only.
3. Central Bank of
i) As stated in Article 2 of the Royal Decree 79/2010, the provisions of Executive Regulation issued in terms of the earlier Money Laundering Law, shall remain effective till such time Minister of National Economy issues the Executive Regulation under the new Law, unless they contravene the provisions of this Law.
ii) While elaborating and widening the focus, coverage, and importance on the subject, the Law, it may be observed, is comprehensive and self-explanatory.
iii) The following require special mention.
a) Predicate offence, as stated, covers all offences which violate the applicable laws in the Sultanate and enable their perpetrators to obtain the proceeds of the offences.
b) Terrorism Financing offence receives special and separate mention and coverage (in addition to money laundering).
c) Non-financial businesses and professions, non-profit Associations and bodies, besides financial institutions, are identified widely.
d) Persons on whom the guilt of offence and punishments will fall are elaborately covered.
Persons at risk by virtue of their positions require extra attention.
e) Financial Intelligence Unit, under Royal Oman Police, assumes required powers with authority to receive and analyze reports, investigate and follow up with actions. It can take more stringent/extended actions with authority from the Public Prosecution.
f) Article 12 covers the duties and responsibilities of financial institutions on the subject.
They are required, among others, to comply with the following:
§ Ensuring that counterparties have physical presence in the countries they are registered and are regulated.
§ Due Diligence should be extended to obtaining identity details, verification and updating identities and should cover ultimate beneficiaries.
§ There shall be no anonymous, numbered or disguised accounts.
§ There shall be monitoring of transactions on on-going basis to verify source of funds and ensure conformity with customer profile.
§ There shall be classification of customers according to corresponding risks and there shall be commensurate tiered levels of enhanced diligence.
§ Records and information need to be kept for 10 years, as specified and they should be provided to competent authorities, upon request.
§ There shall be appropriate oversight of overseas branches for compliance.
§ Financial Intelligence Unit shall be provided with Suspicious Transaction Reports and other requirements directly.
§ There shall be required systems, procedures, compliance infrastructure, control and training in accordance with established specifications.
g) Wire transfer transaction requirement has been covered to obtain and retain identity particulars of the originator also.
h) Notwithstanding the customer confidentiality provisions, disclosure of suspicious transactions and relevant information and records is required, as stipulated.
i) Disclosure of information, on specified actions under the Law to other than competent authorities is prohibited.
j) Actions in good faith are given protection.
k) Roles of competent regulatory authorities and National Committee on Combating Money Laundering and Terrorism Financing are amplified.
The emphasis is on cooperation and coordination among relevant authorities.
l) Penalties have been spelt out clearly, depending upon the nature and seriousness of violations.
Besides the Chairmen, Directors, employees etc., of the erring institutions, the institutions themselves shall be subjected to penalties. Those will include curbs on licenses and activities.
m) There is continued commitment of the Sultanate to international cooperation, covering, among others, cross-border assistance in combating money laundering and terrorism financing and mutual legal assistance.
4. All licensed banks are advised to ensure compliance in all respects, making suitable reviews and changes in their policies, systems, procedures etc., and continuing interactive process with the authorities.
They should note that instructions and requirements issued earlier, under various laws including the Banking Law and not contravening this Law, remain valid and licensed banks shall keep up compliance accordingly on combating money laundering and countering terrorism financing.
Hamood Sangour Al Zadjali