Addleshaw Goddard in Qatar provides a number of clients with assistance in connection with compliance with their regulatory obligations. Additionally, as a law firm, Addleshaw Goddard is subject to a number of anti-money laundering obligations, as can be seen with the increased materials required by way of customer due diligence from all law firms and professional service providers in modern times. The aim of this note is to provide a brief overview of the new Law No.20 of 2019 (the Anti-Money Laundering Law).

Offences 

The Anti-Money Laundering Law sets out two categories of offence, being money laundering offences and terrorist financing offences. 

Money laundering offences are defined as:

• conversion or transfer of funds, knowing that they are proceeds of a crime or an act of participation in the said crime; with a view to concealing or disguising the illicit source of funds or assisting any person involved in the commission of the crime to evade the legal consequences of his actions;
• concealment or disguise of the true nature, source, location, disposition, movement, ownership or the rights of funds, knowing that they are the proceeds of a crime;
• acquisition, possession or use of funds, knowing, at the time of receipt thereof, that they are proceeds of a crime; and
• participation in, association with or conspiracy to commit, attempt, or aid, abet, facilitate, counsel in, cooperate in, or contribute to the commission of any of the acts stipulated above.

From this list, it can be seen that the key determining factor in each of the money laundering offences is the requirement of knowledge (the Anti-Money Laundering Law also provides that such actions must be carried out intentionally).

Terrorist financing offences are defined as being where a person intentionally, by any means, directly or indirectly, with an unlawful intention provides or collects funds to be used, or while knowing that they are to be used, in whole or in part, in any of the following:

• to carry out a terrorist act(s);
• by an individual terrorist or by a terrorist organization, even in the absence of a link to a specific terrorist act or acts;
• to finance the travel of individuals to a country other than their country of residence or nationality, for the purpose of the perpetration, planning, or preparation of, or participation in, terrorist acts or the providing or receiving of terrorist training;
• to organize or direct others to commit or attempt to commit any of the acts stipulated above; and
• to participate, collude, aid, abet, facilitate, counsel in, cooperate in, conspire to commit or attempt to commit any of the acts stipulated above.

Again, as with money laundering offences, the key requirements of terrorist financing offences are knowledge and intention.

Preventative Measures

Financial Institutions and DNFBPs (both as defined below) are required to identify, consider, understand, assess, document, monitor and update on a regular basis their money laundering and terrorist financing risks and are required to submit reports to the Supervisory Authorities (defined below) on request. In this regard, Financial Institutions and DNFBPs are required to take a risk-based approach by developing risk-based internal policies, procedures and controls, having regard to the risks and the size of the business, including:

• appropriate compliance management arrangements, including the appointment of a compliance officer at the management level;
• appropriate screening procedures to ensure high standards when hiring employees;
• an ongoing employee-training program; and
• an independent audit unit to test the systems.

Definition of DNFBPs

A DNFBP is defined as designated non-financial businesses and professions, being: 

• real estate agents;
• traders in precious metals or precious stones;
• authorized notaries, lawyers, accountants, and legal accountants when they arrange, execute or conduct transactions on behalf of or for their customers in relation to any of the following activities:
  • purchase or sale of real estate;
  • management of the customer’s funds, securities or other assets;
  • management of bank accounts, saving accounts or securities accounts;
  • organizing contributions for the establishment, operation or management of companies or other entities; and
  • establishment, operation or management of legal persons or legal arrangements, and sale or purchase of business entities;
• trust and company service providers, when arranging or executing transactions for the customers, including:
  • acting as a formation agent of legal persons;
  • 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;
  • providing a registered office, place of business, correspondence address or administrative address for a company, a partnership or any other legal person or legal arrangement;
  • acting as, or arranging for another person to act as a trustee for a direct credit fund or performing an equivalent function for another legal arrangement; and
  • acting as, or arranging for another person to act as, a nominee shareholder for another person.

Definition of Financial Institutions

A Financial Institution is defined as conducting, as a business, one or more of the following activities or operations:

• accepting deposits and other repayable funds from the public;
• lending;
• financial leasing, except for leasing arrangements related to consumer products;
• money or value transfer services, except for providing the financial institutions with support or messaging systems for funds transfers;
• issuing or managing means of payment, such as credit and debit cards, cheques, traveller’s cheques, transfers, bank cheques, electronic money, money orders, bankers’ drafts;
• financial guarantees and commitments;
• activities related to securities;
• trading in: (1) money market instruments, such as cheques, bills, certificates of deposit and financial derivatives, (2) foreign exchange, (3) currency exchange instruments, (4) interest rate and index instruments, (5) transferable securities, or (6) commodity futures trading;
• participating in securities issues and providing financial services related to such issues;
• management of individual or collective portfolio;
• safekeeping and administering cash or liquid securities on behalf of, or for the benefit of, other persons;
• investing, administering or managing funds or money on behalf of, or for the benefit of, other persons;
• underwriting or placement of life insurance and other investment related insurance (this includes intermediaries);
• money or currency changing; and
• any other activity or transaction defined by a Decision of the Council of Ministers, upon the proposal of the National Anti-Money Laundering and Terrorism Financing Committee.

Definition of Supervisory Authorities

The Anti- Money Laundering Law defines Supervisory Authorities as:

• Qatar Central Bank for banks, insurers and reinsurers;
• Qatar Financial Markets Authority for financial brokerage firms and companies listed in Qatar;
• Ministry of Justice for lawyers, notaries and real estate agents;
• Ministry of Commerce and Industry for accountants, traders in precious metals and stones and trust and company service providers;
• Qatar Financial Centre Regulatory Authority for Financial Institutions and DNFBPs established in the Qatar Financial Centre; and
• The Regulatory Authority for Charitable Activities for non-profit organisations.

Anonymous Accounts

Financial Institutions and DNFBPs are prohibited from opening or keeping anonymous accounts or accounts in obviously fictitious names. 

Time to carry our customer due diligence (CDD)

The Anti-Money Laundering Law provides that Financial Institutions and DNFBPS are required to undertake CDD when:

• establishing a business relationship;
• carrying out occasional transactions equal to or greater than QAR 50,000, whether the transaction is carried out in a single operation or in several operations that appear to be linked;
• there is a suspicion of money laundering or terrorist financing, regardless of the amount of the transaction; or
• there are doubts about the veracity or adequacy of previously obtained customer identification data.

CDD

CDD procedures are defined under the Anti-Money Laundering Law as consisting of:

• identifying any person acting on behalf of the customer, checking his identity and verifying that he is authorized thereto, pursuant to the relevant applicable rules;
• identifying the beneficial owner of the customer (if applicable), and taking reasonable measures to verify his identity, using reliable, independent source documents, data or information until they are satisfied that they know who the beneficial owner is;  
• obtaining information on, and understanding, the purpose and nature of the business relationship or the transaction; and
• for customers that are legal persons or legal arrangements, identifying the nature of the customer’s business, his ownership and control structure, and the beneficial owner (if applicable).

In carrying our CDD, DNFBPs and Financial Institutions are required to rely on reliable, independent source documents, data or information, and are required to at least obtain the following information:

• for natural persons: their name as registered in the official documentation, residential address, date and place of birth and nationality; and
• for legal persons: their name, legal form and proof of existence, the regulations and powers that regulate the legal person, as well as the names of the relevant persons having a senior management position in the legal person; their registered office address and, if different, their principal place of business.

As a bare minimum, Financial Institutions and DNFBPs are required for all customers to:

• understand the nature of the customer’s business;
• verify that any person purporting to act on behalf of the customer is so authorized, and identify and verify the identity of that person;
• understand and, as appropriate, obtain information on the purpose and intended nature of the business relationship; and
• conduct ongoing due diligence on the business relationship.

Beneficial Ownership

For customers that are legal persons, Financial Institutions and DNFBPs are required to identify the natural person(s) who ultimately has an effective controlling ownership interest equivalent to not less than 20% of the share capital of the customer or not less than 20% of the voting rights in the same. 

Enhanced due diligence/PEPs

Financial institutions and DNFBPs are required to apply enhanced due diligence, proportionate to the risks, to business relationships and transactions performed with natural or legal persons from countries identified by the Committee as high-risk countries. The Supervisory Authorities will specify such measures in relation to high-risk countries in due course.

The same is true in the case of politically exposed persons (PEPS), their family members or close associates.

Record retention

Financial Institutions and DNFBPs are required to maintain all records, documents and data for domestic and international transactions for a minimum of ten years from the date of concluding the transaction or operation. 

Suspicious transaction reporting

Financial Institutions and DNFBPs are required to report to the Financial Information Unit any information concerning any transaction or attempted transaction where there is suspicion or reasonable grounds to suspect that such transactions are associated with or involve money laundering or terrorism financing.

Financial Institutions, DNFBPs, their officers and employees are protected from civil and criminal liability for breach of any restriction on disclosure of information if they report their suspicions in good faith. 

National Anti-Money Laundering and Terrorist Financing Committee

The Anti-Money Laundering Law provides for the creation of the National Anti-Money Laundering and Terrorist Financing Committee comprised of representatives from a range of Supervisory Authorities with the powers to: 

• prepare, supervise the carrying out of, document the results of, circulate and update a National Risk Assessment of money laundering and terrorism financing;
• develop and follow up the implementation of a National Strategy to combat money laundering and terrorism financing; and
• implement actions to combat money laundering and terrorism financing.

Financial Information Unit 

The Anti-Money Laundering Law provides for the creation of a 'Financial Information Unit' which will serve as the national centre responsible for receiving and analysing suspicious transaction reports from Financial Institutions and DNFBPs.

Penalties

Where a Financial Institution, DNFBP or any of their directors, board members, executives or management thereof, has violated the provisions of the Anti-Money Laundering Law, the Supervisory Authorities can impose one or more of the following measures:

• sending written warnings;
• ordering regular reports on the measures taken to deal with the above warning;
• ordering compliance with specific instructions;
• imposing a financial penalty of no less than QAR 25,000, and no more than QAR 100,000 per violation per day, on the Financial Institution or the DNFBP;
• imposing a financial penalty of no more than QAR 100,000,000 on the violating Financial Institution or the DNFBP;
• imposing a financial penalty of no more than QAR 1,000,000 on any of the directors, board members, executives or management of a Financial Institution or DNFBP;
• restricting the powers of the directors, board members, executives, or management of a Financial Institution or DNFBP, in addition to appointing a special administrative supervisor, or subjecting the Financial Institution or DNFBP to direct control;
• prohibiting the perpetrator from working in the relevant sectors, either temporarily or permanently;
• suspending, dismissing or replacing directors, board members, executives or management of Financial Institutions or DNFBPs either temporarily or permanently; and
• imposing suspension or revocation of the license of the Financial Institution or DNFBP, restricting any other type of permit, and prohibiting the continuation of work, the profession or the activity, or barring the Financial Institution or DNFBP's name from the relevant registry.

Further information

For further information in relation to the Anti-Money Laundering Law and its applicability to you or your business, please contact Ahmad Anani, Alistair Stewart and Dana Abdul Rahim.