This report presents the evaluation of the anti-money laundering (AML) and combating the financing of terrorism (CFT) measures in place in the Sultanate of Oman at the time of the on-site visit by the assessment team (17-28 July 2010).
The Sultanate of Oman is a member of the Middle East and Northern Africa Financial Action Task Force (MENAFATF). It is also a member of the Gulf Co-operation Council, which is a member of the FATF. This joint MENAFATF-FATF evaluation was conducted by a an assessment team which consisted of experts from the MENAFATF and FATF in criminal law, law enforcement and regulatory issues.
The executive summary presents a summary of the findings, the full mutual evaluation report will be published shortly
The Sultanate of Oman has set up an AML/CFT system that is essentially in line with the international standards.
The new AML/CFT law, enacted in July of 2010, was concluded by the assessment team to be robust. While this new AML/CFT law has been in force since last year, the 2004 Executive Regulations are still in force as Oman currently finalizes the new draft of the Executive Regulations to correspond to the new law. This pending legal update has caused some gaps in the legal framework for preventive measures. Notwithstanding the remaining shortcomings, the overall legal compliance with the FATF Recommendations is high. However, the effectiveness of the legal system and the related institutional law enforcement framework was noted to be lacking in some areas.
Oman has criminalized money laundering, to a large extent in line with the requirements under the Vienna and Palermo Conventions. However, the money laundering offense does not cover "the concealment or disguise of the disposition of property" and the criminal liability for ML does not extend to all legal persons. Moreover, questions can be raised in regard to effective implementation due to the extremely low number of convictions for money laundering.
Oman's legislation provides for most of the elements needed to criminalize terrorist financing. However, the terrorist financing offence does not cover the financing of an individual terrorist, and the definition of terrorist act is not fully consistent with the Terrorist Financing Convention. Effectiveness could not be established since there has been no investigations, prosecutions or convictions relating to terrorist financing.
Oman has in place a robust legal framework that provides for a wide range of confiscation, seizure and provisional measures. However, the low number of confiscations indicates that the effectiveness of the framework is still insufficient. As for the freezing of terrorist assets in relation to the relevant UN Security Council Resolutions, Oman has no laws and procedures in place to implement UNSCR 1373, and although names of designated persons under UNSCR 1267 are circulated to concerned parties, there are gaps in the legal framework and no procedures are in place to implement most of UNSCR 1267 and successor resolutions.
The Financial Intelligence Unit (FIU) and its predecessors within the Royal Oman Police have been receiving suspicious transaction reports (STRs) since 2002. The FIU has been in existence for several years, and has only recently made progress in functioning in an effective manner, shown by considerably more disseminations of STRs in 2010 than in the previous 3 years. Yet, the time spent by the FIU on analyzing STRs should be improved as several investigations have shown to take a long time. The FIU should continue the positive improvements by further enhancing its capacity and experience in analyzing STRs to expedite the time between the reporting and dissemination of an STR.
The Royal Omani Police and the Public Prosecution Office are empowered to conduct money laundering and terrorist financing investigations. Both are sufficiently resourced to perform their tasks and have adequate powers.
Financial Institutions (FIs) and Designated Non-Financial Businesses and Professions (DNFBPs)
Both the Central Bank of Oman and Capital Markets Authority have sufficient powers and financial resources to conduct their supervisory activities. While the assessment team commends the authorities' strong efforts in overseeing their reporting entities, it also noticed very low levels of corrective measures applied by both supervisory agencies. Only one administrative penalty has been imposed so far for an AML/CFT violation. Both authorities need to utilize its full sanctioning powers for violation of AML/CFT requirements.
The pending update of the Executive Regulation causes some gaps in the legal framework for preventive measures for FIs, especially regarding customer due diligence measures. Oman should expeditiously finalise the drafting of the Executive Regulation to address the remaining shortcomings in the preventive area.
Deficiencies identified in FIs' obligations apply equally to the DNFBPs sectors. The effectiviness of the framework for DNFBPs is generally rather limited, mainly due to the recent enactment of the AML/CFT Law, and low money laundering/terrorist financing risk perception by the businesses that are covered.