WHAT ARE THE
Money laundering and terrorism financing laws in Oman?
In Oman, money laundering and terrorism financing are serious offences and are governed by the following laws and regulations:
- The Anti-Money Laundering and Combating the Financing of Terrorism Law (Royal Decree No. 30/2016): is the primary law governing AML/CFT in Oman. The law imposes obligations on financial institutions, designated non-financial businesses and professions (DNFBPs) and businesses operating in other sectors to implement internal controls, conduct customer due diligence, report suspicious transactions, and cooperate with supervisors.
- Central Bank of Oman (CBO) Regulations: The Central Bank of Oman issues specific regulations and guidelines for banks, financial institutions, and money service businesses to ensure compliance with AML/CFT laws. Financial institutions are required to implement risk-based approaches, maintain customer records, and report suspicious transactions to the National Centre for Financial Information (NCFI).
- National Centre for Financial Information (NCFI): the NCFI serves as Oman’s Financial Intelligence Unit (FIU). The NCFI is responsible for collecting, analysing, and disseminating reports of suspicious transactions related to money laundering and terrorist financing.
- International Sanctions and Treaties: Oman is a member of the Financial Action Task Force (FATF) and complies with its recommendations to combat money laundering and terrorist financing. Oman also adheres to United Nations Security Council Resolutions (UNSCRs) related to countering terrorism financing and the freezing of assets linked to terrorism.
WHAT ARE THE
Key obligations reporting entities have under Oman law?
In Oman, reporting entities, including financial institutions, designated non-financial businesses and professions (DNFBPs), and other regulated sectors, have several key obligations under the Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) laws, specifically under Royal Decree No. 30/2016 and related regulations. Here are the main obligations:
- Customer Due Diligence (CDD): Reporting entities must identify and verify the identity of their customers (including beneficial owners) before establishing business relationships or conducting transactions. They are also required to continuously monitor customer transactions to detect suspicious activity and ensure consistency with the customer’s profile. For high-risk customers, such as Politically Exposed Persons (PEPs), enhanced due diligence procedures must be implemented, including obtaining additional information about the customer and the source of funds.
- Suspicious Transaction Reporting (STR): Entities are required to report suspicious transactions or activities to the National Centre for Financial Information (NCFI) immediately, without alerting the customer involved (tipping off). Suspicion may arise from transactions that appear unusual, lack an economic purpose, or are inconsistent with the client’s profile.
- Record Keeping: Entities must keep detailed records of transactions, customer identification, and CDD information for at least 10 years from the date of the transaction or the end of the business relationship. These records must be readily accessible to regulators or law enforcement authorities for audit and investigation purposes.
- Risk-Based Approach (RBA): Reporting entities must implement a risk-based approach to identify and assess the risk of money laundering or terrorism financing, taking into account factors such as customer type, geographical location, and transaction complexity. For higher-risk transactions or clients, enhanced due diligence and additional scrutiny are required.
- Internal Controls and Compliance Programs: Entities are required to establish internal AML/CFT policies, procedures, and controls to prevent financial crimes. A Money Laundering Reporting Officer (MLRO) must be appointed to oversee AML/CFT compliance and ensure proper implementation of internal controls. Regular AML/CFT training should be provided to employees to help them identify and report suspicious activity.
- Currency Transaction Reporting (CTR): Entities must report any large cash transactions exceeding a certain threshold (usually OMR 6,000) to the NCFI, even if the transactions are not suspicious.
- Freezing of Assets: Reporting entities must comply with United Nations Security Council Resolutions (UNSCRs) and other directives related to the freezing of assets linked to terrorism or persons designated under international sanctions.
- Cooperation with Authorities: Entities are required to fully cooperate with the National Centre for Financial Information (NCFI), regulators, and law enforcement agencies by providing requested information and documentation during investigations or audits. Immediate access must be granted to regulators when required.
- Reporting Cross-Border Transportation of Currency: Financial institutions and businesses must monitor and report any cross-border transportation of currency or bearer negotiable instruments above a specified threshold, which could potentially be linked to money laundering or terrorism financing.
- Third-Party Reliance: Entities may rely on third-party service providers to perform some aspects of CDD, but they remain fully responsible for ensuring that proper due diligence is conducted.
- Filing Annual AML/CFT Reports: Entities must submit periodic reports to regulators summarizing their AML/CFT compliance activities, risk assessments, and any suspicious transactions reported during the year. Failure to comply with these obligations can lead to severe penalties, including fines, imprisonment, and revocation of licenses. These obligations help protect Oman’s financial system from abuse and ensure that reporting entities play an active role in detecting and preventing financial crimes.
WHO ARE THE
ML/TF regulators in Oman and what functions do they perform?
In Oman, the key regulators responsible for overseeing compliance with Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) laws are:
- National Centre for Financial Information (NCFI): The NCFI serves as the Financial Intelligence Unit (FIU) of Oman, established by Royal Decree No. 114/2010. It collects, analyzes, and disseminates reports of suspicious transactions related to money laundering and terrorism financing, acting as the central authority for receiving and processing Suspicious Transaction Reports (STRs) and collaborating with law enforcement agencies. The NCFI ensures compliance with AML/CFT obligations across all sectors, working closely with local and international law enforcement agencies.
- Central Bank of Oman (CBO): The CBO is the primary regulator for all banking and financial institutions in Oman. It issues regulations, guidelines, and directives to financial institutions on AML/CFT compliance, monitors their activities, and ensures that banks and financial services companies adhere to risk-based approaches, customer due diligence (CDD), and suspicious activity reporting. The CBO supervises the implementation of AML/CFT controls in the banking sector, including money service businesses (MSBs).
- Capital Market Authority (CMA): The CMA regulates the securities and capital markets in Oman. It ensures that entities operating in capital markets, such as brokers, investment firms, and fund managers, comply with AML/CFT laws. The CMA monitors transactions, conducts audits, and ensures that market participants have AML/CFT policies in place while overseeing the application of AML/CFT measures in the securities industry.
- Ministry of Commerce, Industry, and Investment Promotion (MOCIIP): The MOCIIP supervises designated non-financial businesses and professions (DNFBPs), such as real estate agents, dealers in precious metals, and legal professionals. It ensures that DNFBPs implement customer due diligence, report suspicious activities, and comply with the legal framework related to AML/CFT, regulating non-financial sectors that may be at risk of being exploited for money laundering or terrorism financing.
- Royal Oman Police (ROP): The Royal Oman Police plays an important role in investigating and prosecuting offenses related to money laundering and terrorism financing. It collaborates with the NCFI, the Central Bank, and other regulatory authorities to investigate and combat financial crimes, seize illicit funds, and apprehend offenders. The ROP conducts investigations into money laundering, terrorism financing, and other financial crimes, enforcing the law alongside other agencies.
- Oman’s Judiciary and Public Prosecution: Oman’s judicial system, including the Public Prosecution, prosecutes individuals or entities involved in money laundering or terrorism financing. The judiciary ensures that violators of AML/CFT laws are prosecuted and penalised according to the legal framework, ensuring legal enforcement and adjudication of AML/CFT cases.
- Other Regulatory Bodies: Various industry-specific regulators are also involved in ensuring AML/CFT compliance within their respective sectors, such as the Insurance Regulatory Authority for the insurance sector and specific professional regulatory bodies for accountants, auditors, and lawyers.
- Supreme Committee for Combating Money Laundering and Terrorism Financing: This committee coordinates and oversees the national strategy to combat money laundering and terrorism financing in Oman. It provides guidance, coordinates between different regulators and enforcement bodies, and ensures alignment with international AML/CFT standards, including those set by the Financial Action Task Force (FATF). These regulators collaborate to implement, monitor, and enforce AML/CFT laws, ensuring that Oman’s financial system remains secure and that reporting entities comply with their legal obligations.
WHAT ARE THE
Industry sectors subject to ML/TF regulations?
In Oman, several industry sectors are regulated under the Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) laws. These sectors must comply with the legal framework set by Royal Decree No. 30/2016 and other regulations. The regulated sectors include:
Designated Non-Financial Businesses and Professions (DNFBPs)
This includes sectors such as: Lawyers, notaries, and legal professionals involved in financial transactions or the management of client funds. Accountants and auditors providing financial advice or managing client accounts. Dealers in precious metals and stones, who must monitor large transactions and identify the sources of funds. Company service providers that assist in company formation or management must ensure that their services are not used for illicit purposes.
WHAT ARE THE
Penalties for non-compliance with AML/CTF laws?
In Oman, penalties for non-compliance with Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) laws are strict and can include both criminal and administrative sanctions. The severity of the penalties depends on the nature and extent of the violation. Below are the key penalties under Royal Decree No. 30/2016 and related regulations:
- Fines: Non-compliance with AML/CFT laws can result in significant financial penalties ranging from OMR 10,000 to OMR 500,000 (approximately USD 26,000 to USD 1.3 million), depending on the severity of the violation. Higher fines may be imposed on financial institutions, DNFBPs, or individuals for serious offenses, such as knowingly facilitating money laundering or terrorism financing.
- Imprisonment: Individuals such as company directors, compliance officers, or employees involved in AML/CFT breaches can face imprisonment. Penalties can include prison sentences of up to 10 years for severe violations, such as intentionally aiding in money laundering or terrorism financing activities.
- Revocation or Suspension of Business Licenses: Regulatory authorities, such as the Central Bank of Oman (CBO) and the Capital Market Authority (CMA), have the power to revoke or suspend business licenses of entities that fail to comply with AML/CFT laws, potentially barring them from operating in Oman’s financial sector or other regulated industries.
- Freezing or Seizure of Assets: Authorities can freeze or seize assets linked to money laundering or terrorism financing, preventing the offender from accessing illicit funds or properties. Asset forfeiture is a common penalty in cases where entities or individuals are found to be involved in financial crimes.
- Disqualification of Directors and Officers: Senior management, board members, or officers responsible for non-compliance can be disqualified from holding similar positions in the future, particularly if they are found guilty of intentionally breaching AML/CFT obligations.
- Reputational Damage and Blacklisting: Businesses and individuals found in violation of AML/CFT laws may suffer reputational damage, leading to loss of clients, partnerships, and future business opportunities. They may also be blacklisted by regulatory bodies or international financial institutions, restricting their access to global markets and services.
- Administrative Penalties: Regulatory authorities can impose administrative sanctions such as warnings, notices to rectify non-compliance, and increased scrutiny on the entity’s activities. Non-compliant entities may also be subjected to enhanced regulatory oversight and more frequent audits.
- Civil Liability: Businesses or individuals that fail to comply with AML/CFT laws may face civil lawsuits for damages caused by their non-compliance and may be held responsible for financial losses suffered by third parties due to their involvement in or failure to prevent money laundering or terrorism financing activities.
- Suspension of Operation: In extreme cases, regulators can order the temporary suspension of a business's operations until it rectifies its AML/CFT deficiencies or implements corrective measures.
- Reporting Failures: Entities that fail to report suspicious transactions (STRs) or large currency transactions as required by law can face specific penalties, including fines and criminal charges.
- Other Penalties: Oman’s judiciary can impose additional penalties depending on the offense, including increased jail terms, higher fines, and more stringent regulatory measures on the business or individual involved. These penalties are designed to deter violations and ensure compliance with Oman’s AML/CFT laws, protecting the financial system from misuse and preventing financial crimes like money laundering and terrorism financing.
- Penalties for Non-Compliance: Non-compliance with Oman’s AML/CFT laws can result in severe penalties, including significant fines, imprisonment, revocation of business licenses, and freezing of assets. Entities that fail to report suspicious transactions or conduct proper due diligence may face penalties depending on the severity of the offense.