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French Version

Money-laundering becomes focus of CBJ regulation

Statistics today indicate the amount of money laundered every year comprises some 5 percent of the world's GDP, ranging from $600 billion to $1.5 trillion.

JORDAN (Star) - The tragic events occurring in the US last year eventually led to renewed concerns about the funding of such operations. Governments around the world began investigations to detect and prevent the misuse of global financial systems and the laundering of funds to facilitate terror actions as well as drug trafficking.
Investigators in the US believe the attacks on the World Trade Center and Pentagon could not have happened without illegal funding channels that allowed money to flow from Al Qaeda coffers to contacts in the US. While the idea of laundering drug money had always been a concern in the US, connections that suggested it might have resulted in the single biggest attack on US soil turned the volume up full blast.

Statistics today indicate the amount of money laundered every year comprises some 5 percent of the world's GDP, ranging from $600 billion to $1.5 trillion. The US Drug Enforcement Agency (DEA) seizes ever-larger quantities of cash used in drug and weapons transactions every year. Last year that amount exceeded $100 million. This still equals only one percent of the $100 billion drug traffickers and other smugglers move through the money laundering system.

Arab countries, including Jordan, have become targets of US Department of Justice investigations as fears have arisen that Al Qaeda channels likely flow through the region. Several Arab countries are still considered centers for money laundering activity. The US-led International Narcotics Control Strategy Report expressed concern some Arab countries, including the UAE, Lebanon and Bahrain, may be centers for money laundering activity.

"I believe all Arab countries are aware of the consequences of money laundering on their financial systems," said Fuad Shaker, general secretary of the Arab Banks Union. "Arab governments are now fortifying their financial structures to adapt to world regulations for monitoring the flow and using of cash reserves used for illegal money trafficking."

Jordan's response to global efforts has been swift and sure. The Central Bank of Jordan requires "Currency Transaction Reporting," of any cash transactions over $10,000 in any Jordanian bank. Regulations endorsed by the CBJ in August of 2001 are seen as significant enough that money launderers will have to devise new methods if they hope to deceive Jordanian banks without detection.

Money laundering methods fall into four central categories: Bulk movement, the surreptitious use of financial institutions, the use of commercial businesses as "fronts," and movement through the underground banking system.

The CBJ has made it clear every bank operating in the Kingdom must monitor and control the flow of foreign capital into the country. Funds and reserves can be deemed suspicious only if their sources were unclear and not known to the local banks.

That said banks still provide the safest and most efficient method for money laundering. Many launderers funnel illegal reserves through ordinary commercial enterprises to avoid reporting requirements now regulating financial institutions.

Jordan's economic development effort has some concerned at how open the system might be. The number of major world investments has many calling for increased efforts at detecting money-laundering activities in the Kingdom. The US-Jordan Free Trade Agreement and the Jordan-European Association Agreement have served as tremendous incentives not only to legitimate businessmen but also to those who have more nefarious intent.

Fortunately most economists feel Jordanian banks and financial institutions have developed sophisticated strategies to counter such efforts. Mousa Al A'araj, judicial consultant at the Central Bank of Jordan, said the Kingdom's banks have already installed the required legislations. "CBJ's regulations are clear in that regard," stressed Al A'araj. "Current laws require local banks to verify the source of funds and reserves they receive and whether reserves are of significant quantity or indefinite."

Those seeking sizable loans are now under increased scrutiny. Businessmen routinely seek facilities as part of the normal procedure to expand their businesses. For this reason those who are legitimate must undergo some additional investigation to ensure those with illegitimate intent are stopped. CBJ sources have indicated Jordanian banks now have the right to own and manage the deposits of clients deemed suspicious, up to and including request of substantial collateral facilities.

"I believe the banking sector in Jordan is facing a mounting challenge to fight money laundry," said Al A'araj, adding many banks today refuse to disclose transactions of clients for fear of disclosing their own procedures. Shaker warned the layering of laundered capitals into developing economies, like Jordan's, could undermine social and economic developments already in motion, slowing economic development to a crawl. "Bringing laundered money in means wiping businesses out."

Ghassan Joha
The Star

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