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Money laundering risks on the national economy (Business).

The rise of global financial markets has today made moving money from one country to another easier than ever. All over the world, money earned though illegal activities is transferred through several countries in order to obscure its illicit origin and present it as "clean" to legal authorities. In order to invest their assets and avoid them being seized by the government, drug traffickers, kidnappers and other criminals transform the monetary proceeds of their criminal activity into revenue from apparently legal sources in a practice known as money laundering. With a number of cases recently discovered inside the country, Yemen is no exception.

The global revenue of drugs is estimated at USD 500 billion every year and the size of income from other types of criminal activity is believed to be equally important. In an attempt to erase the source of this money, billions of dollars are being laundered annually in different countries all over the world. In Yemen, specific statistics are yet to be attained.

The Center of Media and Economic Studies and the Yemeni Banking Magazine held a symposium about money laundering hazards on Yemen's economy. Sponsored by the CAC bank, the seminar aimed to change public perception of money laundering and raise awareness about its hazards on the nation.

Mustafa Taha Nasr, director in the Center of Media and Economic Studies and author of a study presented at the seminar, said that Yemen needs a comprehensive vision about money laundering and appropriate mechanisms in fighting it. He also said that there are no efficient laws in the country to combat embezzlement, one of the forms of money laundering.

Dr. Abu Baker Murshed Al-Zuhairi, professor of public law in the Faculty of Law at Sana'a University, discussed the hazards of money laundering on the national economy. He said that the detrimental effects of money laundering are increasing, not only in Yemen but in the whole world, especially in the more developed countries.

According to Al-Zuhairi, money laundering has a number of negative effects on the national economy. First, the practice undermines competition between investors and shakes their confidence in the economy. Second, money laundering deprives the public treasury from taxes. Third, the high demand for foreign currencies by money launderers results in high exchange rates and the devaluation of local currency. Fourth, money laundering increases the cash flow in local currency, which leads to the rise of inflation. Finally, these activities have effects on financial policy since they undermine economic stability and give false economic indicators.

During the symposium, other work sheets were introduced to discuss international and Yemeni efforts to fight money laundering.

Yahya Ali Zahra, assistant deputy for the sector of economical units in the Central Organization for Controlling and Auditing, said that, in its efforts to curtail money laundering, Yemen had criminalized terrorism and all related activities. In 1998, Yemen issued law no 24 to criminalized kidnapping. Moreover, in 2003, Yemen criminalized money laundering as part of law no 35 to criminalize all financial crimes.

Experts criticized speakers at the symposium for not giving any examples of money laundering cases discovered in Yemen or banks that help in money laundering.

Former minister of finance Saif Al-Asli said, "Mechanisms to fight money laundering in our country are not effective. When I was working as the minister of finance, I used to supervise the money laundering committee, but found that it does not work. Its members did nothing more than attend conferences and give a bad image of the situation."

Abdo Hezam Saif, head of the anti-money laundering information unit in the Central Bank of Yemen, denied that money laundering is widespread in Yemen, but said that the most common type of money laundering in the country is embezzlement. He confirmed that 11 cases of money laundering have been discovered. According to him, two of the cases --the first embezzlement and the other related to drug trafficking- went to court because the evidence was indisputable. Nine of the cases involved Yemeni banks.

According to Saif, procedures exist to prevent charity organizations from being used as a tool for terrorist activities and money laundering. These include expenditure lists and sources of financing having to be made readily available.

Dr. Mohammed Al-Saeedy, chairman of the board of trusties and professor at the University of Applied and Social Sciences in Sana'a said that, to combat money laundering, the Yemeni educational system needed to be reviewed to encourage morality. He added that society itself helps and encourages corruption on all levels.

Calling for more transparent meetings, experts and businessmen lauded the symposium as a positive step towards raising awareness on the effects of money laundering. Key players from the Ministry of Justice, Ministry of Social Affairs, banks and the private sector did not attend.

An evaluation of Yemen's capacity to combat money laundering and terrorist financing was carried out in March this year and presented to the National Anti-Money Laundering Committee and Chair of the Tax Authority as part of the American's ongoing support for transparency and anti-corruption efforts in Yemen.

The assessment identified several areas of focus for joint US-Yemeni initiatives and programming, including the drafting of a new counter-terrorist financing law and expanded training for examiners from Yemen's Central Bank.

The report was drafted by a US government-sponsored Financial Systems Assessment Team made up of financial experts from a number of US government agencies. The team visited Yemen in March 2007 and conducted visits to a number of government and private sector entities, including the Central Bank, the Anti-Money Laundering Information Unit, the National Anti-Money Laundering Information Unit, the Political Security Organization, the Ministry of Interior, the Attorney General's Office, the Customs Authority, the Ministry of Social Affairs and Labor, the Tax Authority, the Foreign Affairs and Constitutional Committees of the Yemen Parliament, the Yemen Parliamentarians Against Corruption (YemenPAC) and the Yemen Bankers Association.

In July last year, the U.S administration has strongly criticized the Yemeni government's failure in combating money laundering. And the U.S Treasury Department had demanded Yemen to explain the reasons behind not activating concerned units to combat money laundering especially the intelligence unit which lacks a knowledge base....

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Publication:Yemen Times (Sana'a, Yemen)
Date:Jul 26, 2009
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