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UAE stock market enters war on money laundering

posted on 27/03/2004: 1448 views

The UAE stock market has joined a campaign by banks and other institutions in the UAE to combat money laundering by introducing curbs on financial dealings. The country's top market regulator has told the two main stock exchanges in Abu Dhabi and Dubai to ensure that the cash they receive from investors and other dealers is clean money and set a ceiling on accepted cash of Dh40,000 (US$10,900).

"You are requested to verify all information and documents when accepting cash or opening accounts for clients," the UAE Securities and Commodities Authority said in a circular distributed to the two market and the nearly 25 stockbrokers. Brokers said the new measures are part of the country's drive to fight money laundering, adding that all dealers are complying with such measures to avert penalties.

They noted such a decision, which took effect late last month, was needed to ensure discipline in financial dealing and regulate market activities. Brokers had been told not to accept cash for any share transaction or a deposit from clients if the sum exceeds Dh40,000. Such a deal should be conducted either by a cheque or a transfer from the bank account of those clients.

The UAE began enforcing anti-laundering laws two years ago to ensure no dirty money would find its way into or out of the country. The law includes tough prison terms and heavy fines against persons and banks involved in such operations. Details of the law, published last year, showed the Central Bank was given absolute powers in the war against money laundering and it already has used those powers in freezing several bank accounts and blacklisting others.

The Central Bank has asked all financial institutions to report to it any suspected transaction or transfer they receive from abroad. Besides banks, insurance companies, exchange shops and all other firms involved directly or indirectly in financial activities have also been asked to support the country's drive against laundering.

At the end of 2003, the UAE bourses had 43 listed companies with a market capitalisation of around US$44.5 billion, the third largest in the Arab world after Saudi Arabia and Kuwait. The average daily turnover, or the value of traded shares, was estimated at nearly US$7 million last year. (The Gulf News)


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