AML in UAE: Understanding the Integration Stage in Money Laundering
Knowing about money laundering methods is key to complying with the regulations of Anti-Money Laundering and Combatting Financing of Terrorism (AML-CFT) in the UAE. To develop a robust AML strategy in the UAE for your company, you need to start from the basics. Criminals carry out the act of money laundering in three stages, namely-Placement, Layering and Integration.
Integration is the final stage of money laundering where money re-enters the economy through clean investments. We have already discussed the first two stages of money laundering in the previous articles. In this article, we will focus more on the last stage of money laundering, which is integration. AML consultants in Dubai can provide you with more details on Integration.
Now, let us move on to address the Integration in detail:
What is integration in money laundering?
Integration is the third stage of money laundering where money is absorbed into the economy. Once the criminals place and layer the dirty money, they will try to integrate the fund back into the legitimate financial system as ‘legal’ tender. The dirty money is reintroduced into the economy usually through the banking system. The proceeds from the money laundering are now completely reconditioned and integrated into the economy giving off the appearance of legitimacy.
Examples of Integration in money laundering can include purchases of businesses or properties, luxury items such as artwork, jewellery, or high-end cars. At this stage, it will be difficult for you to differentiate between legal and illegal wealth. However, just like Placement and Layering, there are proven ways to detect Integration as well. Providers of AML consulting services in Dubai can advise you on how to recognise Integration.
Common Integration Techniques
If the Integration stage is successful, the funds become part of the legitimate financial system. The main objective of money launderers at this stage is to integrate the money without drawing the attention of law enforcement. This can be done using various money laundering techniques. Some of the most frequently seen Integration techniques are listed below:
- Loan arrangements
Criminals may establish anonymous companies in jurisdictions that guarantee the confidentiality of ownership. Such companies will enable them to grant themselves loans out of the laundered money during a future legal transaction. The owners of such companies may also claim tax relief on the loan repayments and charge themselves interest on the loan.
In this method, funds held in a jurisdiction on behalf of the launderer may be transferred to another jurisdiction in the guise of a gift or inheritance
- Redemption of life policy or similar investment
In this money laundering technique, the launderer may place the money with an insurance company. The launderer, at a later stage, may encash the property (or borrow against it) so that a cheque from the insurance company looks like coming from a legitimate source.
Consultancy arrangements are one of the prominent money laundering methods through which the ill-gotten fund can be integrated into the financial system. Such an arrangement can cover a diverse range of non-quantifiable services and is often used to integrate illegal funds into the legitimate financial system.
- Corporate Financing
This is a flexible way to transfer money between companies. Corporate financing is often used in sophisticated money laundering schemes. AML advisers in Dubai can help you detect if the money has been integrated into the system using corporate financing.
- Asset sales and purchases
Sale of the property is a common money laundering method used by criminals to integrate laundered money back into the economy. To facilitate integration, the launderers often resort to actual or fictitious sales and purchases of assets.
- Foreign Bank Complicity
Laundering illicit funds using known foreign banks is a sophisticated Integration technique that presents a very difficult target for law enforcement. Foreign banks that willingly assist the launderers present a bigger challenge in terms of law enforcement.
How to Detect Integration in Money Laundering?
Detecting Integration in Money Laundering is nearly impossible as it is the final stage where the process is almost complete. Businesses should have been tracking the launders from the first two stages and gathered document proofs as evidence. However, ongoing transaction monitoring and sanction screening is the best way to identify launders at the final stage of money laundering. Assistance from the best AML consultants in Dubai may also come in handy for businesses.
You need to implement effective AML strategies to comply with the UAE AML Law and allied regulations. However, it is advisable to hire AML advisers in Dubai such as Jitendra Chartered Accountants (JCA) to defend your business against money launderers and financiers of terrorism. JCA provides robust AML consulting services in Dubai that will enable you to ensure AML-CFT compliance without any hassle. We provide services such as implementing AML Policy and Procedures, assessment of tools and controls design, review of current AML Policy, planning of AML-CFT framework, AML audit and reporting, AML training for the staff, Assistance with goAML registration and AML penalty appeal services.