Oman has made notable strides in combating money laundering and terrorist financing, thanks to significant improvements in its legal, operational, and supervisory framework. The 2024 joint mutual evaluation by the Financial Action Task Force (FATF) and the Middle East and North Africa Financial Action Task Force (MENAFATF) highlighted Oman’s robust technical compliance with FATF recommendations.

This evaluation, conducted during an on-site visit in early 2024, emphasized Oman’s advancements in areas such as financial intelligence, international cooperation, and targeted financial sanctions. Yet, the report also underscored the need for further efforts to enhance the effectiveness of these measures, ensuring they align fully with identified risks.

A Targeted Approach to Combating Money Laundering Risks

As a high-income country, Oman faces unique money laundering and terrorist financing challenges, exacerbated by cross-border financial activities and its predominantly cash-based economy. The nation has demonstrated a clear understanding of terrorist financing risks, particularly those arising from its geographic location near conflict-prone regions.

Oman’s Financial Intelligence Unit (FIU) plays a pivotal role in addressing these threats. Equipped with sophisticated artificial intelligence systems, the FIU has proven its competence in analyzing complex cases. Despite these strengths, the report noted that most prosecuted cases involve straightforward instances of self-laundering, signaling the need to focus on high-risk, complex money laundering schemes.

Efforts to improve law enforcement capabilities are ongoing. While Oman secured 50 money laundering convictions during the review period, the FATF recommended deeper integration of risk-targeted investigations and enhanced prosecution capabilities.

International Cooperation: A Collaborative Model

Oman’s commitment to international cooperation is a cornerstone of its anti-money laundering (AML) and countering the financing of terrorism (CFT) strategy. Authorities actively engage in timely and effective assistance for extradition and other international requests, handling both simple and complex cases. This collaborative approach strengthens Oman’s ability to mitigate cross-border money laundering threats.

Despite these achievements, challenges remain. The FATF advised Oman to enhance its asset recovery mechanisms, particularly for confiscating illicit funds at borders. This recommendation aligns with Oman’s identified vulnerabilities, including the risks posed by its geographic and economic dynamics.

Addressing Beneficial Ownership and Non-Profit Organization Regulations

Transparency in beneficial ownership (BO) information is vital to counter money laundering and terrorist financing. While Oman has ensured access to most BO data, the country is in the process of finalizing a centralized BO registry. This registry is expected to enhance the availability and accuracy of BO information, benefiting both authorities and legal entities.

The report also flagged concerns regarding Oman’s treatment of Non-Profit Organizations (NPOs). Excessive regulatory measures imposed on NPOs may hinder legitimate activities, conflicting with FATF Recommendation 8. The FATF urged Oman to revise these regulations, removing unnecessary reporting requirements that could stifle the sector’s operations.

Conclusion: A Path Toward Comprehensive Compliance

Oman has made substantial progress in its AML/CFT framework, showcasing commitment and resilience in addressing financial crimes. With a strong foundation in place, the focus must now shift to deepening risk-targeted measures, refining regulations, and enhancing cross-border asset recovery. By implementing these recommendations, Oman can further solidify its position as a regional leader in financial integrity.

As part of the enhanced follow-up process, Oman will report back to MENAFATF within a year, detailing the progress made on the suggested reforms.

Related Links

• FATF Recommendations
• MENAFATF Reports
• Oman Ministry of Finance
• UNODC’s Financial Crimes Division
• World Bank AML/CFT Guidelines
• IMF Financial Integrity Assessments

Other FinCrime Central Links from MENA

• Saudi Arabia hosts the 39th MENAFATF Meeting
• Key Takeaways from Complytek at the United Nation’s Capacity Building Regional CFT Workshop

Source: FATF