Anti-Money Laundering and Terrorism Financing section

Frequently Asked Questions

What is Money Laundering?

Money laundering is the process of masking the source of illicit proceeds or funds used to promote illegal act by integrating them into legitimate businesses.  The process is also known as obscuring the source of criminal proceeds to enable criminals and their associates to use such proceeds without drawing the attention of Law Enforcement Agencies or Financial Institutions.

Article (2) of Law No. (20) of 2019 on Combatting Money Laundering and Terrorism Financing stipulates that: “Whoever intentionally commits any of the following acts shall be deemed to have committed money laundering offence:

  1. Conversion or transfer of funds, knowing that they are proceeds of a crime or an act of participation in the said crime; with a view to concealing or disguising the illicit source of funds or assisting any person involved in the commission of the crime to evade the legal consequences of his actions.
  2. Concealment or disguise of the true nature, source, location, disposition, movement, ownership or the rights of funds, knowing that they are the proceeds of a crime.
  3. Acquisition, possession or use of funds, knowing, at the time of receipt thereof, that they are proceeds of a crime.
  4. Participation in, association with or conspiracy to commit, attempt, or aid, abet, facilitate, counsel in, cooperate in, or contribute to the commission of any of the acts stipulated in this Article.

The Money Laundering crime shall be considered as an independent crime from the predicate offence.

When proving that funds are the proceeds of crime, it shall not be necessary that a person be convicted of a predicate offence.

The punishment of the persons committing the predicate offence shall not prevent their punishment for the money laundering crime.”

 

How is Money Laundered?

Money laundering consists of three stages as follows:

Placement:  At this stage the generated illicit funds are introduced into the financial system, usually through a financial institution, but also through cash purchases of high-value items, such as cars or real estate. This may be achieved through cash deposits in a bank account; large amounts of cash are often structured into smaller and less visible amounts deposited at different times and in different branches of a financial institution(s). It is important to note, however, that not all crimes result in cash proceeds; crimes such as fraud, embezzlement and corruption will frequently result in transfers of proceeds directly into the perpetrator’s bank account. Not all criminal proceeds are in the form of cash or even money, as they may include any generated dividends, interests, revenue or other outcome, whether or not transferred in whole or in part into properties or investment proceeds. Criminal proceeds can also take the form of cryptocurrencies, such as Bitcoins.

 

Layering:  Also referred to as “obscuring”: This second stage of ML starts after the introduction of the illicit funds into the channels of the legitimate financial system, whereas money launderers separate the illicit funds to be laundered from their illicit source. This is done by the sophisticated layering of the financial transactions in order to make it legitimate, and make the source of such illicit funds difficult to trace ; and that by transferring funds or securities from one bank to another, or to any form of bearer negotiable instruments (BNIs) such as cheques, banker’s drafts and money orders, or to other accounts in different jurisdictions, or to banks in countries with strict rules protecting banking secrecy, known as “financial havens”, or by layering the transferred amount through fictitious goods or services.

 

Integration:  At this final stage of ML, the illicit funds are converted into apparently legitimate sources and business earnings or proceeds by being integrated into the economy or the banking sector. For example, settling fictitious invoices, buying overpriced front companies, concluding successive sales and false loans, etc.

 

What is Terrorism Financing?

Terrorism Financing is providing financial and non-financial support to any terrorist organization, regardless of whether the funds will be actually used to commit a terrorist act. The terrorism financing offence extends to any support or funds provided for terrorists or to whoever promotes, participates or conspire to commit terrorist acts, including providing or raising funds,  whether from a legitimate or illegitimate source, to be used for the following:

  • To carry out a terrorist act.
  • By an individual or by a terrorist organization, even in the absence of a link to a specific terrorist act of acts.

Article (3) of Law No. (20) of 2019 on Combatting Money Laundering and Terrorism Financing stipulates that: “Whoever intentionally, by any means, directly or indirectly, with an unlawful intention provides or collects funds to be used, or while knowing that they are to be used, in whole or in part, in any of the following, shall be deemed to have committed a terrorist financing offence:

  1. To carry out a terrorist act(s);
  2. By an individual terrorist or by a terrorist organization, even in the absence of a link to a specific terrorist act or acts;
  3. To finance the travel of individuals to a State other than their State of residence or nationality, for the purpose of the perpetration, planning, or preparation of, or participation in, terrorist acts or the providing or receiving of terrorist training;
  4. To organize or direct others to commit or attempt to commit any of the acts stipulated in this Article.
  5. To participate; collude; aid, abet, facilitate, counsel in, cooperate in, conspire to commit or attempt to commit any of the acts stipulated in this Article.

The terrorism financing offence extends to any funds, whether from a legitimate or illegitimate source, regardless of whether the funds were actually used to commit or attempt to commit a terrorist act, or are linked to a specific terrorist act.

 

What are the Designated Non-Financial Businesses or Professions (DNFBPs) that are subject to the supervision of the Ministry of Commerce and Industry (MOCI)?

As provided for in Article (59) of the Council of Ministers’ Decision No. [41] of 2019 Promulgating the Implementing Regulations of Law No. (20) of 2019 on Combatting Money Laundering and Terrorism Financing, the MOCI shall supervise, monitor and ensure the compliance of the following sectors with AML/CFT requirements:

  1. Auditors (Legal accountants) when they arrange, execute or conduct transactions on behalf of or for their customers in relation to any of the following activities:
  • Purchase or sale of real estate: the transfer of the real estate ownership is used to cover the illicit funds transfer (Layering phase of ML indicated above), or final investment of the proceeds passed through laundering operations (Integration phase).
  • Management of the customer’s funds, securities or other assets.
  • Management of bank accounts, savings accounts or securities accounts, such as execution of financial transactions on behalf of customers, like cash deposit or withdrawal, foreign currency exchange operations, sale and purchase of shares, or sending and receiving international money transfers.
  • Organizing contributions for the establishment, operation or management of companies or other entities.
  • Establishment, operation or management of legal persons or legal arrangements, and sale or purchase of business entities: whereas the establishment of companies or other complex legal arrangements (like Trusts) may conceal the link between the proceeds of the crimes and the criminals.
  1. Dealers in precious metals or stones whenever they participate in cash transactions of a value equal to or exceeding fifty thousand Qatari Riyals (QR 50.000), whether as a one-off transaction or in several operations that appear to be linked.
  2. Trust and company service providers when arranging or executing transactions for the customers related to the following activities:
  • Acting as a formation agent of legal persons.
  • Acting as, or arranging for another person to act as, a director or secretary of a company, a partner of a partnership, or a similar position in relation to other legal persons.
  • Providing a registered office, business address or, correspondence or administrative address for a company, a partnership or any other legal person or arrangement.
  • Acting as, or arranging for another person to act as a trustee of an express trust or performing an equivalent function for another legal arrangement.
  • Acting as or arranging for another person to act as a nominee shareholder for another person.

 

What are the obligations of the supervised entities?

The obligations of the supervised entities with the AML/CFT requirements are stipulated in Law No. (20) of 2019 on Combating Money Laundering and Terrorism Financing, the Council of Ministers’ Decision No. [41] of 2019 Promulgating the Implementing Regulations of Law No. (20) of 2019 on Combatting Money Laundering and Terrorism Financing, and the Decision of the Minister of Commerce and Industry No. (48) of 2020 Promulgating the AML/CFT Compliance Rules for Auditors, Dealers in Precious Metals or Precious Stones, Trust and Company Service Providers. The key obligations are  as follows:

  • Identify, assess and understand ML and TF risks.
  • Develop adequate policies and controls to mitigate and prevent such risks.
  • Conduct CDD measures including customers identification and determining the intensity and degree of CDD measures and ongoing monitoring.
  • Develop an AML/CFT Programme considering ML and TF risks , nature, size and complexity of the business. The program shall include, in particular, the following:
  1. Appropriate compliance management arrangements, including the appointment of a compliance officer.
  2. Adequate screening procedures to ensure high standards of efficiency and integrity when employing or appointing officers or employees.
  3. Developing and implementing an appropriate ongoing training programme for officers and employees.
  4. An independent audit and review function to test compliance with AML/CFT policies, procedures, systems and controls.
  5. Appropriate and ongoing review and assessment of policies.
  • Reporting of STRs.
  • Record Keeping.
  • Implementation of TFS system.

For further details on the obligations of the regulated entities with AML/CFT requirements, kindly refer to the “AML/CFT Compliance Guidance For Auditors, Dealers in Precious Metals or Precious Stones and Trust and Company Service Providers “.

 

Who is the Beneficial Owner?

  • The natural person(s) who ultimately owns or controls a customer, through ownership interest or voting rights, or the natural person on whose behalf a transaction is being conducted, whether by proxy, trusteeship or mandate, or by any other form of representation. It also includes any person who exercises ultimate effective control over a legal person or arrangement, including any person exercising ultimate effective control by any means.
  • The beneficial owner can only be a natural person: the beneficial owner is always a natural person, whether one individual or several natural persons, each one of them shall be a beneficial owner.
  • A legal person cannot by definition be a beneficial owner and the structure of the legal person or legal arrangement must be scrutinized to identify its beneficial owner.

 

  • A natural person may acquire the status of beneficial owner either directly or indirectly:

Directly: in case the beneficial owner has an ultimately effective controlling interest of at least  20% of a legal person or voting rights.

Indirectly: this takes place via a chain of contributions in companies, where each of them forms a layer through which the natural person exercises ultimate control over the company or legal person.

For further clarifications on forms of controlling ownership, kindly refer to the Guidance on Beneficial Ownership, published on the MOCI Webpage (AML/CFT Section).

 

How is the beneficial owner identified for customers that are natural persons?

The definition of beneficial owner includes the natural person on whose behalf a transaction is being conducted, whether by proxy, trusteeship or mandate, or by any other form of representation , and whether or not he has de facto or legal control over a customer. This type of beneficial owners is of particular importance in relation to CDD measures conducted by the supervised entity, given that the entity must identify the main natural person of the transaction, regardless of whether or not the transaction, completed or attempted, does not make the natural person in question appear to have effective control over the customer. In such case, it should be noted that the natural person is the beneficial owner of the transaction.

 

How is the beneficial owner identified for customers that are legal persons?

Article (15) of the Council of Ministers’ Decision No. [41] of 2019 Promulgating the Implementing Regulations of Law No. (20) of 2019 on Combatting Money Laundering and Terrorism Financing, and Article (55) of the AML/CFT Compliance Rules requires DNFBPs, with regard to customers that are legal persons, to identify and take reasonable measures to verify the identity of the beneficial owner using relevant information or data from a reliable source, as follows:

  1. Identifying the natural person (s) who ultimately has an effective controlling ownership interest not less than 20% of a legal person or voting rights and taking reasonable measures to verify the identity of such persons.
  2. In case no beneficial owner is identified, or there is a doubt as whether the natural person(s) with controlling ownership interest(s) is the beneficial owner(s) under item (1) above, or where no natural person exerts control through ownership interests, DNFBPs shall identify the natural person(s) exercising de facto or legal control in the legal person and arrangement through any means, whether directly or indirectly, over the executives, the general assembly, or the operations of the legal person, or any other control instruments.
  3. In case no natural person is identified under (1) and (2) above, DNFBPs shall identify and verify the identity of the relevant natural person who holds the position of senior managing official in the legal person.

 

Practically, the beneficial owner of a legal person shall be identified by adopting a cascade test and following three steps to be used consecutively. Accordingly, moving from one step to the other is possible only when the criteria of the previous step did not lead to the identification of the beneficial owner. In case the beneficial owner was identified at a specific step, the cascade test shall stop at that step without moving to the next one. 

 

For further clarifications on the criteria to identify beneficial owners, kindly refer to the Guidance on Beneficial Ownership, published on the MOCI Webpage (AML/CFT Section).

 

How is the beneficial owner is identified for customers that are legal arrangements?

Pursuant to Article (17) of the Implementing Regulations of the AML/CFT Law, and Article (55) of the AML/CFT Compliance Rules, for customer that are trusts, DNFBPs shall take reasonable measures to identify and verify the identity of the beneficial owners by identifying the settlor, the trustee and the protector ( if any), the beneficiaries or class of beneficiaries, and any other natural person exercising, directly or indirectly, ultimate effective control over the trust.

For other types of legal arrangements, the identity of the natural persons in equivalent or similar positions.

DNFBPs shall take the necessary procedures to determine whether a customer is acting as a trustee of a trust, or holds an equivalent or similar position in other types of legal arrangements.

For further clarifications on the criteria of beneficial ownership identification for customers that are legal arrangements, kindly refer to the Guidance on Beneficial Ownership published on the MOCI Webpage AML/CFT Section).

 

How to Identify a Suspicious Transaction?

Transactions, whether completed or attempted, may give rise to reasonable grounds to suspect that they are related to money laundering or terrorist financing regardless of the sum of money involved. There is no monetary threshold for making a report on a suspicious transaction. A suspicious transaction may involve several factors that may on their own seem insignificant, but together may raise suspicion that the transaction is related to the commission or attempted commission of a money laundering offence, a terrorist financing offence, or both.

DNFBPs must assess transactions based on a reasonable evaluation of relevant factors, and within the normal practices of business, including the knowledge of the customer.

Transactions that are inconsistent with the client profile established at onboarding or that do not appear to be in keeping with normal industry practices may be relevant factors for determining whether there are reasonable grounds to suspect that the transactions are related to money laundering or terrorist financing.

An assessment of suspicion should be based on a reasonable evaluation of relevant factors, including the knowledge of the customer’s business, financial history, background and behavior. Remember that behavior is suspicious, not people. Suspicion could be based on a single factor, or it could be based on the combination of a number of factors. All circumstances surrounding a transaction or series of transactions should be reviewed.

 

 

 

 

 

When to Submit the STR?

Reporting Entities shall promptly submit STR to QFIU to report any suspicious transaction or any attempts to perform such transactions. For post-transaction STRs, Reporting Entities shall submit an STR not exceeding three (3) working days from the time the reporting entities make the determination that they suspect or have reasonable grounds to suspect that a transaction is related to criminal activity.

When there is suspicion that the transactions are linked to, or to be used in terrorist acts or by terrorist organizations, the STR must be sent within 24 hours of determining that the transactions were suspicious.

Non-working days are excluded from the counting of the prescribed reporting period. The following are considered non-working days:

 

  1. Weekend (Friday and Saturday).
  2. Official regular national holiday.
  3. Officially declared national holiday (Special non-working day nationwide).

 

For attempted transactions, when the Reporting DNFBPs receive an order from a customer to execute a transaction, and the Reporting Entity suspects that the transactions are proceeds of a criminal activity and/or are related to money laundering, or are linked to, or to be used in terrorist acts or by terrorist organizations, the STR must be submitted within 24 hours of determining that the transactions were suspicious, or in the first business day, whichever is soonest.

 

For further clarification on the Obligations to Reporting STRs, kindly review QFIU’s “Guidance to Submitting Suspicious Transaction Reports.

 

How are STRs addressed?

Once the Compliance Officer reports suspicious transactions to QFIU, supervised entities must follow the QFIU’s instructions. Moreover, the customer must be immediately classified as high-risk and be subject to appropriate enhanced CDD measures and ongoing monitoring until further instructions and directives are received from QFIU.

What are the financial and administrative penalties imposed on supervised entities for violating their compliance obligations with AML/CFT requirements?

  • In case where the supervised entity violates its obligations with the requirements of the AML/CFT Law, it will be subject to the sanctions and penalties provided for in the AML/CFT Law.
  • Article (44) of the Law No. (20) of 2019 on Combating Money Laundering and Terrorism Financing stipulates that “Without prejudice to a more severe penalty stipulated in any other law, in case it is evidenced that any DNFBP, or any of the directors, board members, executives or management thereof, has violated the provisions of this Law, the Implementing Regulation, or any AML/CFT decisions or directives, the AML/CFT Section at the Companies Affairs Department may impose one or more of the following measures:
  1. Sending written warnings.
  2. Ordering regular reports on the measures taken.
  3. Ordering compliance with specific instructions.
  4. Imposing a financial penalty of no less than (QR 25.000) twenty-five thousand Qatari Riyals, and no more than (QR 100.000) one hundred thousand Qatari Riyals per violation per day, on the DNFBP after being notified.
  5. Imposing a financial penalty of no more than (QR 100.000.000) one hundred million Qatari Riyals on the violating
  6. Imposing a financial penalty of no more than (QR1.000.000) one million Qatari Riyals on any of the directors, board members, executives or management of a supervised entity.
  7. Restricting the powers of the directors, board members, executives, or management, in addition to appointing a special administrative supervisor, or subjecting the DNFBP to direct control.
  8. Prohibiting the perpetrator from working in the relevant sectors, either temporarily or permanently.
  9. Suspending, dismissing or replacing directors, board members, executives or management either temporarily or permanently.
  10. Imposing suspension of the license, restricting any other type of permit, and prohibiting the continuation of work, the profession or the activity, or barring the name from the relevant registry.
  11. Revoking and withdrawing licenses and registrations.

 

  • The decisions to impose administrative and financial penalties are issued by the Director of Companies Affairs Department, on the proposal of the Head of AML/CFT Section following the examination of offences committed by the supervised entities subject to the AML/CFT requirements and the implementation of TFSs, supported with the proposals received from off-site, on-site and TFSs oversight working group with regard to the applicable measures and penalties, pursuant to Article (44) of the AML/CFT Law No. (20) of 2019.

 

Appealing the decisions to impose financial and administrative penalties to supervised entities.

Petitions against the decisions referred to in Article (44) of the Law may be filed by the supervised entity to the Assistant Deputy of Commerce Affairs, in accordance with the procedures specified in Article (64) and Article (65) of the Implementing Regulations of Law No. (20) of 2019 on Combatting Money Laundering and Terrorism Financing.