Cleaning up the region’s financial scene
The economic crisis seems to have done us one good service: The region is finally putting its financial houses in order.
February 1, 2011 4:45 by Sam Potter
It’s not easy to see the silver lining of a global financial downturn, particularly living in a place that’s been hit as hard as Dubai has. But being an occasionally upbeat sort of website, Kipp is doing its best, and we think we may have found an upside to the recession: the UAE’s murky financial waters are finally clearing.
And better yet, people’s attitudes are changing. Papers this week are reporting that financial companies in the UAE informed the Central Bank of 55 percent more suspicious money transfers in 2010 when compared with 2009. The head of the regulator’s anti-money laundering unit says the Central Bank received 2,711 tip-offs from insurers, banks, investment companies and other financial services companies; there were just 1,750 in 2009.
Abdulrahim Mohamed al Awadi, an executive director of the Central Bank and the head of the anti-money laundering and suspicious cases unit says the rise “shows the effectiveness” of efforts to educate companies about their responsibilities. Hmm. Maybe. But the obvious question goes begging: Does this mean that there was more reporting of fraudulent activity, or simply that there was more fraudulent activity?
2009 was, of course, a year from hell in financial terms, so it wouldn’t surprise us if fraudulent activity fell off – after all, pretty much all activity fell off. But 2010 wasn’t a stellar year either, so a 55 percent raise in naughtiness seems pretty high. Kipp thinks its more likely that large finance operations, having been badly burned by the crisis, have realized that it’s in their interests to shine a light into the murkier activities within their own businesses. Previously they may have turned a blind eye as everyone was happily making money, but when things get tight you learn something – it’s far better to play it straight and know where all your money is.
So companies have learnt a valuable lesson. That’s a good start. And as we have reported before, authorities and the markets have learned a few to. Such as: failing to match international standards is fine as long as everyone is making money, but when things turn bad the money will go where the standards are highest. The Dubai Financial Market gave us another glimpse of that this week as it announced the introduction of ‘Short-Selling’ and ‘Securities Borrowing and Lending’ later this year. It’s also planning a new ‘Delivery versus Payment’ settlement mechanism to be instigated before the end of March. That’s a more efficient and less riskier system of payment, basically.
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