Abstract
This paper aims to study the current conflict within the Gulf Cooperation Council (GCC) and its potential socioeconomic effects on the union. The GCC has remained a strong union of the six Gulf nations of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE, since 1981. The current division is based on accusations of terrorist financing against Qatar by other members Bahrain, Saudi Arabia, and the UAE. The paper validates these accusations and studies Qatar’s internal anti-money laundering and combatting terrorist financing mechanisms. The paper also discusses the economic and social value of a united GCC as opposed to internal divisions. This paper employs five-principle analysis to present factual data surrounding the current division between the GCC. First, the paper uses a legal analysis to understand the legislative approach taken by Qatar to combat financing of terrorism. Second, the paper studies the regulatory measures undertaken by Qatar. Third, the legislative and regulatory advance is understood in terms of international standards of AML/CTF, as set by a variety of international and governmental organizations. Fourth, a comparative study between measures enacted by Qatar and other GCC member countries. Fifth, Qatar’s implementation of relevant AML/CTF laws and regulations are studied. Together, the analysis aims to validate the claims levied on Qatar and the potential damages of the claims to the GCC growing socioeconomic partnership. The GCC is an important and integral part of maintaining economic and social stability in the Arabian Gulf. The paper finds evidence that supports deterrence from the accusations levied on Qatar for the underlying validity. The literature also suggests a united GCC in the long-term economic and social interests of the region and the member states. A prolonged continuity of the GCC crisis poses a threat to regional stability and socioeconomic interests of all member states. There is a need to understand the validity of the claims and support or dissuade on the basis of factual arguments. The GCC is an integral part of the global economy, and as such a continuity of severed relationships challenges the potential progress of all member states. The paper employs five qualitative tools to substantiate the accusations against Qatar. The analysis draws from international, regional, and domestic stance on AML/CTF laws and furthers the discussion on implementation of these laws. The paper also determines potential implications of a prolonged crisis on the domestic and regional socioeconomic status. The Gulf Cooperation Council (GCC) has been a strong and growing partnership between the six member countries since the Council’s inception in 1981. Recent events have led three members of the GCC—namely Bahrain, Saudi Arabia, and the UAE, along with other Arab League members to severe diplomatic and economic ties with Qatar. The former has levied accusations of terrorist financing on Qatar, which the Gulf country has vehemently denied. The GCC had previously been on a successive track after establishing a free trade and movement zone. The current divide between the members, which is being mediated by the non-aligned GCC members Kuwait and Oman, has persisted since June 2017. There is an immediate need to understand the basis of the accusations and the socioeconomic pressures arising from it. There is a lack of critical assessment literature of Qatar’s AML/CTF regulation and implementation. This paper uses the international framework to assess Qatar’s progress on establishing legal and regulatory tools to promote AML/CTF practices. The paper also uses secondary literature that understands Qatar’s implementation of these practices. There is a need to understand the scope of international frameworks on anti-money laundering and combatting of terrorist financing. Such frameworks are the primary source for understanding factual certainties in the discussion of terrorist financing. The current division within the GCC affects the potential benefits of a united Council and must therefore be addressed through a proper discourse using tools that were created to serve as indicators during such disputes.
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Notes
The list of demands was revised and reduced in fairness on better assessment by Bahrain, Saudi Arabia, Egypt, and the UAE. The original list of thirteen demands was then reinstalled on Qatar by the Bloc (Scuitto and Herb 2017). The opposing Bloc might have scaled down the internal conflict with successful mediation continuing in uniting the GCC again; however, instituting of the original demands has caused the situation to return its first phase.
Charities operate all across the world through social relations and are collected through a variety of forms, including door-to-door and donation boxes. In some cases, obtaining the information of the source of the donation is difficult for law enforcement agencies (Centre for Tax Policy and Administration 2010). To this regard, FATF’s Recommendations on outgoing transactions are followed by Qatar and financial intuitions are directed accordingly (FATF 2008).
The Basel AML Index displays risk in a descending order, with the ranking of 149 showing the lowest risk levels, and the rank of 1st, showing extremely high TF/ML risks. Finland remains the lowest risk country in the Basel AML Index as of 2016.
The FATF’s Assessment was conducted in 2008 and is a foundational evaluation of Qatar’s AML/CFT compliance.
Oman is not evaluated within the framework of the Basel AML Index.
STRs may not officially translate into prosecution and only refer to the number of reports regarding suspicious activity received by financial institutions. This mechanism allows financial institutions and law enforcement agencies to investigate faster (FATF 2008).
“The Qatari Customs authority maintains the highest point of integrity among its counterparts in the Gulf with corruption/bribery being the lowest in the Gulf, a report issued by the Economist Intelligence Unit (EIU) has confirmed.” (Qatar Tribune 2017).
“The Middle East and North Africa Financial Action Task Force (MENAFATF)—the regional body charged with evaluating countries’ efforts to combat money laundering and terrorism financing (AML/CFT)—praised Qatar’s success in implementing an AML/CFT framework that reflects best international practice. During MENAFATF’s 19th plenary that took place in Manama, Kingdom of Bahrain from the 16th to 18th of June, delegates from Qatar presented their progress report to MENAFATF highlighting the significant steps taken to enhance the country’s AML/CFT framework, which was a result of implementing Qatar’s new AML/CFT Law issued in 2010.” (Gulf Base 2014).
The author of this research paper is in no way insinuating any UAE involvement, contrary to Dorsey.
Acknowledgement is due to the extensive mediation efforts from the London-based Qatari Sheikh Abdullah bin Ali al-Thani with HRH Crown Prince Mohammed bin Salman in Jeddah.
This gesture of compassion and kindness by the King of Saudi Arabia and the Custodian of the Two Holy Mosques, King Salman bin AbdulAziz Al Saud, is estimated to run into tens of millions of dollars and is a cost which is covered by him personally, as the monarch is recognised globally as a very generous humanitarian.
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Further Reading
Naheem, M. A. Legitimacy of the 2017 GCC crisis and Qatar’s AML framework. Journal of Money Laundering Control. doi:10.1108/JMLC-07-2017-0032.
Naheem, M. A. 2015. Money laundering: A primer for banking staff. International Journal of Disclosure and Governance. doi:10.1057/jdg.2015.10. http://www.palgrave-journals.com/jdg/journal/vaop/ncurrent/full/jdg201510a.html. Accessed 28 July 2017.
Naheem, M. A. 2016a. Trade based money laundering: A primer for banking staff. International Journal of Disclosure and Governance. doi:10.1057/jdg.2015.10. http://www.palgrave-journals.com/jdg/journal/vaop/ncurrent/abs/jdg201521a.html. Accessed 14 July 2017.
Naheem, M. A. 2016b. Trade based money laundering: Exploring the implications for international banks. Ph.D. thesis scheduled for publication in 2017.
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Acknowledgements
The author explicitly states that this research article is not a propaganda piece and in no way has the author received any form of funding or assistance from any party towards this piece of research. This paper sets out an approach to extend the discussion on the Qatar GCC crisis from an independent academic perspective, employing tools that separate AML/CTF analysis from media opinion.
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The author explicitly states that this research article is not a propaganda piece and in no way has the author received any form of funding or assistance from any party towards this piece of research. This paper sets out an approach to extend the discussion on the Qatar GCC crisis from an independent academic perspective, employing tools that separate AML/CTF analysis from media opinion.
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Naheem, M.A. The dramatic rift and crisis between Qatar and the Gulf Cooperation Council (GCC) of June 2017. Int J Discl Gov 14, 265–277 (2017). https://doi.org/10.1057/s41310-017-0025-8
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DOI: https://doi.org/10.1057/s41310-017-0025-8