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Money Laundering Badly Affects Economies; Eleven Cases Recorded in Yemen
  Written By: Moneer Al-Omari (YEMEN POST STAFF)
  Article Date:
December 01
, 2008



According to economic experts, money laundering is among the risks that afflict economies and, sometimes, leads to the collapse of economic systems. However, the spread of this phenomenon is different from one country to another.

Officials of the Yemeni Central Bank revealed that there had been 11 cases of money laundering in Yemen, two of which are now being looked into by judiciary.

In a symposium that addressed the "Risks of Money Laundering on the National Economy" and organized by the Economic Information and Studies Center as well as the Banking Magazine, head of Information Collecting Unit at the Central Bank Abdu Saif pointed out that there were just 11 cases of money laundering discovered over the last four years.

Saif revealed that one of these cases was receiving money from abroad and another one was connected with drug smuggling, hinting that money laundering activities are very limited in Yemen.

Meanwhile, several academics and economic researchers criticized the lack of accurate statistics about money laundering cases in the country, stressing that money laundering takes other forms like administrative and financial corruption and pillage of lands.

The participants emphasized that money laundering, considered an organized crime, is among the dangerous problems of this era, especially under the globalization of economy. They demanded the different economic, scientific, official, judicial parties and media to collaborate efforts for combating money laundering.

In this regard, the Assistant Secretary General of CAC Bank for Banking and Commercial Affairs Mohamed Ahmed Taqi asserted that his bank directors have realized the problem right from the very beginning and this made them establish a specialized unit for fighting money laundering and published a book dealing with how to discover money launderers.

The head of Economic Information and Studies Center mentioned that developing countries are in a dire need for well-built legislations and more transparency to deal with money laundering crimes. He hinted that these crimes include corruption deals, bribery, betraying confidence and arms trade.

For his part, the Chief Editor of Banking Magazine Mohammed Al-Zubairi stressed the importance of working against money laundering. He continued that all parties should play their role towards this crime, maintaining that money laundering is an evil threatening the society.

Risks of money laundering

Abu Bakr Murshed Al-Zuhairi from Sana'a University noted, in his presented paper, that money laundering is an organized crime and has a dangerous effect on the financial and banking systems in particular and the national economy in general.

Al-Zuhairi further revealed that money laundering will corrupt the investing environment as it makes investors lose their trust in the economic system and the legislations that organize investments. It also creates a pushing environment for investments.

He continued that money laundering help corrupt companies to offer their commodities and services at competitive prices and this badly affect the companies that have serious investments. 

Money laundering will cause capitals to run outside the country, which causes the financial gap to widen and cause national capitals to seek refuge in foreign banks, together with turning to unproductive investments because money launderers focus on how to conceal their dubious operations and the source of money. 

Al-Zuhairi also added that money laundering will affect national revenues as part of the national income is smuggled by launderers outside the country, thus depriving the country from one source of income under the tax evasion. This will cause devaluation of national currency and increase in exchange rates.

Other risks of money laundering, according to Al-Zuhairi, include a deficit in payments balance, devolution of national currency because money launderers rely on foreign currencies to make it easy for them to move it from country to another and this seriously threatens state reserves of foreign currency and, sometimes, push them to ask for loans to cover the finance gap resulting from money smuggling.

He also believes that money laundering causes interest rates to increase. It also causes economic instability and hinders the implementation of financial policies and affects the privatization efforts, maintaining that other risks include increase in unemployment, crime and corruption rates.

Central Bank efforts

The Central Bank of Yemen has always been trying over the last eight years to combat terrorism through presenting complete lists to all national banks and exchange companies including the names of terrorist organizations or individuals.

It also gives information about these organizations and issues orders to freeze their accounts and requests other banks to give regular reports on their financial activities, together with organizing training workshops and seminars to make bank employees aware of money laundering processes.