Which Risk Prevails in MENA’s AML Landscape — Sanctions, Terror Financing?

The session begins by addressing the increasing challenges of AML/CFT and sanctions compliance in the MENA region. Ongoing conflicts and political instability create significant hurdles for financial institutions and regulators. Ahmed Nagaty Elgaza explains how these factors contribute to risks like terrorism funding and proliferation finance, where thorough due diligence is difficult but essential.

Sanctions evasion schemes, including informal systems like hawala and trade-based money laundering, take advantage of regulatory gaps. Ahmed and Sherif stress the importance of more potent detection tools and closer cooperation between countries to address these risks effectively.

False positives in sanctions screening, especially for Arabic names, remain a significant challenge. Sherif Sultan Elgendy highlights how advanced screening tools and customized systems can reduce errors while meeting compliance needs. The discussion also examines the challenges remittance and money service providers face in countries with large migrant worker populations, such as the UAE and Saudi Arabia, where managing high transaction volumes securely is critical.

Additional topics include the pressure of secondary sanctions and the growing reliance on data-driven compliance. Sherif emphasizes balancing these demands with the region’s focus on encouraging trade and investment. Non-banking sectors, like jewelry and luxury goods, are also highlighted as weak points exploited for money laundering and terror financing. Ahmed points to better data-sharing and stricter regulations as crucial steps to address these vulnerabilities.