Academic journal article European Journal of Interdisciplinary Studies

Efforts of Controlling Money Laundering of Narcotics Money in Saudi Arabia

Academic journal article European Journal of Interdisciplinary Studies

Efforts of Controlling Money Laundering of Narcotics Money in Saudi Arabia

Article excerpt

1. Introduction

Saudi Arabia is a strong economy country in the Arabian Gulf region. This is because it is home to the world's biggest oil reservoirs. Its economy is diverse, engulfing domestic and international investments and businesses. Unlike most legal systems, laws presented in the Sunna and the Holy Qur'han governs Saudi Arabia. The country is also obliged to keep the Shari'ah, which is Arabic for Islamic Law (Weston, 2008).

Organized crime requires extensive resources to be successful. Terrorists are able to carry out extensive operations because they can afford the resources. The government cannot easily seize these resources because of the money laundering process. Terrorist and other criminals acquire their funds from illegal sources and cover these sources using legal sources. An example of illegal sources includes the black narcotics trade. Since the year 2003, the Saudis have had Anti-Money Laundering (AML) regimes as an incentive to counter terrorist financing (CFT). Under this umbrella, the government uses several policies to counter the criminal activities of money laundering, terrorism, and drug trafficking (Salinger, 2005).

The Saudi Arabia Monetary Agency (SAMA) also has policies that control the flow of money within and without the country as a measure of countering money laundering. Through these policies, the government is empowered to freeze a terrorist's assets, or confiscate property that is involved in terrorism financing. Some of these efforts have succeeded, while some are underway. Some efforts also need to be revised to enhance effectiveness. It is not easy top asses the success of AML strategies in Saudi Arabia as money laundering is associated with predicate crimes. The country has also not analyzed its crime level for several years (Champion, 2003).

This paper will analyze the situation of money laundering in narcotics as it applies in Saudi Arabia. To achieve this end, the paper will first define important terms such as money laundering and narcotics. It will then explain the relationship between money laundering, narcotics trade, and terrorism activities. This background information will form the base for analyzing the various efforts that the Saudi Arabia nation has in place for countering money laundering in narcotics trade. The paper will then explain the challenges facing these efforts, and the future of money laundering in Saudi Arabia.

2. Money Laundering

The meaning of money laundering is quite direct. Literally, money laundering refers to the process of washing money. One can only wash that which is dirty, with the hope of making it clean. Dirty money is that which is obtained through illegal means. This could be through criminal activities such as drug trafficking, robbery, and murder (Primakov, 2004). Criminals wash this money by transferring it to legal sources of money. This is especially through creating legal businesses to cover up for the illegal businesses. It became a current issue that "a black market exists in all economies, no matter how evolved they are but when people start to depend on the black market for acquiring food" the phenomenon of money laundering meet dangerous dimensions (Kagitci and Tatu, 2008). Confidential banks such as the Swiss Bank can also play a role by poising at the loaners of such money. This cover helps criminals escape the probing hand of the law, and gives them a chance to expand their activities. Therefore, money laundering is associated with criminal activities such as terrorism and organized crime. Money laundering can also refer to the disguise of the original source of money, even if the source is legal. If money from source A is presented as money from source B, then the process is money laundering (Madinger, 2012).

Money laundering occurs in three major stages. At first, the money is acquired from the illegal source, and placed in a legal source. This stage is called placement. The money is then used in the legal source in order to disguise it, a process known as layering. …

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