Oman Takes Measures to Avoid FATF Greylisting Amidst Scrutiny on Ties with Iran

In a proactive move to sidestep potential greylisting by the Financial Action Task Force (FATF), Oman is implementing measures to bolster its anti-financial crime framework. A delegation from FATF is scheduled to visit the capital, Muscat, next month for an assessment of Oman's efforts in combating financial crimes, with a particular focus on its ties with Iran, a subject of concern for the United States.

Oman, an oil-rich state with a smaller and more conservative economy compared to the UAE, is keen on avoiding a fate similar to its regional counterpart, which was placed on the FATF watchlist in March 2022. Unlike the UAE, Oman has not embraced crypto-friendly policies extensively, and its property market is less open to international investors.

Tahir Al Amri, Oman's central bank chief, acknowledges the concerns regarding the country's relations with Iran, a nation known for funding and training groups like Hamas and Hezbollah. Al Amri recognizes the potential impact on Oman's economy due to its geographical proximity to Iran.

"The greatest vulnerability is our location. It's because of the relationship with Iran," Al Amri stated in an interview with Bloomberg.

A report by the International Monetary Fund (IMF) underscores the economic consequences of FATF greylisting, estimating a significant reduction in capital inflows for countries on the watchlist. The IMF suggests an average decline of around 3% of gross domestic product in both foreign direct investment and portfolio inflows.

Despite concerns over ties with Iran, experts believe that Oman's focus on strengthening anti-money laundering (AML) and countering the financing of terrorism (CFT) measures could play a crucial role in avoiding greylisting. Amaar Alzaabi, a Senior Specialist in AML Supervision at the UAE's Ministry of Economy, emphasized that effective management of international financial relationships, along with robust AML and CFT measures, might spare Oman from the FATF grey list.

Oman's central bank chief highlighted the nuanced approach the government is taking, acknowledging international sanctions while recognizing the presence of "legitimate people" from sanctioned nations. He cited the example of Iranian money flowing in through trade and emphasized the need to distinguish between legitimate and sanctioned financial activities.

In November, Brian Nelson, the US Treasury Undersecretary for Terrorism and Financial Intelligence, visited Muscat to discuss bilateral cooperation on money flows tied to Iran and Russia. The Biden administration had previously sanctioned Oman-based investment firm Tadawul Financial Services SAOC, alleging its involvement in managing Russian illicit assets.

Oman, with a GDP of approximately $108 billion heavily dependent on oil and natural gas exports, is leaving no room for complacency. The country has established a sanctions list, including individuals from Afghanistan, Syria, and Nigeria, as part of broader reforms that include crypto guidelines and the creation of ultimate beneficial ownership (UBO) and corporate registries.

As the FATF delegation prepares to assess Oman's anti-financial crime measures, the country remains vigilant in navigating its international financial relationships to avert potential greylisting and its economic repercussions.

By fLEXI tEAM