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Clear roadmap for currency union by September: Suweidi

DUBAI — UAE Central Bank Governor Sultan Nasser Al Suweidi said the draft agreement by GCC central bank governors on the creation of a monetary authority by 2009 and an eventual currency union is almost final except for some minor errors, ...

but a clear picture about the roadmap would emerge by September this year at a crucial meeting in Jeddah.

Speaking to the media on the sidelines of a meeting of the national anti-money laundering committee in Dubai, Suweidi said the draft agreement would be presented to GCC finance ministers at the Jeddah meeting.

'I can give you all the details in September after the meeting,' he said when asked about the location of the headquarters of the new regional monetary authority and the timeframe for the currency union, which was originally scheduled to be in force by 2010. However, following the Doha meeting of the governors last week, some conflicting statements sparked scepticism about meeting the common currency deadline.

The UAE Central Bank governor, reaffirming UAE's stance to continue with the dollar peg, also ruled out any possible revaluation of the dirham, a much debated issue in the backdrop of the country's soaring inflation stoked by a weakening currency. Dollar pegs restrict Central Bank's ability to fight inflation by forcing it to shadow US monetary policy of cutting interest rates instead of raising it to stem inflationary trends.

He said the Central Bank is not involved with a probe into bribery allegations against a former vice-president of Dubai Islamic Bank and others.

The governor urged banks in the UAE to report suspicious bank account movements in the wake of a series of financial scandals in the country.

He said the money laundering law ,which came into existence in January 2002, has been effective with the cooperation and 100 per cent compliance by the local financial institutions. 'All banks are abiding by the law and we see a success rate of almost 80 per cent in fighting this crime.'

The law, which defines money laundering offence as any act involving transfer, conversion or deposit, or concealment or disguise of property derived from various offences, has brought the UAE in league with the first group of countries in the world to have a special law that deals exclusively with money laundering offences, in keeping with the country's distinctive position as a leading trade and banking centre in the region. The law prescribes penalties for perpetrators of offences relating to money laundering, as well as for those who assist perpetrators and those who know but fail to report such offences. While authorising the Central Bank to freeze dubious assets for up to one week, the law confers unlimited powers to judiciary to freeze any asset proven to have been derived from money laundering activities.

Following the meeting, members of the National Anti-Money Laundering Committee visited Lieutenant General Dhahi Khalfan Tamim, Dubai Police Chief, at his office in appreciation of Dubai Police role in combating money laundering and terrorist financing.