Gulf Cooperation Council countries have been working since 2014 to weave Shariah-compliant blockchain technology and cryptocurrencies into their existing financial and legal infrastructure.
Current members of the Gulf Cooperation Council, known as the GCC, are Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.
Saudi Arabia and the UAE — which account for 75 percent of the GCC’s $1.4 trillion economy — have undertaken blockchain-oriented national projects aimed at diversifying and modernizing their countries’ economies. Currently oil revenues make up around 90 percent of their total public revenues.
The Saudi Arabian Monetary Authority together with the central bank of the United Arab Emirates (UAECB) have backed numerous FinTech initiatives, including co-developing the world’s first state-backed bilateral cryptocurrency named “Aber,” Arabic for passing by, crossing, or traveling on a road.
Aber is initially set to help Saudi Arabia and the UAE make more cost-effective, bank-to-bank, cross-border payments and financial settlements using blockchain technology on a probational basis, and for exclusive use by a limited number of banks according to the official statements.
Cryptocurrencies are not currently legal in either Saudi Arabia or the UAE.
The UAE last year passed new AML/CFT laws aimed to bring its rules in line with FATF recommendations, which include the establishment of an independent financial information unit within the central bank to receive and investigate reports of illicit financing activity.
Saudi Arabia also recently made fundamental changes to its AML/CFT regime in line with FATF Recommendations. In a recent report FATF said, “Saudi Arabia’s financial intelligence unit is not able to conduct sophisticated financial analysis, although it does provide a wide variety of information that is available to and used by competent authorities.”
The European Commission has added Saudi Arabia to an EU draft list of countries that pose a threat to the bloc because of lax controls against terrorism financing and money laundering.
Selva Ozelli, Esq., CPA, pictured above, is an international tax attorney and CPA who frequently writes about tax, legal and accounting issues for Tax Notes and the OECD.
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