Anti-Money Laundering in Jordan: An Overview of Laws & Penalties

Jordan, located in a key spot in the Middle East, needs strong and effective AML practices to keep its economy sound and build global trust. Just like Egypt, the UAE, and Kuwait, Jordan’s financial sector faces challenges and complex money laundering schemes.

Because money laundering keeps changing, anti-money laundering in Jordan is important to meet international standards.

Legal Framework for AML in Jordan

AML/CFT Law No. 46 of 2007 shows Jordan's dedication to global standards for fighting money laundering. This law of anti-money laundering in Jordan sets up the legal groundwork for tackling money launderers.

Money laundering changes quickly, so countries and government bodies need to update their laws and processes to stay ahead of criminals. Because of this, The law of anti-money laundering in Jordan has been changed several times to be more effective against new financial crimes and to follow the latest FATF recommendations.

This means Jordan is actively working to handle new risks and keep up with international AML standards.

Regulatory and Supervisory Bodies in Jordan

The Framework of anti-money laundering in Jordan is shaped by several key organizations:

• Anti-Money Laundering Unit (AMLU): AMLU is Jordan’s main authority for combating money laundering. It sets and monitors compliance standards and also investigates unusual financial activities.

• Central Bank of Jordan (CBJ): The Central Bank of Jordan is the country’s central financial regulator and it ensures that banks and financial institutions maintain the practices of anti-money laundering in Jordan, while also collaborating with global financial bodies to uphold Jordan’s financial security.

• Jordan Securities Commission (JSC): The JSC is tasked with overseeing Jordan’s securities market to ensure that all market participants adhere to the regulations of anti-money laundering in Jordan.

• Insurance Regulatory Commission (IRC): The IRC is responsible for regulating the insurance sector in Jordan, enforcing AML standards specifically tailored to insurance transactions.

• Ministry of Industry, Trade, and Supply: This ministry extends AML oversight to non-financial sectors like real estate and trade.

AML Compliance Requirements for Financial Institutions

1. AML Law (AML/CFT Law) No. 46 of 2007:

• Law Details: This is the cornerstone of Jordan’s AML framework. It was amended in 2018 to enhance its effectiveness and align with international standards (Jordanian Parliament). This law mandates comprehensive AML measures, including customer due diligence, reporting of suspicious transactions, and maintaining records. It also integrates counter-terrorist financing measures.

• Unique Aspect: The law requires financial institutions to report any transactions that exceed JOD 10,000 or its equivalent in foreign currency to the Anti-Money Laundering Unit (AMLU) (AMLU Jordan).

2. Customer Due Diligence (CDD): Banks and other financial institutions need to carefully check who their clients are, this means collecting and reviewing personal details to figure out how risky each client might be.

3. Enhanced Due Diligence (EDD): For clients considered high-risk, like politicians or their family members, institutions must take extra steps, which involve more thorough checking and ongoing monitoring of their transactions.

4. Reporting Obligations: Financial institutions must report any suspicious activities they notice through Suspicious Transaction Reports (STRs). They also need to report large transactions to the Anti-Money Laundering Unit.

5. Record-Keeping: They have to keep detailed records of all transactions and customer interactions at least for five years.

6. Internal Controls and Risk Management: Institutions must set up strong internal controls and manage risks based on what they find. This includes training staff regularly and having independent checks to ensure they are following the rules.

Jordan’s FATF Status

As of October 27, 2023, Jordan has been removed from the FATF’s list of jurisdictions under increased monitoring. The FATF recognized Jordan’s substantial progress in addressing previous AML/CFT deficiencies.

Jordan has made significant strides in improving its anti-money laundering and counter-terrorist financing (AML/CFT) measures. Key achievements include:

• Enhanced Risk Assessments: Jordan has completed and shared its risk assessments for legal persons and virtual assets.

• Strengthened Supervision: There has been a boost in risk-based supervision, with increased training for financial institutions and designated non-financial businesses and professions (DNFBPs).

• Beneficial Ownership Transparency: Jordan has improved the maintenance and accessibility of basic and beneficial ownership information.

• Investigation and Prosecution: The country has made progress in pursuing money laundering cases and enhancing its sanctions and confiscation framework.

• Legal Framework: Jordan has implemented a robust legal framework for targeted financial sanctions (TFS) and improved monitoring of non-profit organizations (NPOs) to ensure they are not misused for illicit purposes.

• Jordan’s removal from the increased monitoring list highlights its successful efforts to address the FATF’s concerns and improve its AML/CFT system.

EU List of High-Risk Countries

On February 7, 2024, Jordan was also removed from the EU’s list of high-risk countries, indicating that the European Union recognizes Jordan’s progress in aligning with international financial regulations.

Compliance with FATF Recommendations

According to the 2022 Mutual Evaluation Report, Jordan's compliance with FATF standards is as follows:

• Compliant: 8 recommendations

• Largely Compliant: 24 recommendations

• Highly Effective: 0

• Substantially Effective: 2

Also, currently, no international sanctions are in place against Jordan.

Money Laundering Risks in Jordan

Jordan, like many other countries, has unique money laundering risks shaped by its economy, rules, and location.

• Real Estate Sector: In Jordan, the real estate market is a big risk for money laundering. High-value transactions and some lack of transparency make it easier to use property deals to hide dirty money. Large sums of money in real estate deals can cover up where the money really comes from. Sometimes, it's not clear who actually owns a property, which makes it simpler to launder money.

• Informal Financial Sector: Informal money systems, like hawala, are another risk. Hawala is a traditional way to transfer money that's popular in Jordan and nearby areas. While it helps people who don’t have access to regular banks, it can also be used to launder money because it isn’t closely monitored.

• Geographical Vulnerabilities: Jordan’s long borders and nearby conflicts make it vulnerable to smuggling, which can be tied to money laundering. Ongoing regional issues can make smuggling and financial crimes worse, adding to Jordan’s money laundering risks.

Penalties for Non-Compliance with AML Laws in Jordan

In Jordan, penalties for breaching Anti-Money Laundering laws are severe, ranging from hefty fines to imprisonment. Fines for non-compliance can vary from thousands to millions of Jordanian Dinars, depending on the violation's gravity. Serious breaches can lead to imprisonment for up to 10 years or more. Institutions that repeatedly fail to comply with regulations may face license revocation or suspension, halting their operations until compliance is achieved.

Penalties include asset freezing, criminal prosecution, and administrative sanctions. Non-compliant entities may also face civil penalties and disqualification of their managers or directors. Additional penalties include increased supervision, audits, and potential international cooperation or extradition if violations affect other countries. These penalties reflect Jordan's commitment to adhering to international standards in tackling financial crimes.

Future of Financial Crime and AML in Jordan

As Jordan continues to improve its efforts to fight financial crime, several important trends are shaping how the country will handle these challenges in the future:

1. Technology Integration: Jordan is set to use more advanced technologies to boost its fight against money laundering. Artificial Intelligence and Machine Learning tools will help spot suspicious activities more easily and make it simpler to follow the rules. Blockchain Technology will make financial transactions more secure and transparent, helping track money flows better.

2. Enhanced Data Sharing: Better communication between regulators and banks will help in spotting risks and taking action quickly. Jordan will work more closely with international organizations to share information and tackle financial crimes that cross borders.

3. Regulatory Updates: The country will update its regulations to keep pace with new trends in financial crime and follow international guidelines. New rules will focus on fixing gaps and making sure that everyone follows the best practices for AML.

4. International Cooperation: Jordan will strengthen its ties with other countries and international bodies.

Conclusion

Jordan has made significant strides in strengthening its financial sector by focusing on Anti-Money Laundering in Jordan and implementing effective AML Compliance in Jordan. The country’s commitment to compliance and anti-money laundering is reflected in its comprehensive legal and regulatory measures, which are designed to combat financial crimes and align with international standards.

A key component of Jordan’s approach is the focus on Anti-Money Laundering and Counter Terrorist Financing in Jordan, where the government works closely with financial institutions to prevent illicit financial activities. The country’s AML and CFT regulatory framework outlines clear guidelines for institutions to follow, ensuring they adopt robust compliance measures to detect and report suspicious activities. This integrated AML and CFT regulatory framework not only protects Jordan’s financial system but also enhances its reputation as a trusted partner in global anti-money laundering efforts.