Dubai Police currently investigating a Dh 300 million ($81.7 million) international fraud case have issued a warning about the potential role of digital assets in terms of facilitating crime in the UAE.
Speaking at a forum on Sunday September 16, Major-General Khalil Ibrahim Al Mansouri, assistant-commander of criminal investigation department (CID) at the Dubai Police warned that a lack of awareness in the UAE about the risks inherent in digital currency aids cybercriminals in carrying out fraud, money laundering and piracy in the country.
According to police officials at the event, unmonitored large scale electronic financial transactions inevitably pose a substantial amount of risk, and the UAE government needs to develop a legal and law enforcement framework to deal with this threat.
At the event, Lt-Gen Dhahi Khalfan Tamim, deputy chairman of the Dubai Police and head of general security in Dubai noted that the nature and price of digital currencies makes it such that it is impossible to offers protection guarantees to investors. In the light of this he said, the only possible course of action on the part of the government is to warn investors about the risks they potentially face.
According to him, electronic money will eventually replace cash, but that in itself does not mean that all digital currencies will achieve the trust levels of fiat as long as their source and tracking system remains unknown.
A number of experts also spoke on the need for the UAE to proactively engage with cryptocurrencies so as to preempt their possible deployment as a tool of criminality. Dubai SmartWorld chairman Dr Saeed Al Dhaheri stated that rather than wait, Dubai should take the initiative and create a regulatory system to monitor electronic currency and stop it from becoming an enabler for crime. According to him, the high level of crypto startup failure within four months of establishment – 56 percent – is proof that a large portion of such businesses are “fake”.
In his words:
“For every one successful digital transaction, there are five failed currencies.”
Experts recommended the formation of a comprehensive legal system for regulating crypto in keeping with the Emirates Blockchain Strategy. To this end, they suggested the launch of a state-backed UAE cryptocurrency, as well as amendments to existing AML and CFT laws to state that they also apply to the use of digital currencies.
Authorities in the UAE have a well documented ambivalence about the issue of cryptocurrencies and digital assets, often issuing conflicting messages within weeks of each other. CCN reported in February that the UAE’s Securities and Commodities Agency (SCA) issued an investment warning to ICO investors in the country. Previously, the UAE Central Bank governor Mubarak Rashed Al Mansouri also stated that cryptocurrencies are “often abused for illicit financing purposes”.
However in December 2017, CCN reported that the UAE and Saudi Arabia began a collaboration on a proposed cross-border cryptocurrency. In February 2017, the UAE government also announced a partnership with IBM for a blockchain trade finance project.
Featured image from Shutterstock.
Last modified: May 20, 2020 5:59 PM UTC