The UAE is set to sign the United Nation's International Convention for Suppression of Financing Terrorism, instituted in December 1999, knowledgeable sources said.

The country is already a signatory to the UN Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, instituted under Resolution No 39/141 in December 1984, they noted.

They explained that the moves come as part of the overall fight against money laundering, with the UAE Anti-Money Laundering Law itself in the process of being instituted.

The sources observed that Saudi Arabia, which has also signed the convention against narcotics, is in the process of signing the convention against financing terrorism, and that the UAE is expected to follow suit shortly.

They, however, pointed out that money laundering and financing terrorism need not be related, and that anecdotal evidence suggests terrorism itself is more often than not financed directly by "clean money".

Hence, they cautioned, bankers here must make a distinction between the two often disparate issues, each with differing modus operandi.

Meanwhile, the various measures undertaken by the UAE Central Bank to fight money laundering are in compliance with international initiatives to counter money laundering, according to a senior Central Bank official.

"In the Central Bank of the UAE law, there are no banking provisions which contradict with or are in conflict with the UAE Central Bank commitment towards other central banks and authorities concerned to encounter money laundering activities - rather, the opposite is true," says Abdulrahim Mohammed Sinkais Al Awadi, senior manager and in-charge of Special Unit, Banking Supervision & Examination Department, UAE Central Bank, in a paper on procedures taken by the apex bank to fight money laundering.

International initiatives include the 40 recommendations issued by the Financial Action Task Force (FATF), the Declaration of Principles to prevent the misuse of the banking system issued by the Basle Committee, the directive of the European Group to prevent the misuse of the financial system for money laundering, and the United Nations Convention on fighting Narcotics & Psychotropic Substances for 1988, as well as other directives in this regard.

Also, the UAE Central Bank has not faced any major difficulties in implementing the provisions contained in the Vienna Convention of 1988 and other international initiatives to counter money laundering activities.

"The Central Bank of the UAE is committed to and in support of international cooperation in all areas, especially in encountering money laundering activities, as per the international initiatives and conventions as well as the related directives," Al Awadi said.