FATF AML Deficiency List
Non - Compliance with FATF MER Recommendations
Corruption Index (Transparency International & W.G.I.)
World Governance Indicators (Average Score)
Weakness in Government Legislation to combat Money Laundering
Oman is not currently identified by FATF as having substantial money laundering and terrorist financing (ML/TF) risks or having strategic AML/CFT deficiencies
Compliance with FATF Recommendations
The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Oman was undertaken by the Financial Action Task Force (FATF) in 2011. According to that Evaluation, Oman was deemed Compliant for 3 and Largely Compliant for 24 of the FATF 40 + 9 Recommendations. It was Partially Compliant or Non-Compliant for 1 out of 6 of the Core Recommendations.
US Department of State Money Laundering assessment (INCSR)
Oman was deemed a “Monitored” Jurisdiction (Lower Risk) by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR). Key Findings from the report are as follows: -
Oman is not a regional or offshore financial center and does not have significant money laundering or terrorism financing concerns. Due to its location on the tip of the Strait of Hormuz, Oman is home to a small number of smugglers operating between Musandam, the northern-most exclave of Oman, and Iran. Omani authorities are aware that growing Iranian overtures toward Oman for increased trade and engagement, particularly in light of potential sanctions relief, may create conditions for money laundering/terrorism financing activity. Trade is generally financed with small amounts of cash and mostly comprises consumer goods. Oman is a regional transit point for narcotics from Afghanistan, Pakistan, Iran, and Tanzania, although the government is proactive in tracking and prosecuting drug traffickers. Sources of illegal proceeds are generally limited and derived from smuggling or drug trafficking activities. Smugglers and drug traffickers are generally expatriates.
Corruption, primarily in the form of cronyism or insider operations, remains a concern. Since 2013, the government has been taking legal action against senior officials in the housing sector and senior executives of partially state-owned enterprises accused of corrupt practices in the oil and gas sector.
EU Commission Tax Blacklist
On October 6, 2020, the EU Commission confirmed that Oman was considered as compliant with all its commitments after it ratified the OECD Convention on Mutual Administrative Assistance in Tax Matters, enacted legislation to enable automatic exchange of information and took all the necessary steps to activate its exchange-of-information relationships with all the EU member states.
There are no international sanctions currently in force against this country.
The Arab League (comprising 22 Arab member states), of which this country is a member, has approved imposing sanctions on Syria. These include: -
Cutting off transactions with the Syrian central bank
Halting funding by Arab governments for projects in Syria
A ban on senior Syrian officials travelling to other Arab countries
A freeze on assets related to President Bashar al-Assad's government
The declaration also calls on Arab central banks to monitor transfers to Syria, with the exception of remittances from Syrians abroad.
The Arab League has also boycotted Israel in a systematic effort to isolate Israel economically in support of the Palestinians, however, the implementation of the boycott has varied over time among member states. There are three tiers to the boycott. The primary boycott prohibits the importation of Israeli-origin goods and services into boycotting countries. The secondary boycott prohibits individuals, as well as private and public sector firms and organizations, in member countries from engaging in business with any entity that does business in Israel. The Arab League maintains a blacklist of such firms. The tertiary boycott prohibits any entity in a member country from doing business with a company or individual that has business dealings with U.S. or other firms on the Arab League blacklist.
BRIBERY & CORRUPTION
Rating (100-Good / 0-Bad)
Transparency International Corruption Index 54
World Governance Indicator – Control of Corruption 67
Corruption is generally not an obstacle for businesses in Oman. Nonetheless, risks are higher when dealing with the elite as nepotism is widespread in the higher echelons of the government. The intertwined business interests of the political elite have resulted in perceived widespread political corruption. Businesses face a high corruption risk when operating in the public procurement sector. However, petty corruption does not constitute a barrier for business, and the practice of bribery is not common in Oman. Efforts to curb corruption among government officials have led to the prosecution of several high-ranking officials for crimes of corruption and abuse of office in recent years. The Omani Penal Code and the Law for the Protection of Public Funds and Avoidance of Conflicts of Interest constitute the legal framework to tackle corruption, and the government generally implements these laws effectively. Gifts that are intended to influence the acts of public officials are criminalized in Oman. For further information - GAN Integrity Business Anti-Corruption Portal
Oman is heavily dependent on its dwindling oil resources, which generate 84% of government revenue. In 2015, low global oil prices drove Oman’s budget deficit to $6.5 billion, or nearly 11% of GDP. Oman has limited foreign assets and is issuing debt to cover its deficit.
Oman is using enhanced oil recovery techniques to boost production and has actively pursued a development plan that focuses on diversification, industrialization, and privatization, with the objective of reducing the oil sector's contribution to GDP from 46% at present to 9% by 2020. Tourism and gas-based industries are key components of the government's diversification strategy.
Muscat also is focused on creating more jobs to employ the rising number of Omanis entering the workforce. Increases in social welfare benefits, however, particularly since the Arab Spring, dating to 2011, have challenged the government's ability to effectively balance its budget, as oil prices decline. Omani officials intend to reduce social entitlements to cut the deficit but have faced stiff public opposition to spending cuts, hindering their implementation.
Agriculture - products:
dates, limes, bananas, alfalfa, vegetables; camels, cattle; fish
crude oil production and refining, natural and liquefied natural gas (LNG) production; construction, cement, copper, steel, chemicals, optic fibre
Exports - commodities:
petroleum, reexports, fish, metals, textiles
Exports - partners:
China 35.4%, UAE 15.3%, South Korea 6.8%, Saudi Arabia 5.8%, Pakistan 4.2% (2015)
Imports - commodities:
machinery and transport equipment, manufactured goods, food, livestock, lubricants
Imports - partners:
UAE 29.7%, Japan 10.2%, US 7.5%, China 6.7%, India 6.3% (2015)
Investment Climate - US State Department
Overall, Oman’s investment climate is conducive to U.S. investment. Omani officials and businesspeople generally value U.S. technology, skills and expertise in a wide range of fields, count on U.S. firms’ reputation for reliable, transparent business practices, and are keen to leverage U.S. business models, corporate values, and entrepreneurial culture in order to take fuller advantage of the United States-Oman Free Trade Agreement (FTA). U.S. firms enjoy special privileges due to the FTA, namely duty exemptions, national treatment, and non-discrimination in government procurement. However, lack of Omani Customs’ compliance with FTA Article 4 regarding duty exemption for eligible U.S. goods transshipped via Dubai exists in some cases, as well as the imposition of a the “In-Country Value” program promoting local sourcing, marred the generally positive outlook for U.S. investors. In addition, Omanization mandates, compelling companies to hire Omani employees, and scarcity of gas for new manufacturing projects posed challenges for U.S. investors.
Advantages of investing in Oman include:
Oman’s business-friendly environment, including the United States-Oman Free Trade Agreement; a modern business law framework; respect for free markets, contract sanctity and property rights; relatively low taxes; and a one-stop-shop at the Ministry of Commerce and Industry for business registration;
The educated and largely bilingual Omani work force;
The excellent quality of life: Oman is a modern, friendly, and scenic country, with outstanding international schools, widely-available consumer goods, modern infrastructure, and a convenient and growing transportation network;
Oman’s geographic location, just outside the Persian Gulf and the Strait of Hormuz, along busy shipping lanes carrying a significant share of the world’s maritime commercial traffic, with convenient access and connections to the Gulf, Africa, and the subcontinent;
The steady and ambitious investment by the Government of Oman (GoO) in the country’s infrastructure, including manufacturing free zones, seaports, airports, rail, and roads, as well as in its health care and educational systems and facilities.
Foreign investment is increasing in Oman as international firms recognize the growing opportunities related to the Sultanate’s massive infrastructure investment program as well as increased efforts to diversify away from oil and gas, particularly with low world oil prices in late 2014 and 2015. Non-oil economic growth stood at 8 percent in 2014, reflecting major infrastructure-related activity and the Sultanate’s success in promoting downstream manufacturing in its free zones. According to Oman’s National Centre for Statistics and Information, nominal GDP grew by 4.63 percent in 2014, but contracted by 14.2 percent in 2015 (calculated using data through September 2015 on a year-on-year basis). Contraction in 2015 was largely driven by low oil prices, which pulled down growth despite a 4.7 percent nominal growth in the non-oil sector, according to Oman’s National Centre for Information and Statistics. The government’s diversification ambitions, which focus on the logistics, mining, tourism, manufacturing, and fishing sectors, have generally not yet had an impact on the economy as a whole. Despite this, the Omani government remains committed to continuing spending on existing infrastructure projects and other investments, despite continued depressed world oil prices.
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