A panel set up to investigate financial irregularities at a major currency exchange company operating in Bahrain has found that the majority of its transactions over a two-year period had not been properly reported.

The revelation was made at the High Criminal Appeals Court yesterday (March 9) by a Central Bank of Bahrain (CBB) official, who was tasked with investigating the involvement of UAE Exchange in a BD350 million ($921.3 million) money laundering racket, said a report in the Gulf Daily News (GDN), our sister publication.

In October, 11 managers and staff working for the exchange company were sentenced to eight years and six months in jail by the Lower Criminal Court and fined BD130,000 each after being found guilty of illegally sending money to Saudi Arabia.

Four other defendants were sentenced to five years and three months in jail and fined BD40,000 each.

Appeals were subsequently filed and judges heard evidence yesterday from the CBB expert charged with heading a special panel set up to "investigate irregularities at UAE Exchange between January 2013 and November 2014".

"We found that SR3.5 billion (BD350 million) out of SR4 billion (BD400 million) transferred by the company during that period had not been reported," said the expert.

"We then focused on eight companies that had transferred the money during that period.

"The activity of these companies was suspicious because their financial situation and size did not match the amount of money transferred."

The expert witness said that they had investigated nine employees at the exchange company who were "connected to the irregularities".

"We found this out after questioning their colleagues," he said.

"Our investigations also led to uncovering the involvement of top officials at the exchange company as well as customers who transferred the money.

Convictions

"These officials included heads of Bahrain branches, a development manager, an operations manager and other key officials in the company.

"However our investigations did not include the smugglers, who illegally transported the money out of the country via the King Fahad Causeway."

The CBB expert said he was also unable to comment on the six defendants that were not part of his investigation.

All 15 defendants have been convicted of hiding data, failing to provide registers documenting the company's transactions and providing false information to the CBB, in addition to money laundering, illegal money transfers and forging documents.

They were caught following a major transnational investigation spanning Bahrain, the UAE and other GCC countries after the CBB made the Interior Ministry's Anti-Corruption and Economic and Electronic Security Directorate aware of the financial irregularities.

Fourteen of the defendants are in custody, while one is at large and was sentenced in absentia.

The case was adjourned until April 1 for the submission of defence papers. - TradeArabia News Service