The International Monetary Fund (IMF) has lauded Qatar for its low crime rates but said the emirate's anti-money laundering law has loopholes that need to be plugged.

In a 241-page report on the Gulf country's anti-laundering regulations, the IMF said it did not see any significant financial criminal activity in Qatar although it now has the second-most developed financial sector in the region after the UAE, according to a report in the Emirates Business.

The study, conducted by an IMF team following a series of meetings with authorities during a visit to Qatar in June, also called for the development of the country's financial intelligence unit to ensure it has more powers.

In a response to the team findings, the Qatari Government said it was pleased to be informed that Qatar has a low crime rate but stressed it was aware of the risks associated with the rapid development of its banking sector. It also said it was already taking measures to upgrade its anti-laundering laws.

According to the IMF assessment team, the anti-money laundering law (AML) in Qatar provides for the basic elements of the money laundering offense but still suffers from major shortcomings, in particular with respect to the limited number of predicate offences. It said the law does not enable the Qatari authorities to prosecute money laundering in a fully effective way.

'There is a need to amend the AML to clarify and extend the scope of the money laundering offence in order to cover all intentional acts aiming to conceal or disguise not only the source of the funds but also the true nature, location, disposition, movement or ownership of or rights with respect to proceeds of crime. This could be achieved either by clearly specifying the purpose in the AML or by deleting altogether the intended purpose,' the report said.

The IMF also urged authorities to ensure that predicate offences for money laundering all extend to conduct that occurred in another country when there is dual criminality and to provide in-depth training to the law enforcement agencies on the AML and on money laundering trends and typologies.

'Although the authorities maintain that the terrorist financing offence is covered by the notion of the 'terrorist crimes' that appears in Article 2 of the AML, it is also recommended, for the sake of clarity, to specifically mention the terrorist financing offence in the list of predicate offences.'

The report said Qatar's Financial Intelligence Unit, which was created in 2006, also needs to be upgraded so it can have more powers.

'The authorities are recommended to address the legal basis that established the unit as a national centre for receiving, analysing and disseminating disclosures of suspicious transactions reports (STRs) and other relevant information concerning suspected money laundering activities. While the unit appears to operate in practice, it should be grounded on a sound legal basis,' it said.

'They should ensure that the unit provides financial institutions and other reporting parties with guidance regarding the manner of reporting, including the procedures to be followed when reporting.'

It said the unit should also be developed to enhance the depth and quality of its STRs analysis, in particular by accessing the central reports system (CRS) and requesting on regular basis additional information from reporting entities and the Economic Crime Prevention Division (ECPD).

It should also be enabled to use, when necessary, the CRS, the link to the commercial register developed by the Qatar Central Bank, the real estate register and all available databases to enhance its STR analysis.

Other recommendations for the development of the FIU included:

- Ensure that the unit establishes mechanisms for co-operation with regulators, supervisors, reporting entities and law enf