IDEffective Insolvency and Creditor Rights Systems
In a July 2009 presentation made by Dr. N. Saidi, it was noted that the Hawkamah-World Bank-OECD survey, based on the Principles and Guidelines for Effective Insolvency and Creditor Rights Systems developed by the World Bank, scored the 11 MENA nations according to a 155 point system, with higher scores denoting stronger and better established regimes. Qatar achieved a score of 84 out of 155, which is below both the OECD average of 124 and the MENA average of 88. The U.S. Department of Commerce (DoC) cautioned in 2008 that although Qatar had recently passed significant insolvency-related legislation, it had yet to pass the requisite regulations for implementation, and it expressed doubts as to whether or not the new legislation will enter into force. The DoC adds that Qatari culture finds the public announcement of insolvency distasteful, shaming not only to the debtor firm but to the individuals involved, their families, and their tribe. In a May 2009 article appearing on the World Bank's "Crisis Talk" website, it was announced that Qatar joined nine other Middle Eastern countries as a signatory to a formal commitment aimed at improving the insolvency regimes of the region in line with international best practices. The commitment includes an agreement to foster greater awareness among local policy makers, legislators, and the judiciary as to the need for improvements in the insolvency regime; an undertaking to strengthen the frameworks – both legislative and institutional – that underpin the insolvency and creditor rights system; and participation in a Regional Forum that will foster professionalism and capacity building as well as information sharing.
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IIInternational Financial Reporting Standards
According to a number of sources on the subject, Qatar has adopted the International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board (IASB). Furthermore, in 1999, the Qatar Central Bank made international standards mandatory for all banks, finance, and investment companies (foreign and national). Nevertheless, a 2007 paper by Al-Shammari finds enforcement of accounting standards and norms to be weak. Qatar is not a member of the International Federation of Accountants (IFAC), and there is insufficient information publicly available on Qatar’s compliance with the latest version of IFRSs as issued by the IASB.
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IIPrinciples of Corporate Governance
In February 2009 the Qatar Financial Markets Authority (QFMA) approved a Corporate Governance Code for public companies in Qatar which was developed in line with international practices and guidelines, and in collaboration with the Hawkamah Institute of Corporate Governance. The Code will be implemented on a comply-or-explain basis. The Code does, however, grant the QFMA the discretionary authority to enforce provisions of the Code. No further information on the degree of compliance of Qatar's corporate governance framework with the Organization for Economic Cooperation and Development's principles of corporate governance is available. The QFMA was created in 2005 as the securities market regulator and supervisor. This new, independent authority took over the responsibilities previously held by the Doha Securities Market Commission, the erstwhile regulator of all brokerage companies in the country. The QFMA started operations in 2007. According to a 2009 International Monetary Fund report, Qatar is moving towards creating a unified financial regulator that will integrate the regulatory functions of the QFMA, the Qatar Central Bank, which oversees the country's banking sector, and the Qatar Financial Centre Regulatory Authority (QFCRA).
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IIInternational Standards on Auditing
Qatar is not a member of the International Federation of Accountants (IFAC), and there is insufficient information publicly available on Qatar’s compliance with International Standards on Auditing (ISAs) as issued by the IFAC.
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IDAnti-Money Laundering/Combating Terrorist Financing Standard
The IMF conducted a detailed assessment of Qatar’s Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) regime against the Financial Action Task Force’s (FATF) 40+9 recommendations and special recommendations in 2008. The report was adopted by the Middle East & North Africa Financial Action Task Force and FATF in April 2008 and June 2008 respectively. In its assessment, the IMF concludes that Qatar is fully compliant with 2, largely complaint with 8, partially compliant with 20, and non-compliant with 10 recommendations. For the nine special recommendations on terrorism financing, the IMF team judged Qatar as largely compliant with one, partially compliant with two, and noncompliant on six. Qatar’s AML/CFT framework is based on Law (28) of 2002 which criminalized money laundering as amended by Decree Law (21) 2003 and Law (3) of 2004 on Combating Terrorism which criminalizes terrorism financing in a limited way. The IMF notes that preventive measures for financial institutions in the domestic sector fall short of addressing most of the customer due diligence requirements of the international standard and, therefore, are insufficient in meeting all the requirements of Recommendation 5. Although “largely compliant” with the FATF recommendation on the Financial Intelligence Unit (FIU), the IMF assessment finds flaws in the legal basis for establishing the FIU and the poor quality of suspicious transaction report analysis. Moreover, there exists no obligation in legislation for suspicious transactions related to terrorist financing to be reported. Most importantly, Qatar is not a party to and has not implemented the International Convention for the Suppression of Terrorist Financing. A 2008 FATF report lists Qatar as one of the jurisdictions which have undertaken measures to implement the 40 Recommendations and 9 Special Recommendations.
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IICore Principles for Systemically Important Payment Systems
The Qatar Payment System (QPS), a real-time gross settlement (RTGS) system, and the electronic check clearing system are the two main large-value payment systems in Qatar. The QPS is an inter-bank payment and settlement system managed and operated by the Qatar Central Bank (QCB). Based on the results of the World Bank’s 2008 Global Payment Systems Survey, Cirasino and Garcia’s 2008 report evaluates a country's compliance with four distinct sub components which are broadly based on the Committee on Payment and Settlement Systems' Core Principles for Systemically Important Payment Systems (CPSIPS). The component, "large value payment systems" addresses aspects of Core Principles (CP) III through CP X and the 2008 report by Cirasino and Garcia concludes that Qatar achieves a "medium-high level of development" for this component. Qatar also achieves a "medium-high level of development" for the legal and regulatory framework component, which covers CP I and to some extent CP II. Finally the third component of interest in the Cirasino and Garcia report is the payment system oversight component for which Qatar achieves a "medium-low level of development." However, the information contained in this report, although useful and informative, cannot be used to assess Qatar's compliance with the CPSIPS. On its website, the World Bank recognizes the Qatar Central Bank’s efforts in recent years to modernize the country’s payment systems. The IMF notes in its 2007 Article IV Consultation report that Qatar plans to establish a single financial market and a unified regulator. In this context, the IMF encourages the QCB, the Ministry of Economy and Finance, and the new regulator to clarify their respective responsibilities for payment systems regulation and operation.
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