Recent AML-CFT Developments in the UAE Businesses Must be Aware of
The UAE maintains a strong Anti-Money Laundering and Combatting Financing of Terrorism (AML-CFT) framework to counter the menace of money laundering and terrorist financing. The UAE has taken steps to effectively monitor cash flows through its financial system and to cooperate with international efforts to counter the financing of terrorist entities.
The realm of AML-CFT compliance in the UAE is not static as money laundering apologies always evolve with the advent of technologies. Given this, the UAE keeps updating its AML framework with new regulations. Let’s have a look at some of this recent development in the UAE’s AML-CFT framework. Keep reading.
Regulatory Framework Adopted for Crypto Assets
Terms like Bitcoin, Ethereum and Dogecoin are nowadays the buzzwords with cryptocurrency and blockchain businesses gaining more mainstream acceptance. Free zones such as Dubai Multi Commodities Centre (DMCC) has started issuing business licenses for companies delaying with the virtual assets in the UAE. However, the volatile nature of virtual assets has promoted the UAE authorities to seriously think about its risk aspects from the perspective of money laundering and financing of terrorism.
Considering the risk aspects of cryptocurrencies, UAE’s National Committee for Combatting Money-Laundering and Financing of Terrorism and Illegal Organisations (NAMLCFTC) has adopted a regulatory framework for virtual assets. The implementation of the framework will be overseen by the UAE Central Bank and the Securities and Commodities Authority. The framework is in line with the recommendations of the Financial Action Task Force (FATF).
New Anti-Money Laundering Guidance for UAE Banks
The UAE Central Bank has issued a new guideline for the Licensed financial institutions (LFIs), which requires the institutions to comply with its mandates. The guideline was issued on 13th September 2021 and the LFIs must ensure compliance with the guidelines within one month from the said date. The guideline instructs the LFIs to develop internal policies, controls, and procedures that match with the nature and size of their business that is approved by their senior management. AML consultants in Dubai can help the LFIs to ensure compliance with the guidelines.
New Anti-Money Laundering Court in Dubai
Dubai has amped up efforts to boost its AML- CFT framework by establishing a special criminal court that deals with money laundering cases. The new AML court in Dubai will operate within the Court of First Instance and Court of Appeal. Cases related to AML-CFT are complex. A special court where judges have the proper expertise and a track record in handling similar cases will lead to better AML-CFT enforcement in the UAE.
Guidelines for Banks Providing Services to Certain DNFBPs
The risk of money laundering is higher for certain Non-Financial Businesses and Professions (DNFBPs) such as Precious Metals & Real Estate. Given the heightened risks in such sectors, the Central Bank has issued a guideline for LFIs providing services to such DNFBPs. The guideline doesn’t prohibit the banks to prohibit customers from such sectors. Instead, the Central Bank asks the LFIs to understand the risks and take a risk-based approach to save themselves from money launderers and illicit transactions.
The LFIs must perform the following to mitigate the risks:
- Conducting risk assessment
- Identifying and assessing risks associated with customers
- Customer identification & verification
- Beneficial owner identification
- Developing customer profile
- Enhanced due diligence if necessary
- Ongoing monitoring
Central Bank Finds Money Laundering Risk in E-commerce
The Central Bank of UAE has released a report titled “Typologies in the Financial Sector”, which reveals the new money laundering risks that emerged post-COVID-19. The report says the pandemic has increased the money laundering and financing of terrorism risks that exist in the financial sector. The Bank said the pandemic increased raises such as fraud, bribery, corruption, charity and disaster fraud, cyber-attacks, and external fraud.
The most striking findings of the report are the rise of unlicensed money service providers and the usage of e-commerce to launder money. The widespread lockdowns across the world have increased the rise in demand for e-commerce. The lockdowns made the transfer of money and goods difficult during the pandemic p, which promoted the criminals to use e-commerce as a money-laundering tool. Consult with AML consultants in Dubai for more advice.
UAE Adds More Individuals, Entities to Terror List
The UAE issued Cabinet ministerial resolution No.83 of 2021 adding 38 individuals and 15 organisations to its terror list. The resolution reinforces the UAE’s commitment to target and dismantle organisations and individuals supporting the financing of terrorism. The resolution urged the regulatory authorities to monitor and identify individuals or entities affiliated with or associated with any financial, commercial or technical relationship and take the necessary measures. The UAE terror list is often used by LFIs and DNFBPs as part of Targeted Financial Sanctions (TFS). AML consultants in Dubai can help the companies ensure TFS compliance.
Jitendra Chartered Accountants Offers AML Compliance Services in Dubai
Ensuring AML compliance in the UAE is critical for both LFIs and DNFBPs to avoid hefty penalties and reputation damage. Apart from meeting the requirements, the businesses must also keep updated about the new regulations and announcements issued by the Supervisory authorities such as the Central Bank of UAE. The best AML consultants in Dubai such as Jitendra Chartered Accountants (JCA) can help the entities keep abreast of the latest developments.
JCA provides the best AML compliance services in Dubai, UAE that has helped hundreds of companies dodge penalties and reputation damage. We offer services such as review of current AML-CFT framework, AML audit and reporting, designing due diligence framework, AML-CFT penalty appeal services, AML training of staff etc. Contact JCA today to build a better AML compliance framework.