An AML Guide to Virtual Assets & Related Activities Regulations 2023
Virtual assets like cryptocurrencies are getting increasing acceptance in countries including the UAE. However, due to the inherent money laundering risk associated with such businesses, the Virtual Assets Service Providers (VASPs) need to comply with the regulations of Anti-Money Laundering and Combatting the Financing of Terrorism (AML-CFT) in the UAE. In view of regulating VASPS, the emirate of Dubai established a new regulatory authority for VASPs named Virtual Asset Regulatory Authority (VARA).
The VARA has issued the ‘Virtual Assets and Related Activities Regulations 2023’ to regulate the operations of the VASPs in the emirate of Dubai. Ensuring compliance with UAE AML-CFT Laws is one of the key requirements in the Virtual Assets and Related Activities Regulations 2023 that VASPs in Dubai need to meet. AML consultants in Dubai can help VASPs to meet the relevant provisions of the regulation. Read ahead to learn more about AML compliance as per the Virtual Assets and Related Activities Regulations 2023:
What is a Virtual Asset in Dubai?
The Dubai Virtual Assets Law issued on 9th March 2022 defines a Virtual Asset as a “digital representation of value that may be digitally traded, transferred, or used as an exchange or payment tool, or for investment purposes. This includes Virtual Tokens, and any digital representation of any other value as determined by VARA.” AML consultants in Dubai can help you get more information on the definition of virtual assets.
Who are Virtual Assets Service Providers in Dubai?
The Virtual Assets and Related Activities Regulations 2023 defines VASPs as entities Licensed by VARA to carry out virtual assets activities (VA Activities) in the emirate of Dubai. The following activities are classified as VA Activities in Dubai:
- Advisory Services
- Broker-Dealer Services
- Custody Services
- Exchange Services
- Lending and Borrowing Services
- Payments and Remittances Services
- VA Management and Investment Services
Role of VARA as an AML Supervisory Authority in Dubai
VARA is an independent regulator overseeing the licensing, operations and compliance requirements of VASPs in Dubai. The Virtual Assets and Related Activities Regulations 2023 defines VARA’s role as an AML supervisory authority in Dubai as listed below:
- VARA is designated as a Supervisory Authority for the emirate of Dubai in respect of all VASPs and VA Activities
- VARA is responsible for the regulation in relation to money laundering in Dubai in respect of all VASPs and VA Activities
- VARA has the power to supervise compliance with relevant Federal AML-CFT Laws by VASPs in the Dubai
- When VARA detects an activity that it suspects may relate to money laundering, it may promptly report its suspicions to the relevant authority exercising powers and performing functions under the relevant Federal AML-CFT Laws
AML/CFT obligations of VASPs in Dubai
As per the Virtual Assets and Related Activities Regulations 2023, VASPs are required to comply with all the Federal AML-CFT Laws as well as all other legislation, regulatory requirements, regulations, rules and directives in respect of AML/CFT as may apply to its VA Activities, businesses or operations in any jurisdiction at all times. It may include the requirements as per the VARA rulebook and FATF recommendations as may be incorporated by VARA into its regulatory framework from time to time.
Scope of the Virtual Assets and Related Activities Regulations 2023
VARA acts as a supervisory authority for VASPs licensed by and established in the emirate of Dubai. Therefore, the scope of the Virtual Assets and Related Activities Regulations 2023 applies only to the VASPs licensed to operate in Dubai. AML advisors in Dubai can help you meet the requirements stipulated by the Virtual Assets and Related Activities Regulations 2023.
Penalties as per Virtual Assets & Related Activities Regulations 2023
If a VASP licensed by VARA in Dubai violates Regulations, Rules or Directives relating to AML/CFT and “know your customer” (KYC) requirements, it will attract relevant penalties based on the nature of the violation. As per Virtual Assets and Related Activities Regulations 2023, the amount of the AML penalty in Dubai will be determined in accordance with relevant local and federal laws. AML consultants in Dubai can advise you on AML violations and relevant penalties.
Hire the Best AML Consultants in Dubai to Ensure Compliance
VASPs operating in Dubai now require professional AML compliance due to the increased compliance requirements set out by the VARA. Seeking assistance from AML consultants in Dubai to ensure seamless compliance with relevant AML-CFT requirements. Jitendra Chartered Accountants (JCA) offers bespoke AML advisory services in Dubai that can save you from incurring hefty penalties. As one of the top AML advisors in Dubai, JCA can help you in the following ways:
- Assistance for goAML registration
- Help to develop AML/CFT Policies and Procedures Manual
- Design, develop and implement the AML-CFT compliance framework
- AML audit and reporting
- AML training for staff, management and other relevant stakeholders
- AML penalty appeal services in case the company incurs AML penalties in the UAE