AML in the UAE: What Should be the Contents of MLRO Report?
The Money Laundering Officer’s Report (MLRO) is a key compliance requirement that enables the UAE regulators to ensure the companies under obligation are complying with the Anti-money Laundering and Combatting Financing of Terrorism (AML-CFT) requirements. The MLRO report is the key document with which the UAE regulators conduct the desk-based supervision of companies to determine they are complying with the regulations on an ongoing basis.
As per Clause (3) of Article 21 of the Cabinet Decision No 10 of 2019, MLRO reports should be submitted semi-annually to the senior management and its copy should be sent to the relevant supervisory authority. To prepare the report, an MLRO or AML compliance officer should review the internal controls and procedures to combat money laundering and their consistency with the AML-CFT laws. The MLRO must assess the extent to which the company is committed to apply such rules and procedures and propose what is needed to be updated and develop the AML-CFT framework of the company.
Read ahead to understand how to prepare an MLRO report and details about its contents to ensure AML-CFT compliance in the UAE.
Key Information to Include in the MLRO’s Report
An MLRO has to highlight the compliance deficiencies and the corresponding remedial action while compiling the report. The following are some of the key information that can be included:
- MLROs can review the number of Suspicious Activity Reports (SAR) submitted by the employees and assess the quality of such reports. If there are no such reports, mention the inadequacy of the AML-CFT training program provided for the employees.
- Include how many clients were declined due to the lack of proper information
- Mention the details of AML-CFT training imparted to the employees during the given year. It may cover details such as the number of training courses, state if both new and existing staff were trained and the issues identified. Provide evidence of such training by giving certificates and assessment results. State the employees’ understanding of their role and responsibilities in fighting money laundering.
- Report if the company needs any additional resources to ensure AML-CFT compliance
- State about the sample review of the Customer Due Diligence (CDD) file to ensure that information is relevant and up to date
- Sample check of clients to make sure the risk ratings are appropriate and check whether the risk assessment is relevant and up to date
- Check if the company’s AML-CFT policies, procedures and risk assessment are relevant and up to date
Controls to be Highlighted in the Report
An AML compliance officer is required to check the controls in the company such as:
- AML-CFT control environment
- The supervision of senior management and board of directors regarding the AML-CFT program
- Business-related risk assessment
- CDD/ KYC, customer risk assessment and enhanced customer due diligence (EDD)
- Ongoing monitoring & STR reporting
- Record keeping
Special Focus Areas in the MLRO Report
An AML Compliance Officer should focus on the following focus areas while preparing the report:
- The focus should be on the conformity of the AML-CFT procedures applied
- Confirmation that the company has applied the results of risk assessment generalised by the competent authority
- The report should contain recommendations to improve the quality of applied measures that would help the company achieve full AML-CFT compliance, a deadline for implementing the improved measures and assess whether the company is seriously implementing the measures
Competent Authorities to Submit the MLRO Report
Financial institutions including banks, insurance firms etc. must submit the MLRO / compliance officer’s report to the Central Bank of UAE (CBUAE). Designated Non-financial Businesses and Professions (DNFBPs) need to submit the report to the Ministry of Economy (MoE). DNFBPs are Auditors, Dealers of Precious Metals & Precious Stones, Real Estate Agents & Brokers, and Trust & Corporate Service Providers.
Consult with the Best AML Compliance Advisers in the UAE
Appointing an MLRO and submitting the MLRO’s report to the competent authority are mandatory requirements for companies under AML-CFT obligation in the UAE. The MLRO report should highlight the deficiencies in the AML-CFT programme and the inadequacy in the AML training given to the employees. Companies that are unaware of preparing proper MLRO reports or providing training to the staff can consult with the best AML compliance advice in Dubai such as Jitendra Chartered Accountants (JCA).
JCA has a team of highly qualified team of AML advisers who can ensure that the companies are complying with the AML-CFT rules. JCA can provide services such as Assessment of money laundering risk faced by the company, Documenting key AML performance & risk indicators, AML penalty appeal services etc.