A Guide to AML Regulations for Virtual Assets Service Providers in UAE

Virtual Assets Service Providers are required to comply with the regulations of the Anti-Money Laundering and Combatting Financing of Terrorism (AML-CFT) in the UAE. The recent growth in demand for virtual assets such as cryptocurrencies (Bitcoin, Ethereum etc.) has elevated concerns about the risk of money laundering in this sector. In the wake of the new AML-CFT compliance requirement, Virtual Assets Service Providers (VASPS) can consult with AML consultants in Dubai to ensure compliance.

Before consulting with AML advisors in Dubai, it is advisable for the VASPS to have a basic awareness of the compliance requirements they are subject. In this article, we will take you to the basic tenets of AML-CFT compliance for VASPS in the UAE. Keep reading for more valuable insights:

What are Virtual Assets in the UAE?

As per the Federal Decree-Law No. (26) of 2021, virtual assets are a digital representation of the value that can be digitally transferred and can be used for payment or investment purposes and otherwise specified in the Executive Regulations of the Decree Law. Bitcoin, Ether, Dogecoin, and Stablecoins are some of the most commonly used virtual assets across the world including in the UAE. AML consultants in Dubai can help you determine whether your business is within the scope of this business.

Who are Virtual Assets Service Providers in the UAE?

Virtual assets such as cryptocurrencies are impacting the global financial sector including the UAE. The increased momentum in Virtual Assets has also spurred the need for intermediaries who support and facilitate crypto transactions. Such intermediaries are commonly termed as VASPs. As per the Federal Decree-Law No. (26) of 2021 and the FATF regulations, VASPs are licensed individuals or legal persons that practice as a commercial business one or more activities or operations for the benefit of or on behalf of their clients for any of the following activities:

  1. The exchange between virtual assets and fiat currencies
  2. Exchange between one or more types of virtual assets
  3. Transfer of virtual assets (transfer means to perform a transaction on behalf of another individual or legal person that moves a virtual asset from one virtual asset address or account to another)
  4. Safekeeping or management of virtual assets or instruments that enable control over virtual assets
  5. Participation in and provision of financial services related to an issuer’s offer and/or sale of a virtual asset

How can Virtual Assets Providers comply with UAE’s AML-CFT Obligations?

As per the regulations of AML in the UAE, VASPs fall within the category of Financial Institutions. This means VASPs are required to meet all the current UAE AML-CFT obligations that apply to financial institutions. VASPs can consult with AML consultants in Dubai to properly meet these critical AML-CFT requirements. The key AML-CFT obligations for VASPs in the UAE are given below:

  • VASPs must identify risks associated with any Money Laundering and Financing of Terrorist & Illegal organisations (ML/FT) activities
  • VASPs licensed in the UAE are required to implement a Risk-based Approach and apply an appropriate level of risk reduction measures within the organization
  • VASPs need to develop internal policies, controls, and procedures and carry out AML-CFT training programs
  • VASPs in the UAE are required to perform conduct customer due diligence taking into the risk factors that include but are not limited to its client and transactions
  • Most importantly, VASPs operating in the UAE are required to regularly comply with all the AML-CFT rules, guidelines, and circulars issued by the Supervisory and Regulatory Authority

Consequences of Not Complying With AML-CFT Regulations

Many VASPs fail to comply with the UAE AML-CFT requirements due to a lack of awareness about their obligations. However, you can’t cite the lack of knowledge of laws as an excuse as non-compliance leads to severe consequences and hefty AML penalties in the UAE. The AML Regulatory Authorities have the power to periodically investigate to determine whether VASPs are complying with their AML/CFT obligations.

The consequences and penalties for AML non-compliance in the UAE include warnings and administrative penalties between AED 50,000 and AED 5,000,000 for each violation depending on the severity of the violation, cancellation of trade license etc. However, AML consultants in Dubai can help you to avert the possibility of incurring AML-related penalties.

Consult with the Best AML Consultants in Dubai, UAE

VASPs now require professional 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