Targeted Financial Sanctions in the UAE: How Entities Should Conduct Screening?

The UAE is updating regularly its Local Terrorism List in line with the UAE’s resolution to combat the financing of terrorism. As per Cabinet Resolution, No 74 of 2021, every financial institution and Designated Non-Financial Businesses & Professions (DNFBPs) are required to screen daily their customers based on the Local Terrorism List and the UN list.

The Cabinet Resolution No 74 of 2021 deals with Targeted Financial Sanctions (TFS), which refers to asset freezing and other financial prohibitions, to curb funds or other assets from being made available, directly or indirectly, for the benefit of listed individuals, groups and entities. The UAE has also issued a guideline for helping the businesses efficiently screen the customers and determine whether they are in the UN List or Local Terrorism List.

Based on the guideline, this article sheds light on how the entities under obligation should conduct the screening to meet the TFS requirements. Keep reading.

Primary Requirement for TFS Screening 

As per the TFS guidelines, the companies under obligation must carry out ongoing and daily checks to identify possible matches with names listed in the Sanctions Lists as per the UN List or the UAE Local Terrorist List. Companies under obligations include financial institutions and DNFBPs like auditors, real estate agents, dealers of precious metals & precious stones and trust & corporate service providers.

When to Conduct Initial Screening?

The companies must conduct the initial screening before the onboarding of a customer and/or facilitation of an occasional transaction. After that, the screening must be done daily at the company’s initiative. The UN and the UAE continuously update the Sanctions List and the institutions must check the Executive Office’s website and the UN website online for the updated list.

Recommended Databases for Screening

To companies under obligation should check the following databases to conduct the TFS Screening:

1. Existing customer databases
2. Names of parties to any transactions
3. Potential customers
4. Beneficial owners
5. Names of individuals or entities with direct or indirect relationships with them
6. Customers before conducting any transactions or entering a business relationship with any Person
7. Directors and/or agents acting on behalf of customers (including individuals with power of attorney)

How to identify a match to apply Targeted Financial Sanctions?

The entities should screen their customers daily for possible matches to the Local Terrorist List or UN List. The Sanctions List contains a lot of information to help the institutions identify a listed individual or entity. The information may include:

1. Name or Names
2. Aliases
3. Address of Registration ( for entities)
4. Address of branches ( for entities)
5. Date of birth (for individuals)
6. Nationality (for individuals )
7. ID or passport information (for individuals)
8. Last known address ( for individuals)
9. Other Information

Potential Matches, Confirmed Matches 

While carrying out the TFS screening, you may encounter three possibilities: a potential match, a confirmed match or a false positive. A potential match is when there is any match between data in the Sanctions Lists with any information in your databases. Stumbling upon a potential match doesn’t mean the individual or entity you have screened is subject to TFS.

A confirmed match is when a potential match has been confirmed to be the individual, group or entity subject to TFS or when there is any doubt, indication, or suspicion that the potential match may correspond to an individual, group or entity subject to TFS.  In that case, you must implement the freezing measures without delay, refrain from offering any funds or services, and notify the relevant Supervisory Authority and the Executive Office within two business days from taking any freezing measure and/or attempted transactions.

If you are satisfied that the individual or entity with a potential match is not subject to TFS, you do not need to implement any measure, you may allow the transaction or business to continue its normal course, and you are required to maintain evidence of this process in their records.

How can Jitendra Chartered Accountants Help you?

Complying with TFS requirements is mandatory for both financial institutions and DNFBPs. Such businesses can’t afford to be non-compliant with the regulations on account of the hefty fines and risk of reputation damage.

This demands assistance from AML consultants in Dubai such as Jitendra Chartered Accountants (JCA). JCA has a team of qualified professionals who are well-versed in AML-CFT laws and regulations. JCA can advise the organisations on how to comply with TFS requirements and help with sanction screening. Consult with JCA today to avoid penalties and reputation damage.