AML in the UAE: Why Ongoing Monitoring is Important for your Business?

With advancements in technology and evolving regulatory updates, businesses find it tough to ensure they have taken robust ’Know Your Customer’ measures irrespective of the nature of the business. You may have performed Customer Due Diligence (CDD) during the customer onboarding however, are you sure the one-off KYC process is enough to safeguard your business from the risk of money laundering and financing of terrorism?

You need to adopt a robust ongoing monitoring program to ensure compliance with Anti Money Laundering and Combatting Financing of Terrorism (AML-CFT). AML consultants in Dubai can advise you on implementing an effective ongoing monitoring policy within the organisation. Here is everything you need to know about the significance of the AML-CFT ongoing monitoring program:

A Brief Intro For Ongoing Monitoring

Financial institutions and Designated Non-financial businesses and Professions (DNFBPs) are exposed to a high level of money wandering risks due to the nature of their business. DNFBPs include real estate agents, dealers in precious metals and precious stones, auditors, and trust & corporate service providers. They are at constant risk as they conduct high-value transactions and deal with entities or individuals who may be Politically Exposed Persons (PEP) or sanctioned.

The risk profile is high in such cases as the customers use fund transfers and invoices to carry out illegal activities. They may also conceal sources of funds to launder money. The customer profile and business activities of such entities constantly change, which means a one-off KYC check won’t suffice. Financial Institutions and DNFBPs must use ongoing monitoring as part of CDD to avoid exposure to such high-risk entities. Ongoing monitoring saves them from reputational damage and non-compliance.

What Does Ongoing Monitoring Involve?  

Ongoing monitoring is required to verify whether the customer’s profile and business activities are consistent with the risk assessment made at the time of onboarding. An ongoing monitoring process helps you to periodically review the changes in the PEP status, sanctions and adverse media reports. You can screen customers against dynamic global databases to check for any changes in client risks and exposure.

Moreover, ongoing monitoring is a compliance requirement in the UAE as per Federal Decree by Law No (20) of 2018 on Anti-Money Laundering and Combatting the Financing of Terrorism (AML-CFT). AML consultants in the UAE can help you with the process. Conducting ongoing monitoring in your organisation involves the following processes:

  • Identifying the objective and nature of changing business relationships and record-keeping
  • Reassessment of risk associated with customers in terms of activities, transactions geographies, and updates to the PEP and Sanctions database
  • Determining whether the customer profile matches with the KYC and customer risk assessment

Why Do You Need Ongoing Monitoring?

If your business activity falls under DNFBPs or Financial institutions, You will be required to implement a robust ongoing monitoring program. You will be required to ensure many important things such as keeping track of the changing risks, being on top of the compliance requirements and avoiding exposure to financial crime and administrative penalties. A robust ongoing monitoring program will help you achieve these goals and ensure business health. Ongoing monitoring is critical for the following purposes:

Keep Track of Changes in Customer Profiles

Customer profiles are dynamic and may change in tandem with time. A customer of good reputation with whom you have done business for a long time may turn into a PEP at any time. He may become a PEP by winning an election for a political post or by being appointed to a global banking outfit. One of your customers may get listed on the Targeted Financial Sanctions (TFS) watchlist or get featured in adverse media reports. Such events may drastically change your customer’s profile, which requires you to review risk assessments.

Exposure to High Risk or Sanctioned Countries

Most countries, including the UAE, have a list of sanctioned organisations or individuals with whom you should not engage in any business relationship. However, some countries may not get featured on such watchlists but are at a higher risk of money laundering and terrorism financing. Such countries are usually vulnerable to internal conflicts, constantly changing governments, lack of regulation and corruption. You need to enforce a special ongoing monitoring program to save your business from the risk of money laundering or terrorism financing.

Risk Assessments of Business Relationships 

Doing business with PEPs or their close associates, customers on a TFS a watchlist or belonging to a high-risk industry or sanctioned country, are considered as high risk. You need to enhance your ongoing monitoring with up-to-date data to check your customers for risk exposure.

How can Jitendra Chartered Accountants Help You?

Compliance requirements for high-risk industries and high-risk countries keep evolving and businesses need to keep track of them. Financial institutions and DNFBPs can seek the help of the best AML consultants in Dubai such as Jitendra Chartered Accountants (JCA)  to adopt a robust ongoing monitoring approach. JCA’s highly qualified AML experts can help you to meet the CDD requirements in tune with the UAE AML-CFT Law and regulations.