Gatestone Group


With the ever-increasing importance of combating financial crime globally, the United Arab Emirates (UAE) is at the forefront of implementing robust anti-money laundering (AML) regulations. Recently, the country has seen significant updates to its AML framework. This blog explores the laws that are in effect, who are impacted by them, what the AML authorities demand, and what needs to be prepared from the AML inspections.

AML/CFT legislation in the UAE

Financial terrorism and money laundering are examples of crimes against society and the safety, stability, and integrity of the global financial and economic system. The UAE has implemented AML laws in order to tackle financial crimes, financing of terrorism, and other associated risks to the country.

The law regulating AML and Countering the Financing of Terrorism (CFT) in the UAE is the Federal Decree-Law No. (20) of 2018 On Anti-Money Laundering and Combating the Financing of Terrorism and Financing of Illegal Organisations (the “AML-CFT Law” or “the Law”) and implementing regulation, Cabinet Decision No. (10) of 2019 Concerning the Implementing Regulation of Decree Law No. (20) of 2018 On Anti-Money Laundering and Combating the Financing of Terrorism and Illegal Organisations (the “AML-CFT Decision” or “the Cabinet Decision”).

A thorough AML and CFT program comprising an AML policy for KYC, screening, risk profiling, governance, suspicious transaction report (STR) filing, and other areas must be established by Designated Non-Financial Businesses and Professions (DNFBPs) and Financial Institutions (FIs) in accordance with the UAE’s AML Law. According to the UAE’s AML Law, the anti-money laundering policy, AML processes, and AML standards must be appropriate for the kind and scale of the company.

Who is subject to the AML/CFT compliance law in the UAE?

The AML and CFT regulations apply to the following two categories in the UAE:

Designated Non-Financial Businesses and Professions (DNFBPs), including:

1. Brokers and real estate agents

2. Corporate and trustee services provider

3. Lawyers, notaries, and other legal professions

4. Dealers in precious metals and stones

5. Auditors and accountants

Financial Institutions (FIs), including:

1. Insurance and reinsurance sectors

2. Security and stock brokerage

3. Banking sector

4. Exchange centres

5. Other financial services providers

Checklist to enable DNFBP companies to be prepared for the AML authority inspections

DNFBP must comply with the following steps to avoid AML and CFT irregularities:

General policies and procedures: Every DNFBP company should have maintained updated documents containing the general policies and procedures on AML. The ministries also emphasise to circulate such policies to all employees in the companies.

Internal risk assessment: The ministries in the UAE require all the DNFBP companies to carry out an internal risk assessment to focus on the money laundering risks to their businesses. Such a document should contain the risk categories and should be checked, such as:

1. Customer risk check

2. Delivery channel risk

3. Products, services, and transaction risk

4. Country-wise risk

Governance: The Ministries urge the companies to know whether the higher management is looking after the AML policies in the company. The management also makes sure that they receive the compliance report from the compliance officer on time.

Compliance officer: The ministries instruct the companies to appoint a compliance officer who shall be given full access to the company’s documents, including the financials.

Client’s acceptance and onboarding: Before onboarding the client, the following criteria should be met, such as:

1. KYC compliance

2. Identity verification check

3. Check on sanctions and PEP screening

4. Custom risk assessment

5. Beneficial owner verification

Cash transactions: The ministries have implemented stringent measures to monitor the companies’ use of funds for services. They require special controls and procedures to be implemented for cash transactions. The ministries may ask about the percentage of cash transactions out of the company’s total transactions and the total number of cash transactions valued at more than AED 55,000 during the last 24 months.

Suspicious transaction reporting: The company should comply with the following:

  • Whether the company has registered for the Go AML Platform.
  • Have they submitted any suspicious transaction reports yet? If yes, how many?

Have they documented any red flags or indicators for suspicious transactions? If yes, then this must be reported.

Record keeping: The Ministry is interested in knowing if all local and foreign financial, commercial, and cash transaction records, papers, materials, and data have been preserved for a minimum of five years following the process completion date or the client relationship termination.

Training and awareness: Higher management of the organisation needs to ensure that the AML officer periodically conducts a training and awareness program.

What to expect when the authorities come for a periodic AML inspection?

A delegation from the UAE’s Ministry of Economy visits businesses for recurring AML inspections concerning the execution of AML/CFT protocols. The team does a periodic AML examination to check if the business is complying with the necessary AML and CFT measures.

The notice from the Ministry instructs the businesses to assist the inspection team during their visit. Regarding the execution of Federal Decree legislation No. 20 of 2018 on AML, this notification relates to Federal Decree No. 20 of 2018 and Cabinet Decision No. 10 of 2019. During the inspection, the financial institutions and DNFBPs must accurately complete the checklist and provide a signed copy to the inspection team.

Conclusion

In conclusion, by thoroughly understanding the AML/CFT procedures in place within your company, you demonstrate a strong commitment to upholding the UAE’s AML regulations. The intricacies of AML regulations in the UAE can be overwhelming for businesses.

At Gatestone Group, we empower you to navigate this complex landscape with confidence. Our team of AML experts will help you understand and implement robust AML and CFT procedures, minimising risk and ensuring compliance.

We strive to streamline your operations, ensuring a seamless and secure environment for your business. Contact us today via email at [email protected] or call +971 4 450 1023 for a free consultation with our legal team.

Categories

Get in touch