Uae Anti-money Laundering Legislation – What You Should Know

By Author: Haroon Juma
Total Articles: 4
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The Anti-Money Laundering regulations governed by the MoF and enacted under Legislation Federal Decree by Law No. (20) of 2018 on Anti Money Laundering and Combating the Financing of Terrorism and Illegal Organizations and 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 organizations, seek to target and combat money laundering crimes and financing of terrorism and illegal organizations.
The legislation introduces a regulatory framework bringing into scope Financial institutions and Designated Non-Financial Businesses and Professions (DNFPBs) to implement new regulations and compliance frameworks necessary to combat money laundering. The implications for affected companies are wide-ranging. In this blog, we answer the key questions to help navigate the key aspects of the legislation.

What are UAE Laws on AML and CFT in the UAE?

Law: Decree 20 of the Federal Law 2018 on countering money laundering offenses, combating terrorist financing, and financing illegal organizations.
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... Executive Resolution: Regulations 10 of 2019 for a decree of federal law No. 20 of 2018 on countering money laundering crimes, combating terrorist financing, and financing illegal organizations.

What sectors are governed by the UAE Central Bank’s AML/CFT regulations?

Originally affecting sectors/individuals in Financial Sectors such as:
Banks, finance companies, exchange houses, money service businesses (including hawaladar or other monetary value transfer services.
The sectors now include Designated Non-Financial Businesses and Professions (DNFPBs) including:
Brokers and real estate agents, dealers of precious metals and precious stones, accountants, auditors, and corporate service providers.

What are the compliance requirements for Anti Money Laundering (AML) and Countering Financing of Terrorism (CFT) in the UAE?

At a central level, the Anti-Money Laundering law mandates the formation of an independent Financial Intelligence Unit (the UAE FIU) within the Central Bank (CBUAE).
This unit is the recipient of Suspicious Transaction Reports (STRs) and related details from all Financial Institutions (FIs) and Designated Non-Financial Businesses and Professions (DNFBPs) for further investigation. In addition, this unit has the responsibility to audit any affected company to assure a satisfactory set of policies, procedures, and training are implemented to manage AML-CFT obligations.
The AML-CFT Law states that FIs and DNFBPs should “identify crime risks within (their) scope of work” and update their risk assessments with regards to the different risk factors.
In the case of high-risk identification, enhanced due diligence will have to be conducted, and in cases wherein low-risk identification is identified, simplified due diligence will do.

What is NAMLCFTC?

Under its obligations under the Financial Action Task Force Standards, the UAE is obliged to identify and assess the money laundering and terror financing risks in its jurisdiction.
As such, The National Committee for Combating Money Laundering and the Financing of Terrorism and Illegal Organisations (NAMLCFTC) oversees the national risk assessment process.

What are the main elements of the UAE’s AML/CFT regulations?

All the requirements of the Financial Action Task Force (FATF) recommendations of 2012 and its methodology are detailed in the prevailing AML Law and AML By-law.
In addition to registering for Anti-Money Laundering, the minimum statutory obligations of supervised institutions are:
• To recognize, evaluate and understand risks specific to its business nature
• Carry out required due diligence work including enhancing KYC
• To appoint a compliance officer to fulfill the needs of the Supervisory Authority and assure compliance to the required procedures
• To ensure that the required management/information systems, internal controls, policies, and procedures are in place across the organization to mitigate and report risks
• To ensure that the indicators to recognize suspicious transactions are in place
• To maintain adequate records and retention for 5 years
How does an organization ensure that it is compliant?

Financial Institutions are required to “maintain a risk identification and assessment analysis with its supporting data.” They can make use of appropriate methodologies to analyze risk, based on the nature and size of their businesses. This can be systemized with the use of technology to support the identification of transactional risks with enhancing KYC compliance procedures.
DNFPBs require equivalent policies and procedures to manage and report risks. This is subject to the size and nature of the organization. Nevertheless, compliance with the Regulations is mandatory with substantial penalties across 26 possible infringements. At a minimum, the detailed statutory obligations must be met or face substantial penalties.
It is strongly advised to ensure you are compliant with the AML/ CFT regulations.

What is Go AML System?

Go AML is an integrated system used by supervisory units to receive, analyze, and distribute suspicious transaction reports quickly and effectively. It has wide-ranging use by many financial information units worldwide. The UAE is the first Gulf country to implement this system.
The go AML system was developed by the United Nations on Drugs and Crime (UNODC) to combat money laundering and terrorist financing.