In 2018, UAE’s first national assessment on money laundering and terrorist financing identified a number of areas in which the risks of money laundering and terrorist financing are high. Consequently, the Federal Decree-Law No. (20) of 2018 and its Implementing Regulations were introduced. This is the basic legislative framework that criminalizes Money Laundering (ML) and Financing of Terrorism (FT). Earlier, in the year 2000, National Anti- Money Laundering and Combating Financing of Terrorism and Financing of Illegal Organizations Committee – NAMLCFTC was established, headed by the Governor of the Central Bank. It oversees policies and efforts to combat money laundering and counter terrorism financing in the country.
How does the AML/CFT law affect businesses?
The Decree-Law identifies two main categories of entities – Financial Institutions (FIs) and Designated Non-Financial Businesses and Professions (DNFBPs), which are associated with high ML/FT risks.
Based on the AML frawework, see if you fall under any of these two categories.
| Designated Non-Financial Businesses and Professions (DNFBPs) | Financial Institutions (FIs) |
|---|---|
| Real Estate: | Insurance Companies and Brokers |
| Your firm carries out brokerage/agency transactions with customers involving the buying, selling, or leasing of real estate property. | Your Company carries out insurance transactions and is registered under the Insurance Authority as an Insurance company, broker or agent. |
| Audit and Accounting: | Banking services: |
| You are an independent accountant providing services to your customers in relation to purchase and sale of real estate, management of their funds, creating, operating or managing legal persons & similar arrangements,helping them in operation and management of their companies or assisting in selling or buying commercial entities. | You receive deposits and other funds that can be paid by the public including deposits in accordance with Islamic Sharia, provide private banking services, offer any type of credit facilities or provide cash brokerage services or provide virtual banking services. |
| Dealing in precious stones/metal: | Stockbrokers: |
| You deal in precious metals or precious stones, as an intermediate buyer, broker, cutter and polisher, refiner, and/or jewelry manufacturer. | You assist your customers in trading, investing, operating or managing funds, option contracts, future contracts, exchange rate and interest rate transactions, other derivatives or negotiable financial instruments. |
| Providing corporate services to businesses: | Currency exchange: |
| You are acting as an agent in creation of establishment of legal persons or as a director or secretary of a Company, you provide a registered office, work address, residence, correspondence address or administrative address for a legal person or legal arrangement. | You provide currency exchange, money transfer, stored-value facilities or electronic payment for cash, or issue and manage means of payment, guarantees or obligations |
| Providing or supporting trustee services: | Funds and portfolios: |
| You performs work or equip another person to act as a trustee for a direct Trust or act as a nominee shareholder. | You manage funds and portfolios of all kinds, or is involved in the preparation or marketing of financial activities. |
| Lawyers, notaries and legal consultants | Providing other financial services: |
| You assist a customer in preparing or conducting financial transactions in respect of purchase and sale of real estate, management of their funds, creating, operating or managing legal persons & similar arrangements,helping them in operation and management of their companies or assisting in selling or buying commercial entities. | You provide other financial services like marketing financial activities, financial leasing, underwriting of shares or managing saving funds |
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| What should you implement to ensure proper compliance? | What are the penalties for the same? |
|---|---|
| AML Policy Manual | Not having an AML policy manual? |
| Develop and implement a firm-wide AML policy in line with the Decree-Law and other National and International guidelines which is specific to your industry and commensurating with the nature and size of your business. | AED50,000 |
| Know Your Customer (KYC) procedures | Has not implemented KYC procedures? |
| Design and implement a KYC form which is to be filled by customers before establishment of a new relationship. This should gather information about customer’s identity, location of business, financial dealings and beneficial owners. | AED1,00,000 |
| Risk Based Assessment | Not assessing the AML risk of individual customers? |
| Based on the information collected in the KYC form, conduct a risk assessment to identify and classify the AML risk of each customer as ‘High’, ‘Medium’ or ‘Low’. To do this, each area of AML risk as per the relevant framework is to be identified and scored on a numerical scale. A quantitative value of the risk is identified for this exercise. | AED1,00,000 |
| Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD) | Not having documented procedures, not conducting Due Diligence? |
| For each risk category, design and document and plan an appropriate level of due diligence. The purpose of this due diligence is to confirm the identiy, ownership and source of customer’s funds. This is to be conducted either on a specific time or on an ongoing basis according to the identified risk of each customer. | AED 50,000 – 200,000 |
| Screening for Targeted Financial Sanctions | Not screening the customers for sanctions? |
| Screen your customers on the sanctions listings issued by the UN Security Council and UAE’s national list of terrorist on an ongoing basis. If a customer’s details are a ‘confirmed match’, or a ‘potential match’ in a sanction list, then take appropriate meaures as provided in the guidance note issued by the Executive Office of the Committee for Goods Subject to Import and Export Control. | Not screening customers on national and international sanction lists : AED 1,000,000 Not screening for Politically Exposed Persons : AED 100,000 |
| Reporting Suspicious Transactions | Delaying/failing to submit STR? |
| If the staff or management suspect that a customer is initiating a transaction or transferring funds related to any AML/CFT crime, then they have to report it to the Financial Intelligence Unit (FIU) through GoAML portal after following the internal reporting guidelines | AED2,00,000 |
| Records maintenance | Not keeping appropriate records? |
| Maintain all customer records, documents, data and statistics for all financial transactions, commercial and cash transactions for a period of no less than five years from the date of completion of the transaction or termination of the business relationship with the customer. | AED50,000 |
| Training staff | Not conducting staff training on AML? |
| Conduct workshops to train and equip the employees with knowledge to collect KYC requirements, assess the individual customer risk, conduct CDD and report suspicious transactions. Document the training session for future reference | AED50,000 |
| Appointment of Money Laundering Reporting Officer (MLRO) | Failure to appoint MLRO |
| Appoint an MLRO with appropriate competencies, experience and qualification for supervising the AML functions in the organisation. | AED50,000 |
How can we assist?
Working with Evas International to design and implement an AML system in line with the regulatory framework, presents you with the opportunity to tap into specialist skills where your functions can be performed more efficiently. We will assist you in
- Preparation of an AML Policy and procedure manual
- Analysing customer onboarding forms, preparation of a Risk Assessment Matrix suiting the size and inherent risks of your organisation
- Preparation of addendum documents
- * Group wide policy for conducting Customer Due Diligence
- * KYC manual
- * Manual reference for handling customers identified as Politically exposed persons (PEP)
- * Manual for targeted financial sanctions
- * Manual for conducting non-face to face transactions
- * Suspicious Transactions/Activity reporting Manual
- * Internal STR filing formats
- * Employee Codes of Conduct with respect to AML reporting
- Trainings to staff, board and senior management
- Assistance in Implementation of the framework in your organisation
- Providing continuous updates on the documents
- Weekly review of the compliances and suggesting suitable courses of action.
- Conducting an AML compliance health check, identifying gaps and suggesting changes