It is a financial disclosure and transparency law, conceived as a tool to help the U.S. government crack down on tax evasion by U.S. taxpayers who hold investments in offshore accounts. The UAE has become a FATCA partner which mandates , financial institutions across the country to comply with additional reporting obligations, to the Ministry of Finance and the IRS
UAE passed a cabinet resolution that requires entities in UAE to disclose its beneficial owners to the Regulators. Such disclosure is intended to enhance transparency of entities registered in the state and ultimately build a reliable database containing ownership details for UAE based entities
The Regulation require UAE onshore and free zone companies and certain other business forms that carry out any of the defined “Relevant Activities” to maintain and demonstrate an adequate “economic presence” in the UAE relative to the activities they undertake (“Economic Substance Test”). The application of the regulations must be assessed for each entity each year.
The AML law introduced several concepts recommended by the Financial Action Task Force (FATF) designed to enhance UAE’s effectiveness in identifying and preventing attempts at money laundering and terror financing. Risk based assessment, proper transactions monitoring, ensuring the legal source of money, identifying the ultimate beneficiary owners, having stringent policies and procedures, staff training, suspicious transactions report filing etc. are some of the important features to be followed by the organizations. Professional Firms are also coming under the purview of the AML requirements.