In order to meet international AML/CFT standards UAE has introduced Federal Decree-law No. (20) of 2018 (the “AML Law”) and identified 4 key players those are dealing with the matters related to this regulation in UAE. Below are the authorities responsible for dealing with the matters related to this regulation.
Ministry of Economy – having Anti-money laundering department
Abu Dhabi Court – dealing with money laundering and tax evasion
Executive office of Money Laundering and Counter Terrorism financing
UAE Central Bank. - For financial institutions
Money Laundering
Money laundering is an act of engaging wilfully with the full knowledge that funds are the proceeds of a felony or a misdemeanour and thereby transferring or converting the proceeds or conducting any transactions with an aim of concealing the true nature, source or location of the proceeds including the methods of disposition or movement and with respect to the ownership rights with respect to the said proceeds. This includes the act of acquiring, possessing or utilizing the proceeds on receipt and assisting the perpetrator of the original offence to get away from the punishments.
Financing Terrorists
Involving in the activity of money laundering with the knowledge that the proceeds are partly or wholly owned by a terrorist, terrorist organisation or person or intended to use for financing a terrorist, terrorist organisation or act of terrorism. This includes the activity of assisting, facilitating, collecting, preparing or receiving the proceeds or facilitating to obtain through third parties with an intention to use them, or while knowing that such proceeds will be used in whole or part of the commitment of an act of terrorism or committing such acts on behalf of a terrorist organization or a terrorist person being aware on their true nature or purpose.
Reporting obligation on suspicious transactions
It is obligatory and duty bound to report to the authoritiesif knowledge, suspicion or reasonable cause to suspect that a transaction involves money laundering or that certain funds received from the proceeds of crime, related to a crime, or shall be used in the commission of crime.
Duty bound to report to FIU (Financial Intelligence Unit) in UAE in case if we have knowledge about the suspicious transactions described above.
Reporting System
UAE has introduced goAML, an electronic system operated by the Financial Intelligence Unit (FIU) of the UAE Central Bank wherein all relevant persons will need to report suspicious activities directly to FIU.
Who has to register in goAML portal?
Article 3 of Cabinet Decision 10 of 2019 (AML Regulations), issued under the AML Law, requires the following business and professions to register on GoAML by 31 March 2021:
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Brokers and Real Estate Agents – who conduct operations on behalf of customers with regard to sale and purchase of real estate.
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Dealers in Precious Metals and Precious Stones who are carrying out transactions in excess of AED 55,000/-.
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Lawyers, Notaries, and Other Independent Legal Professionals, Legal Consultants and Independent Accountants who are conducting financial transactions with regard to the purchase and sale of real estate, management of funds owned by the Customer, management of bank accounts, etc.
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Corporate Service Providers, who act as agents in the set up or incorporation of legal persons, forming of trusts, foundations and other fiduciary style relationships, provide services to act as professional director or secretary of a company, act as a nominee shareholder in favour of another person, etc.
Newly issued Penalty List for AML and CFT violations
Cabinet Resolution 16 of 2021 (31-01-2021) introduced 26 (!) additional administrative penalties for DNFBPs in, among others, the following cases:
1. Failure to take simplified (client) due diligence measures to manage low risk.
2. Failure to take the necessary measures to understand the nature of the client's business, the ownership structure of his business, and the extent of the client's control over it.
3. Failure to appoint a compliance officer.
Applicable fine: AED 50,000
1. Failure to specify and assess the risks that may arise in one’s business when services are developed.
2. Failure to take or maintain appropriate due diligence measures in relation to new or existing client relationships.
Applicable fine: AED 100,000
Failure to notify the Financial Intelligence Unit of a suspicious transaction report when taking due diligence measures is impossible.
Applicable fine: AED 200,000
Failure to take measures related to customers listed on Sanctions List prior to or during business relationship.
Applicable fine: AED 1 million
Administrative Penalties for DNFBPs (Designated Non-Financial Business and Professions)
Violation of the AML Law by DNFBPs is further subject to the following administrative penalties: Warnings;
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Administrative penalties of no less than AED 50,000 and not exceeding AED 5 million; Banning the violator from working in the sector for a specified period;
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Suspension or cancellation of License.
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Constraining the powers of company’s board members, supervisory or executive management members,
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Managers or owners in case of proven responsibility for violations;
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Arresting the aforementioned persons in case of proven responsibility for violations.
Compliance Requirements
1. Risk Assessment.
2. Policies and procedures.
3. Due-diligence – Requirements.
4. Reporting tipping off.
5. Awareness and training.
6. Audit.
7. Book keeping/maintain Records related to the transactions.
Action required and key takeaways
1. Mandatory Registration to the goAML portal system by DNFBPs.
2. Registration for Financial Intelligence Unit or “FIU” (goAML) and Committee for Commodities Subject to Import and Export Control system (Automatic Reporting System for Sanctions Lists).
3. Appointing a Compliance Officer by DNFBPs.
4. Implementing due diligence measures.
5. Reporting suspicious transactions ➢ Register goAML. ➢ Prerequisite for submitting STR.
6. Register in reporting system for sanctions list.
We are happy to offer the assistance and guidance for clearing the issues related to the implementation of AML & CFT issues in UAE including the assistance for registering goAML online portal for meeting the reporting requirements.