Over the years, the UAE has been doubling down on its efforts to combat money laundering and terror financing.
The government has set up courts focused on financial crimes, established an entity that ensures better collaboration between the central bank and other authorities and introduced an array of penalties for anti-money laundering cases.
Earlier this year, global watchdog Financial Action Task Force (FATF) put the UAE under increased monitoring. The Paris-based group is an intergovernmental organisation founded by a G7 initiative to develop policies to combat money laundering.
“Whilst being added to the gray list will be viewed by many as a major blow for the UAE, since the FATF’s warning in 2020, the UAE government has taken numerous affirmative steps to better align with global standards on anti-money laundering and counter terrorist financing,” the Dubai-based head of advisory in financial crime at law firm Al Tamimi & Co, Ibtissem Lassoued, told Bloomberg.
Just recently, the UAE central bank has updated some guidelines to strengthen existing anti-money laundering mechanisms, especially as the country continues to see further economic growth.
“The new guidelines for LFIs is a great step towards securing the UAE banking sector against the ever persistent threat of money laundering,” said Damon Madden, head of business development – fraud, MEASA at ACI Worldwide.
Madden added that increased due diligence measures on politically exposed persons (PEPs), is a “global best practice and the regulation put in place by the CBUAE, align to that best practice.”
The UAE’s commitment to advancing efforts to combat money laundering and counter terrorist financing remains a key pillar underpinning the country’s status as an attractive global business hub that operates in line with international standards.
Here is an overview of UAE’s latest anti-money laundering measures and sanctions:
- UAE imposes $11.2 million in penalties for anti-money laundering cases during first half of 2022
- Gupta brothers arrest part of UAE’s ‘continuous efforts’ to combat money laundering: Authorities
- UAE central bank imposes $1.4 million fine on exchange house as part of anti-money laundering efforts
- UAE judges discuss measures in fight against money laundering crimes
- UAE issues anti-money laundering guide for ‘politically exposed persons’
- UAE renews anti-money laundering vow amid growing payments sector
- UAE targets money laundering in real estate in new regulations
UAE imposes $11.2 million in penalties for anti-money laundering cases during first half of 2022
The UAE’s anti-money laundering enforcement actions have led to imposition of over AED 41 million ($11.2 million) in penalties in the first six months of 2022.
The country’s supervisory authorities have also added financial institutions, dealers in precious metals and stones, real estate, lawyers, accountants and auditors, and trust services providers for risk assessments for crimes related to anti-money laundering and countering financing of terrorism.
These disclosures were made at the 15th meeting of the Higher Committee Overseeing the National Strategy on Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) in Abu Dhabi on Tuesday.
The meeting was chaired by Sheikh Abdullah bin Zayed Al Nahyan, minister of foreign affairs and international cooperation, Wam reported.
Hamid Al Zaabi, director-general of the executive office of AML/CFT said law enforcement agencies continued to enhance money laundering investigations and cooperation with international counterparts, which has led to several successful interceptions of some of the individuals who presented a threat to the global financial system.
Some of the big names who were arrested in the UAE recently included Atul and Rajesh Gupta, the most wanted individuals in criminal and money laundering cases in South Africa, and Sanjay Shah, a suspect in a $1.7 billion tax fraud and money laundering case in Denmark.
Al Zaabi also presented the overall progress on the UAE’s national action plan on anti-money laundering and countering the financial terrorism, which included an increase of over 100 percent in international cooperation and mutual legal assistance cases and requests.
On targeted financial sanctions, Al Zaabi said relevant authorities have enhanced outreach to the private sector in the country to ensure effective implementation of sanctions and to increase their awareness on the matter.
Over 11 outreach sessions were conducted with more than 7,000 participants from the private sector, in addition to issuing of several guidance notes to relevant authorities, he added.
The Higher Committee welcomed the steps taken and the progress achieved by all authorities, which reflects the UAE’s commitment to combating money laundering and terrorist financing.
The Higher Committee was also briefed about a working plan developed by the executive office of AML/CFT in cooperation with the National AML/CFT committee and ministry of foreign affairs and international cooperation and other strategic stakeholders on the submission of the progress report.
Gupta brothers arrest part of UAE’s ‘continuous efforts’ to combat money laundering: Authorities
The arrest of the Gupta brothers, wanted in South Africa for allegedly masterminding the looting of billions, is part of the UAE’s increasing efforts to tackle money laundering, authorities have stated as they consider extraditing the pair.
The two men, who are wanted in South Africa on charges of money laundering and fraud, were detained after Interpol in February placed them on its most-wanted list.
The arrests in June reflect the “continuous efforts” by the UAE to combat money laundering, the Dubai police said in a statement.
Abdullah bin Sultan bin Awad Al Nuaimi, Minister of Justice, said, “The UAE does not rest in preventing international financial crime. The arrest of Rajesh Gupta and Atul Gupta, two individuals wanted by South Africa and pursuant to Interpol’s international Red Notice request, is the latest example of our commitment and sustained efforts to combat illicit finance.
“I am thankful to the UAE authorities who have led this case with expert skill and compiled the requisite evidence to make the arrests possible. The arrests send a clear statement of the UAE’s proactive efforts to work in close collaboration with its international partners and organisations.
This is clearly reflected in the response to the Interpol request for Rajesh Gupta and Atul Gupta, as well as the UAE’s extradition and legal assistance agreements with South Africa, which came into force in July 2021.
“The UAE Ministry of Justice, alongside all competent UAE authorities, is determined to prevent financial crime in all its forms to protect the UAE and uphold the integrity of the global financial system as a top national and international priority.”
The UAE has been increasing its efforts to track the money that enters the country. The Financial Action Task Force, a Paris-based organisation set up by G7 countries to combat money laundering, on March 4 put the UAE on its “gray list” of jurisdictions that it wants to do more in this space.
The UAE has committed to this and has “significantly strengthened” its anti-financial crime framework. South Africa has meanwhile been warned that it will be included on the list unless it tightens up its controls.
UAE central bank imposes $1.4 million fine on exchange house as part of anti-money laundering efforts
The Central Bank of the UAE has imposed a AED5.2 million ($1.4 million) fine on an exchange house in the country for a “weak compliance framework.”
The sanction was imposed after the regulator found that “the exchange house had a weak compliance framework regarding the required due diligence policies and procedures to prevent money laundering and financing of terrorism,” a statement on Wam said.
The move is pursuant to the country’s federal law on anti-money laundering and terror financing – which the central bank has been focusing on in recent years.
The statement said: “The CBUAE, through its supervisory and regulatory mandates, works to ensure that all exchange houses, their owners and staff abide by the UAE laws, regulations and standards adopted by the CBUAE to safeguard the transparency and integrity of the exchange houses’ business and the UAE financial system.”
The bank did not name the fined exchange house, but it said it was operating in the UAE.
UAE judges discuss measures in fight against money laundering crimes
Senior UAE judges have met to support the country’s fight against money laundering and terrorism financing.
The Abu Dhabi Judicial Department (ADJD) held a webinar on the mechanisms needed to combat money laundering and the obligations of legal professionals as part of efforts to strengthen anti-money laundering endeavours in line with the UAE’s drive to reduce financial crimes.
Their aim is to maintain the UAE’s positive reputation worldwide and consolidate its position in the field of financial and commercial control, while reducing abusive or suspicious practices in various business activities.
Counsellor Mansour Al Marzouqi, Chief Justice of the Abu Dhabi Criminal Court, highlighted the importance of reinforcing the anti-money laundering mechanisms to support the fight.
Mohammad Alhassani, Chief Prosecutor at the Major Financial Matters Prosecution, and Head of the International Cooperation Section at the Technical Office of the Attorney General of the Emirate of Abu Dhabi, discussed the challenges and solutions in the fight against money laundering and the local and global obligations.
The forum addressed the nature of money laundering crimes, their elements and historical roots and the role of the business sector in addressing them.
Alhassani stressed the importance of international cooperation in risk identification, policy development and coordination, the prosecution of money laundering, terrorist financing and the application of preventive measures in the financial sector.
Dr. Ridha Khemakhem, Judge at the Abu Dhabi Court of Appeal, reviewed the UAE’s efforts in combating money laundering and the legislative and institutional mechanisms the country has adopted in this regard, as well as the most important international agreements and treaties signed by the UAE.
He also pointed to the sustained efforts to develop the judicial system in the Emirate of Abu Dhabi to deal with these crimes and to prosecute the perpetrators and bring them to justice by taking several measures in cooperation with the relevant authorities through a developed legislative and judicial system.
The measures support the efforts of Sheikh Mansour, Deputy Prime Minister and Chairman of the Judicial Department of Abu Dhabi, who wants to establish a judicial system that enhances the protection of both society and the economy against the effects of crime.
UAE issues anti-money laundering guide for ‘politically exposed persons’
The Central Bank of the UAE (CBUAE) has issued a new guidance on anti-money laundering (AML) and combatting the financing of terrorism (CFT) for licenced financial institutions (LFIs) on risks related to politically exposed persons (PEPs), the regulator announced on Tuesday.
The guidance, which comes to effect immediately, “will assist LFIs’ understanding of risks and effective implementation of their statutory AML/CFT obligations, and takes Financial Action Task Force (FATF) standards into account,” WAM said in a statement, adding LFIs must comply with the regulator within a month.
PEPs and transactions related to them may expose LFIs to a higher risk of money laundering and terror financing, the lender said.
The guidance is set in place to enable LFIs to carry out due diligence on PEPs and their direct family members or close associates.
“We are keen to ensure that all LFIs comprehensively understand their role and responsibilities in mitigating relevant AML/CFT risks and safeguarding the UAE financial system from illicit activities,” CBUAE’s governor Khaled Mohamed Balama said.
Balama added this guidance provides LFIs with further requirements and measures they must fulfil before and after initiating business relationships with PEPs to stay compliant of anti-money laundering.
LFIs providing services to PEPs must develop risk-based policies, the lender said, adding this would ensure accurately identified PEPs or related customers prior to the start of the business relationship, risk rating and applying equivalent customer due diligence.
The regulator also said LFIs must constantly monitor business relationships and maintain a transaction monitoring system in order to track suspicious transactions.
Any unusual activity would then be reported to the UAE’s financial intelligence unit, using the ‘goAML’ portal.
The UAE central also renewed anti-money laundering policies for risks related to payments recently.
UAE renews anti-money laundering vow amid growing payments sector
The Central Bank of the UAE (CBUAE) has issued a new guidance on anti-money laundering (AML) and combatting the financing of terrorism (CFT) for licensed financial institutions (LFIs) on risks related to payments, the regulator announced on Monday.
The guidance, which comes to effect immediately, “will assist LFIs’ understanding of risks and effective implementation of their statutory AML/CFT obligations, and takes Financial Action Task Force (FATF) standards into account,” WAM said in a statement, adding LFIs must comply with the regulator within a month.
The Central Bank has levied a fine on several financial institutions and banks for not complying with the nation’s AML rules over the last few months.
The guidance is set in place to enable LFIs to mitigate risks that would arise from money laundering and the financing of terrorism risks related to payments.
“We are committed to implementing high regulatory control over LFIs and their payment operations, including products, services and exposure,” CBUAE’s governor Khalid Mohammed Balama said.
New payment products and services might bring risks to the financial system because of the rapid movement of funds between payment participants and across borders and LFIs might be exposed to participants licensed by the CBUAE and those operating globally, the regulator said.
LFIs must conduct a regular risk assessment to cover all the payment products, services, relationships and exposure to domestic and foreign payment sector participants.
Suspicious transactions must be reported to the UAE’s financial intelligence unit, the regulator added.
Financial institutions must have a sanctions compliance programme with operational systems that screen transactions and transmit required information throughout the payment cycle.
LFIs must also avoid processing payments for a correspondent unless they are sure that the correspondent conducts proper screening.
These preventive measures should be integrated into the “LFI’s AML/CFT compliance programme and supported with governance and training,” the statement said.
Commenting on the recent changes implemented by the UAE central bank, Chainalysis’ general manager EMEA Bas Lemmens lauded the government’s “clear and commendable stance against money laundering.”
Lemmens added, “the latest announcement concerning licensed financial institutions relating to payment products and services, follows a notice from the Ministry of Economy to real estate agents, gold dealers and corporate service providers regarding their need to register with relevant AML systems.”
Digital assets, such as fiat-backed stablecoins, play an increasing role in the global payments infrastructure, which is why “close attention also needs to be paid to how AML obligations can be met for digital assets, whether stablecoins for payments, or trading in bitcoin and other cryptocurrencies,” Lemmens told Arabian Business.
Lemmens emphasised on the need for such measures as cryptocurrencies are becoming popular among criminals globally. “They [criminals] have laundered an estimated $8.6 billion of cryptocurrency in 2021, an increase of a staggering 30 percent on the previous year. Anti-money laundering is a critical requirement of cryptocurrency if it is to gain acceptance.”
With the UAE implementing several AML rules recommended by the FATF in its efforts to become a “global crypto hub,” Lemmens said this will help combat “nefarious actors from converting questionably obtained cryptocurrencies into real-world fiat money.”
Ratings agency S&P said that the placement of the UAE on FATF’s increased monitoring list, also known as the grey list, is “unlikely to be a significant blow to the country’s economy.”
The firm believes that the listing is unlikely to significantly affect the UAE “because it is a net exporter of capital to the rest of the world and not dependent on external funding.”
For corporates, the agency says that as companies secure most of their lending from the domestic banking system, any additional costs that will come from external debt capital markets will be limited.
“We expect the UAE’s implementation of corporate tax, starting 2023, to increase surveillance and transparency of corporates’ performance and funding sources,” the firm said.
Similarly, S&P believes that the grey listing will also not significantly disrupt the country’s banking sector, with UAE banks possessing “ample margins” to withstand any cost increases.
During the announcement, FATF noted that the UAE had already “significantly strengthened” its anti-financial crime framework.
S&P also noted that over the past few years the UAE had implemented reforms aimed at increasing the supervision of the real estate and precious metals dealers.
“The UAE takes its role in protecting the integrity of the global financial system extremely seriously and will work closely with the FATF to quickly remedy the areas of improvement identified,” the UAE’s Executive Office of Anti-Money Laundering and Countering the Financing of Terrorism said in a statement carried by WAM.
“On this basis, the UAE will continue its ongoing efforts to identify, disrupt and punish criminals and illicit financial networks in line with FATF’s findings and the UAE’s National Action Plan, as well as through close coordination with our international partners.”
UAE targets money laundering in real estate in new regulations
In another major step to wipe out money laundering and terrorist financing, payments for real estate transactions in the UAE through virtual assets, sale of virtual assets, or cash amounts above AED55,000 will now be subjected to additional reporting to authorities.
All real estate agents, brokers, and law firms are now obliged to file reports to the UAE Financial Intelligence Unit (FIU) for purchase and sale transactions of freehold real estate properties including any of the three methods of payment.
The payments methods are:
- Single or multiple cash payments equal to or above AED55,000
- Payments with virtual assets
- Payments where the fund(s) used in the transaction have been derived from a virtual asset
The introduction of new reporting requirements was announced by the Ministry of Economy (MoE) and the Ministry of Justice (MoJ) in partnership with FIU.
It makes UAE one of the first countries to implement such a mechanism for real estate transactions involving virtual assets, and shows the country’s evolving approach to the global fight against money laundering and terrorist financing.
The decision was made following multiple meetings and discussions involving the MoE, MoJ, FIU, and other authorities like the Executive Office for Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT).
Ali Faisal Ba’Alawi, head of the UAE FIU, said: “These new measures will improve the quality of financial intelligence available to the FIU and will be used to trace the suspicious movement of funds or investments as part of our fight against money laundering and terrorism financing.
“Importantly, the requirements further strengthen the stability and integrity of the UAE’s real estate sector and provides all stakeholders with greater transparency in a sector that is a key contributor to the UAE’s economy.”
Abdulla bin Touq Al Marri, Minister of Economy, said the adoption of the highest standards of transparency and governance, in addition to the necessary regulations to ensure economic and financial stability while combating malpractice within the business community, are priorities of the Ministry of Economy and its partners in local, federal, and private sector entities.
Abdullah Sultan Bin Awwad Al Nuaimi, Minister of Justice, added: “The introduction of reporting rules for certain transactions in the real estate sector is another example of how the UAE is coordinating across the government and with the private sector to strengthen the national framework for anti-money laundering and countering the financing of terrorism.”
The agents, brokers and law firms will also need to obtain and record the identification documents of the parties to the applicable transaction. The rules apply to both individuals and corporate entities.
The relevant private sector entities have been informed about the specific requirements in regulatory circulators issued by the MoE and MoJ. The authorities are also collaborating to host three separate workshops with these parties to help guide them through the new requirements and enhance their familiarisation with the FIU’s goAML system.
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