The United Arab Emirates introduced a new Federal Decree-Law to amend provisions of the existing law on anti-money laundering and combating the financing of terrorism on Sunday.
The move aims to strengthen the country’s legal framework and align it with international standards in the ongoing battle against illicit financial activities. This comes almost six months after the UAE was removed from the Financial Action Task Force’s grey list.
“These amendments are in line with the UAE’s ongoing efforts to develop its legislative and legal system, aiming to further strengthen the country’s legal framework in support of the authorities’ efforts to combat financial crimes,” said Lily Eid, Money Laundering Reporting Officer at BSA Ahmad Bin Hezeem & Associates.
Key changes to the law
The new legislation introduces several important changes to the UAE’s anti-money laundering and counter-terrorism financing framework.
Establishment of new committees:
- The National Committee for Anti-Money Laundering and Combating the Financing of Terrorism and Financing of Illegal Organisations
- The Supreme Committee for the Oversight of the National Strategy for AML and CFT
Creation of a General Secretariat:
- To support the operations of the National Committee
- Headed by a Secretary-General who will also serve as Vice-Chairperson of the National Committee and a member of the Supreme Committee
Enhanced coordination and oversight:
- Clear mandates for improved collaboration among Financial Institutions (FIs), Designated Non-Financial Businesses and Professions (DNFBPs), and other key players
- Improved information sharing and simplified reporting processes
Alignment with international standards:
- Focus on meeting international recommendations and treaties
- Oversight of the Mutual Evaluation Report development
- Implementation of new measures to protect the local financial ecosystem
UAE sets up new committees
“This newly established body, formed by a Cabinet decision, will play a central role in the UAE’s strategy for combating financial crimes. It is responsible for developing and implementing comprehensive AML and CFT strategies, ensuring that all relevant entities in the UAE align with both national and international standards,” said Eid.
The Supreme Committee issues decisions and guidelines based on its evaluations, Eid explained, ensuring that AML and CFT strategies are implemented effectively across all relevant entities.
“It oversees the development of the Mutual Evaluation Report, which assesses the UAE’s compliance with international standards and monitors the implementation of necessary recommendations,” she added.
Enhanced coordination and oversight
One of the primary objectives of the new law is to improve coordination between relevant entities in the UAE’s fight against financial crimes. The creation of these committees is expected to significantly enhance collaboration among key players in the financial sector.
“By setting clear mandates and providing oversight, these committees will ensure that Financial Institutions (FIs), Designated Non-Financial Businesses and Professions (DNFBPs), and other key players work together seamlessly,” Eid said.
“They will also improve information sharing, simplify reporting processes, and promote consistent implementation of anti-money laundering and counter-terrorism financing strategies across all sectors.”
The law also stipulates the creation of a General Secretariat to support the operations of the National Committee. “The Secretary-General acts as a key connector between the National Committee and the Supreme Committee, ensuring that the Supreme Committee’s decisions and directives are implemented,” she added.
Aligning with international standards
A crucial aspect of the new law is its focus on aligning the UAE’s practices with international standards and recommendations. This alignment is vital for maintaining the country’s reputation as a reliable financial centre and for facilitating international cooperation in the fight against financial crimes.
“By proactively amending its laws to address emerging threats and align with international best practices, the UAE underscores its commitment to maintaining a robust and adaptive legal framework,” Eid said.
“The establishment of the National and Supreme Committees, along with the introduction of innovative standards, further advances the country’s efforts to protect its financial ecosystem and maintain compliance with international standards.”
The law specifically mandates the oversight of the development of the Mutual Evaluation Report, which assesses the UAE’s compliance with international AML and CFT standards. This focus on international alignment demonstrates the UAE’s commitment to playing a leading role in global efforts to combat financial crimes.
The new law is expected to have far-reaching implications for financial institutions and other entities operating in the UAE. These organizations will need to adapt to new reporting requirements and ensure compliance with the enhanced AML and CFT framework.
“Financial institutions and DNFBPs should closely monitor the implementation of this new law and prepare to adjust their compliance programs accordingly. The establishment of these new committees may lead to more stringent oversight and potentially increased reporting obligations,” said Eid.
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