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21.09.2020

AML Regulation in the UAE

Eliminating ML/FT risk in the UAE

Daniel Doerr

Co Founder

21 September 2020, 12:17

Tagline

Eliminating ML/FT risk in the UAE

UAE Regulatory Landscape Key Take Aways AML breaches & Sanctions Good Reads

UAE Regulatory Landscape

In the past years, the UAE has made significant improvements to its AML/CFT system. The UAE has demonstrated a high-level commitment to better understand and mitigate its money laundering/terrorist financing.

The Dubai Financial Services Authority (DFSA), the Abu Dhabi Financial Services Regulatory Authority (FSRA), have developed a detailed understanding of ML/TF risk.

The Framework in the UAE (Picture)

Free zones: Constitutional separation of jurisdictions for commercial laws in financial free zones.
Financial free zones: DIFC Authority – commercial licensing, corporate filings and data protection. DFSA – financial services regulation .

DIFC: Established in 2004, the DIFC is home to companies of banking and financial institutions and has, since its inception, grown to become one of the top financial centers in the world.

Important Regulators:

1. UAE Securities & Commodities Authority

2. UAE Central Bank

SARs must be submitted to the DFSA:

In discharging its regulatory mandate, the DFSA has a statutory obligation to pursue the following objectives.

To foster and maintain fairness, transparency and efficiency in the ﬁnancial services industry (namely, the ﬁnancial services and related activities carried on) in the DIFC.
To foster and maintain conﬁdence in the ﬁnancial services industry in the DIFC.
To foster and maintain the ﬁnancial stability of the ﬁnancial services industry in the DIFC, including the reduction of systemic risk.
To prevent, detect and restrain conduct that causes or may cause damage to the reputation of the DIFC or the ﬁnancial services industry in the DIFC, through appropriate means including the imposition of sanctions.
To protect direct and indirect users and prospective users of the ﬁnancial services industry in the DIFC.
To promote public understanding of the regulation of the ﬁnancial services industry in the DIFC.
To pursue any other objectives as the Ruler may, from time-to-time, set under DIFC Law.

Key Take Aways

The main risks faced by the UAE are at the moment a wide range from: terrorist financing, and a range of ML activities including professional third-party money laundering, cash-based money laundering, abuse of legal persons, trade-based money laundering and the laundering of proceeds, particularly from foreign predicate offences including fraud, tax offences and organised crime.

AML breaches & Sanctions

Under the federal AML laws, directors and managers of companies can face criminal, civil and regulatory actions, while companies can face criminal fines, and civil and regulatory actions.

General sanctions for criminal breaches of AML laws

Persons found to have committed a criminal offence under the federal and DIFC AML laws may:

Be fined between AED100,000 and AED50m, depending on whether an aggravating factor applies or if the offence is carried out by an individual or corporate.
Be imprisoned for between six months and 10 years, or even receive a life sentence, depending on any aggravating factors; and
Have their business licence(s) suspended or removed.

Federal AML law also allows for the confiscation of assets, travel bans and, in the case of crimes committed by a foreigner, deportation/restriction of freedom.

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