AML Compliance UAE | Transactions Monitoring in the UAE

Introduction

New guidelines have been issued by the Central Bank of the United Arab Emirates (CBUAE). They cover AML transaction monitoring procedures and screening sanctions for its license financial institutions (LFIs). Throughout the guide, LFIs are encouraged to understand and effectively comply with their statutory AML/CFT responsibilities.

On September 13 2021, the CBUAE compliance requirements for LFI came into effect. It is now required for LFIs to demonstrate compliance within one month of the effective date.

Transaction Monitoring

Transaction monitoring in banks and other financial firms are required to follow the guide by the Central Bank of the United Arab Emirates (CBUAE) for the AML Compliance UAE. As a result of a successful transaction monitoring program, LFIs are able to

• identify aml transaction monitoring red flags,
• investigate those cases, and
• report suspicious transactions,
• adhering to the legal and regulatory framework in the UAE, and
• ensuring that their customers and transactions are within their risk appetites. 

The effectiveness of transaction monitoring is directly related to obtaining information about the types of transactions in which the customer normally engages. This also includes – but is not limited to – customer due diligence (CDD) and know your customer (KYC) measures. 

A Transaction Monitoring program should include the following elements: 

1. A well-calibrated risk-based framework
   
2. Robust training and risk awareness
   
3. Meaningful integration into the AML/CFT program
   
4. Active oversight

Sanction Screening

In accordance with the guidelines for AML Compliance UAE, LFIs must establish and maintain an effective transaction monitoring and sanction screening program. This includes a well-calibrated risk-based framework, active board supervision, and employee training and awareness. Additionally, LFI should ensure that its systems for monitoring transactions and screening sanctions are continuously improved according to its risks. Independent testing, verification, and auditing of the system, as well as the monitoring and screening models, should take place.

Programme Governance and Oversight

To keep money laundering and terrorist financing risks under control, LFIs are required to formulate internal policies, procedures, and control measures suited to its nature and scale. These must be approved by the senior management team. Besides developing indicators to detect suspicious transactions and activities, LFIs are responsible for reporting them to the UAE Financial Intelligence Unit.

Furthermore, before any transaction or entry is made, LFIs are required to regularly review its database and transactions based on names published in lists by the UN Security Council and its affiliated bodies (UN Consolidated List) and the UAE Cabinet (UAE List of Local Terrorists). A customer can be established as a client, whether it is a single individual or a business.

Conclusion

Software programmes, such as the one created by DX Compliance, uses the most effective technology to irradiate human error within AML. An effective transaction monitoring program enables LFIs to detect, investigate and report suspicious transactions. The solution is designed and structured based on the CBUAE guide to ensure the highest levels of security for LFIs and their customers. 

Read more about the Central Bank Guideance here.

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