Anti-Money Laundering (AML) in UAE

DIFC to tackle Money Laundering

Dubai, amongst the most significant financial centers in the Middle East, welcomes a variety of global corporations to the Dubai International Financial Centre (DIFC). From its very establishment in 2004, the DIFC has developed to become one of the finest financial hubs, employing numerous banking and financial organizations. Dubai’s prominence also makes it a desirable prey for fraudsters looking to commit fraud by taking advantage of the emirate’s wealth accumulation.

In the DIFC, the following actions are illegal:

1. Money laundering 

• To act with the aim and awareness that the subject in question is the product of wrongdoing
• Transform criminal funds with the intent of hiding or masking their unlawful origins, or hiding or confusing the source of dirty money
• Obtain, utilize, or hold criminal proceeds
• Assist a money-laundering or criminal offender in avoiding imprisonment

2. Bribing people those who are being investigated for questionable transactions by relevant authorities
3. Financial support for unlawful entities
4. Terrorist support

A severe money laundering violation occurs when an individual:

• performs any of the aforementioned money-laundering acts while knowing that the benefits are partially or entirely held by a terrorist organization/person, or with the aim to sponsor a terrorist organization/person, even if the funds are not intended to be hidden or disguised.
• Offers, gathers, arranges, or receives the illegal activities, explicitly or implicitly, understanding that such profits will be used to undertake a terrorist crime, or to purposefully dedicate such deeds on behalf of a terrorist organization/person while understanding their real intention.

Operations that take place outside of the UAE might potentially be an issue of frustration for DIFC-registered businesses. Legal liability may be imposed on such companies if:

• Any aspect of the money laundering process that took place inside or via the UAE involves the DIFC Company.
• The reward of a money-laundering transaction is generated or was meant to be completed in the UAE, entirely or substantially for the profit of the DIFC firm.
• A culprit assists or participates in a money-laundering offence that takes place completely or partially in the UAE.

Measures to strengthen AML/CFT Programmes

The DIFC has its own regulatory structure in place to deal with the financial issues.  The Dubai Financial Services Authority (DFSA), which is in charge of preventing money laundering and other financial crimes, oversees this framework. As a result, financial institutions doing business in Dubai should be mindful of the financing threats, as well as how to adhere with DFSA laws.

The DFSA mandates that businesses in the DIFC tackle money laundering in a risk-based strategy. In reality, this implies that firms must create an AML/CFT programme that is proportional to the money laundering challenges and incorporates the elements listed below.

• Observation of transactions
  Customers’ activities should be monitored for behaviour that might reveal money laundering, such as activities over a particular limit.
• Checking
  Customers should be screened for negative media coverage and their position as socially exposed individuals, as well as against appropriate international sanctions lists.
• Officer in charge of compliance
  Internal anti-money laundering (AML) programmes should be monitored by a compliance officer who has adequate authority and experience to properly carry out their duties.
• Customer Due Diligence
  Companies should implement the relevant due diligence processes and specify their scope, taking into consideration the numerous risk factors as well as the findings of the national risk management.

When businesses in the DIFC refuse to obey AML/CFT laws, the DFSA has the authority to investigate the violations. As part of the inquiry, the DFSA may pursue a spectrum of information, including acquiring accounts and documents and conducting interviews with workers.  When businesses fail to meet required compliance criteria, the DFSA has the authority to impose penalties such as penalties, license cancellations, or disciplinary actions.

Anti-Money Laundering/CFT Legislation in the UAE

The below state-adopted legislation addresses anti-money laundering and counter-terrorist financing:

• Anti-Money Laundering and Counter-Terrorism Financing Federal Decree-Law No. 20 of 2018
• Federal Law No. 1 of 2004, Decree on Combating Terrorism Offences
• On Anti-Money Laundering and Combating the Financing of Terrorism and illegal Organisations

The statutes listed above describe money laundering, as well as its predicate offences and punishments. Banks and licensed financial institutions (LFIs) must implement the use of Know Your Customer practices when taking on new customers or suffer huge and massive penalties from the Central Bank and other responsible authorities.

AML Compliance Services: Conclusion

The UAE’s Ministry of Economy has created an anti-money laundering (AML) department to supervise the monitoring of anti-money laundering and counter-terrorist financing laws and regulations. The UAE has enacted extensive legislation and is not shying away. The Ministry is planning to develop and execute the Financial Action Task Force’s recommendations in all earnest.