Oversight of the UAE’s national risk assessment process is provided by the National Committee to Combat Money Laundering and Financing of Terrorism and Illegal Organizations (NAMLCFTC). In accordance with its obligations under the Financial Action Task Force Standards, the UAE identifies and assesses money laundering and terrorist financing risks.
The Central Bank of the United Arab Emirates (CBUAE) regulates AML controls in the UAE, while the Dubai Financial Services Authority (DFSA) regulates AML controls of organisations based in Dubai International Financial Centre (DIFC). On another hand, the Ministry of Economy is responsible for overseeing AML implementation on all concerned UAE businesses. The AML law names them “Designated Non-financial Business and Professions” (DNFBPs).
What are DNFBPs?
Article 3 of the Cabinet Resolution No. 10 of 2019 concerning the Implementation of the AML Law outlines the definition of DNFBPs. It includes a wide range of activities and sectors such as real estate sales and purchases, precious metals and precious stone dealers, trust and company service providers, auditors, accountants, and lawyers.
DNFBP companies may also be defined as those engaged in certain business activities which are listed on their trade licenses in accordance with the International Standard of Industrial Classification(s) (ISIC). Nevertheless, any company that has a business activity listed on its trade license that matches one of the listed activities on the linked document does not necessarily qualify as a DNFBP. The competent authorities take substance over form into account.
Consequently, the relevant authority will likely consider as DNFBP a business conducting one of the listed activity. To put it another way, The competent authorities adopting a substance over form approach will consider what the business does in practice and not just what is on its license.
UAE’s Latest DNFBP Sanctions Guidance
The Executive Office of the Committee for Goods Subject to Import and Export Control (the “Executive Office”) published updated guidelines in May 2021 regarding AML non-compliance sanctions.
The UAE’s Guidance outlines very important obligations that DNFBPs must adhere to in the course of their operations:
- DNFBPs must receive automatic email notifications by registering on the Executive Office website.
- DNFBPs must carry out Screening checks against the sanctions lists issued by the United Nations and the UAE, including the UAE’s local terrorist list (“Sanctions Lists”). The relevant UAE person in contact directly or indirectly with the customer must screen the mentioned sanctions lists, names of parties to transactions, partners and beneficiaries, individuals, as well as directors and/or agents on the customer’s behalf.
- Apply targeted financial sanctions to individuals and entities listed on one or more Sanctions Lists by freezing their funds and ceasing to make funds available to them. The difference between freezing and rejecting is important. The process of rejecting a fund transfer involves refusing to process the transaction and returning the money to the original owner. A freeze involves the party applying targeted financial sanctions seizing funds and holding them — however, they cannot be made available to the original owner.
- Upon taking any action referred to in (C) above, notify the Executive Office within two business days.
Additional obligations under DNFBPs
DNFBPs have also the following additional obligations:
- Verify the accuracy of the information submitted in cooperation with the Executive Office and the relevant supervisory authorities.
- The implementation of decisions made by the United Nations Security Council and the UAE Cabinet, including the lifting of targeted financial sanctions when necessary.
- Set and implement:
- A system of internal controls and procedures to verify the implementation of the Resolution’s obligations.
- Policies prohibiting employees from telling customers or third parties that they are placed under a targeted financial sanction or any other measure against them.
The UAE has a targeted financial sanctions regime that punishes people violating the regime with prison time or fines of not less than AED 50,000 and not more than AED 5,000,000. DNFBPs can face additional administrative penalties, such as the cancellation of their trade licenses, bans from working in the sector, and restrictions on the right to hold office for any members of their board who violated regulations.
Actions taken by the UAE to combat Money Laundering
The UAE has introduced a number of measures to combat and prevent money laundering in recent months. As part of efforts to strengthen the integrity of Dubai’s financial system, the government established a special investigative court in August 2021. As part of the UAE’s wider stance against crime, the new court will help Dubai combat financial crime, including money laundering.
DNFBPs were detected to have committed 100 violations and have been fined AED5 million in the first half of 2021, according to the Ministry of Economy. The local authority has fined the concerned companies AED50,000 for each violation, or for failing to participate in the approved government systems.
As the Gulf business hub has strengthened its defenses against financial crime, the UAE has introduced strict measures to combat money laundering. UAE authorities continue to crack down on financial crimes after a Dubai Court convicted eight individuals and three companies for breaches of computer security and money laundering amounts amounting to nearly 3.5 million dirhams ($3.81 million).
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