UAE: A New Resolution On Anti Money Laundering

On 28 January 2019, Ministry of Cabinet Resolution accompanying the enforcement of Anti-Money Laundering Law and combatting financial terrorism and illegal organizations, Federal Decree-Law Number 20 of 2018 (hereinafter referred as AML Law), promulgated Cabinet Resolution Number 10 of 2019 for implementing the provisions of AML Law (the Resolution). The Commercial Lawyer of Dubai a have witnessed numerous improvement in the AML provisions outlined explicitly in this article.

The new Resolution has initiated an approach to ascertain risk whether high or low. Accordingly, financial institutes and DNFPB (Designated Non-financial Businesses and Professions) are required to conduct money laundering risk assessment. Pursuant to Article 5 of the Resolution, each financial institution and DNFPB are under an obligation to perform Customer Due Diligence (CDD) to ensure or substantiate the identity of the customer prior to establishing any business relationship or opening a bank account. In addition to this, it is compulsory for the all financial institution to perform CDD for all transaction exceeding AED 55,000 or any online transfer exceeding AED 3,500. The institutions should conduct extensive CDD for apprehended Money laundering risk. It is further possible under the Resolution to appoint third parties to perform CDD on behalf of the institution. Nevertheless, the procedure can be avoided for any ultimate beneficial owner or shareholder of a listed company or any subsidiary company of any holding company.

The definition of Political Exposed Person (PEP) earlier include the individuals who have been entrusted with a significant position in functions of UAE or any other state, however, under the new Resolution, PEP includes UAE nationals as well and can be subject to money laundering assessment if they highlight high risk. Additionally, any new technological product or business strategy, prior to introducing in the market shall be assessed for any money laundering risk.

A non-exhaustive list of activities carried out by financial institutes has been issued along with the new Resolution which can possibly include further amendments by the UAE regulators. It is important for all financial institutions or DNFPB to disclose all high-risk money laundering activities to the Financial Information Unit (FIU) for their scrutiny and to publish in the list of Money laundering activities. An important obligation has been imposed on all the companies registered in UAE to maintain all relevant information of the company enabling the institute to conduct CDD and simultaneously, to provide such information to Department of Economic Development (DED).

Another significant provision in the Resolution is regarding the license requirement for all the companies providing Money & Value Transfer services (MVTS) and an obligation to confer with AML obligations. Wherein, MVTS is defined as any service undertaken by the company which involves accepting cash or any other monetary instrument or any payment of subsequent cash to the beneficiary through various electronic means such as message, transfer or communication.

In a nutshell, the Top Lawyers of Abu Dhabi would advise all our readers to:

1. Adhere with AML obligations and the subsequent Resolution to avoid any penalties;
2. To inspect the current compliance in accordance with the compliance guidelines provided by the Law;
3. Amend any procedures or practices which are in direct conflict with the AML laws;
4. To conduct proper CDD and to ensure that the information provided by the client is sufficient and satisfy AML laws.

Awatif Mohammad Shoqi Advocates & Legal Consultancy is a full-service law firm in UAE committed to delivering sound judgment to its clients on their most difficult and important matters.