UAE Strengthens Anti-Money Laundering Framework: Key Updates and Amendments

Introduction:

The UAE has reinforced its commitment to combating financial crime with significant updates to its anti-money laundering (AML) legislation. Federal Decree-Law No. 20/2018, which originally established the framework for combating money laundering, the financing of terrorism, and the financing of unlawful organisations, has been significantly amended by Federal Decree-Law No. 26/2021 and more recently by Federal Decree-Law No. 7/2024. These updates enhance financial security and align with international standards.

Key Developments in Anti-Money Laundering Legislation

Federal Decree-Law No. 20/2018 initially laid the foundation for the UAE's AML efforts. However, the complexity and evolving nature of financial crime necessitated further enhancements, leading to the introduction of Federal Decree-Law No. 26/2021. The latest update, Federal Decree-Law No. 7/2024, introduces critical changes that enhance the effectiveness of combating financial crime.

Key Amendments Under Federal Decree-Law No. 7/20241. Formation of the National Committee

The recent amendment to Article 11, effective from July 29, 2024, establishes the National Committee for Combating Money Laundering and the Financing of Terrorism and Illegal Organisations. This high-level committee, chaired by the Governor, will oversee and coordinate national AML efforts.

The Cabinet, based on the proposal from the Minister of Finance, is responsible for the committee's formation. This move aims to consolidate efforts and ensure that the UAE's AML strategies are effectively implemented.

2. Creation of the Supreme Committee

A new addition to the AML legal framework is Article 12 bis 1, which establishes the Supreme Committee for Supervising the National Strategy to Combat Money Laundering and Terrorism Financing. This committee operates under the Presidential Court and is tasked with several key functions:

• The Supreme Committee will study, monitor, and assess the effectiveness of strategies and procedures employed by the National Committee. It will provide recommendations and decisions to enhance the AML framework.
• It will determine the requirements that the National Committee and other concerned entities must meet, supervising their execution.
• The committee will coordinate with relevant entities, ensuring they provide necessary support to the National Committee.
• It will supervise the mutual evaluation process to measure the UAE's adherence to international AML standards.
• The committee will propose draft laws and amendments to existing legislation, submitting these proposals to the Cabinet.
• It will propose necessary financial allocations for federal entities involved in executing the national AML strategy.
• The Supreme Committee may assume other tasks as determined by the Cabinet.

The Cabinet may authorize the Chairman of the Supreme Committee to issue the work system for the committee.

3. Establishment of the General Secretariat

Article 12 bis 2 introduces the General Secretariat of the National Committee. This body will support the National Committee and be led by a Secretary General, who will also serve as the Deputy Chairman of the National Committee and a member of the Supreme Committee. The Secretary General's appointment will be decided by the Cabinet.

Key functions of the General Secretariat include:

• The Chairman of the Supreme Committee will issue decisions to regulate the General Secretariat's structure, powers, and financial and administrative regulations. The Chairman of the National Committee may be authorized to issue some of these decisions.
• The Chairman of the National Committee has the authority to amend the General Secretariat's organizational structure below the level of departments.

New Amendments

These amendments represent a significant step forward in the UAE’s approach to combating financial crime. The formation of the National Committee and the Supreme Committee, along with the establishment of the General Secretariat, creates a structured and coordinated effort to address money laundering and terrorism financing more effectively.

By consolidating oversight and coordination under high-level committees and ensuring robust support structures through the General Secretariat, the UAE aims to enhance the effectiveness of its AML framework. These measures will not only align the UAE’s AML practices with global standards but also reinforce its position as a secure and transparent financial hub.

Conclusion:

The recent amendments introduced by Federal Decree-Law No. 7/2024 represent a significant advancement in the UAE’s fight against money laundering and terrorism financing. The establishment of the National Committee, Supreme Committee, and General Secretariat emphasizes the commitment to strengthening financial crime prevention measures and aligning with international standards.

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Dr. Hassan Elhais is a legal consultant in Dubai, specializing in the drafting of all statements of claim, memos and consultation on litigation of all manner.