AML/CFT Compliance

AML/CFT Compliance

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About AML/CFT Compliance Services

About AML/CFT Compliance Services

UAE’s strong commitment to adopt the finest international business practices has no limits. In April, 2020 the Financial Action Task Force (FATF) issued a Mutual Evaluation Report (MER) on the UAE’s compliance level with the FATF 40 recommendations and the level of effectiveness of the existing compliance system. The evaluation also aimed in identifying the threats, vulnerabilities and emerging risks in the UAE’s financial sector. Pursuant to this Central Bank of UAE(CBUAE) established a dedicated wing to handle all Anti-Money Laundering and Combatting the Financing of Terrorism issues.

Scope

  • Money Laundering: In simple terms, the act of concealing the identity of the original source of illegal funds and then making it appear as derived from a legitimate source.
  • Financing Terrorism: The act of funding or financing any terrorist organisations/activities.

Applicability of the AML/CFT Framework?

OBLIGATIONS UNDER AML/CFT FRAMEWORK

  • Appropriate internal policies, procedures and controls to identify and mitigate the risk of ML/FT crimes. This includes:
    • Conducting customer due diligence: FI & DNFBPs should undertake CDD measures in the following cases:
      • Establishing business relationships
      • Carrying out occasional transactions with a customer for amounts >= AED 55,000
      • Carrying out occasional wire transfers of amount >= AED 3,500
      • Suspicious transactions
      • Where there are doubts about the adequacy of previously obtained customer data
      • Establishing adequate KYC procedures to identify the customer and assess the risk
    • Screening of your customers: Identify if your customer falls under the sanction list issued by the United Nations Security Council or any local list. Both lists can be accessed from UAEIEC.GOV.AE. Entities should also subscribe to the UN & Local Sanction mailing list to receive updates.
    • Risk based profiling of your customers: Entities should categorize their customers based on the following risk factors:
      • Customer risk: Enterprise level / Business relationship specific
      • Geographic risk
      • Product, service, transaction value risk
      • Delivery channel related risk
      • Other factors as considered appropriate for the entity
Financial Institutions
Designated Non-Financial Businesses and Professions (DNFBPs)
Receiving deposits and other funds
Brokers and real estate agents
Private banking services
Dealers in precious metals and precious stones
Currency exchange and money transfer services
Providers of corporate services and trusts
Providing credit facilities of all types
Independent legal Professionals and accountants
Currency exchange and money transfer services
Providers of corporate services and trusts
  1. Enhanced Due Diligence: Once customers are categorized based on risk, enhanced due diligence should be done for customers under the High-risk category including Politically Exposed Persons (PEPs). Special approval from senior management should be taken for transactions with customers in this category. A well-set KYC policy helps identify if a particular customer needs EDD.
  2. Suspicious Transactions Reporting: Any suspicious transactions should be reported to the Financial Intelligence Unit (FIU) without any delay.
  3. Record Retention: All the relevant records, documents, and supporting documents should be retained for a minimum period of 5 years so as to enable the authorities to trace and identify any crimes under AML/CFT.
  4. Appoint an AML/CFT Compliance Officer: This is crucial to setting up an effective AML/CFT overseeing framework. The compliance officer shall be in-house employed or outsourced. It’s the duty of the compliance officer to report any crimes of money laundering or terrorism financing, manage the AML/CFT governance in the organization, and provide appropriate training and awareness to the management and employees.
Fines & Penalties :

A list of penalties has been issued by the supervisory authority ranging between AED 50,000 to AED 5,000,000.

RED FLAG INDICATORS FOR SUSPICIOUS TRANSACTIONS
A general guidance to identify suspicious transactions include:
  • No economic purpose to the transaction
  • Geographic location of the customer
  • The channel through which the transaction is routed
  • Inability of the customer to give required information or documentation or explain a particular transaction
  • Deposits immediately followed by withdrawals
  • Using a single bank account for multiple businesses
  • Unusual forms of payments like use of traveler’s cheques
  • Unusual payment terms
  • For DPMS: Where trading is happening in large volumes with countries which are not part of a specific precious metals and stones pipeline
  • Details of the transaction are different from details in the commercial invoice
  • Mortgages are repaid quickly without appropriate explanations
  • If the collateral provided for a transaction is located in a high–risk country or owned by a high-risk organization

What Expert CA can do for you?

  • Compliance Assistance including notifying relevant updates and guiding to adhere to the same.
  • Registration on GoAML Portal.
  • Know your Customer checks.
  • Gap Assessment and providing periodic review.
  • Provide periodical MLRO Report.
What Expert CA can do for you?

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