New guidelines were released by the Central Bank of the UAE to assist licensed financial institutions (LFIs) in preventing the financing of terrorism and money laundering.
The Central Bank of the UAE (CBUAE) has updated its anti-money laundering and countering the financing of terrorism (AML/CFT) guidelines to address the risks associated with payments for its licensed financial institutions (LFIs).
The banking regulator stated in a statement on Monday that LFIs, including lenders, are required to create internal policies, controls, and procedures to manage risks related to money laundering and the funding of terrorism.
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LFIs must demonstrate compliance with the agency’s criteria within one month, according to the regulator.
The advice will help LFIs recognize risks and effectively carry out their legal obligations to combat money laundering and the financing of terrorism (AML/CFT), according to the Central Bank.
Additionally, Financial Action Task Force criteria are taken into consideration.
We are dedicated to enacting strict regulatory oversight of LFIs and their payment activities, including their products, services, and exposure, “said Khaled Balama, governor of the UAE Central Bank.
“The new guideline guarantees that all LFIs in the UAE are aware of their AML/CFT obligations and have compliance programs to reduce payment-related risks,” says the statement.”
A monthly risk evaluation of all the payment products, services, connections, and exposure to domestic and international payment sector players is another requirement of the recommendations for LFIs.
The quick transfer of funds between payment participants and across borders could pose dangers to the financial system, and LFIs could be exposed to participants with licenses from the Central Bank of the UAE and those operating internationally, according to the regulator.
According to the Central Bank, financial institutions are in charge of performing due diligence on their clients, keeping an eye on any transactions processed or carried out through LFIs, and alerting the UAE’s Financial Intelligence Unit to any suspicious activity.
Additionally, they ought to have systems in place for sanctions compliance that filter transaction and send pertinent data all the way through the payment cycle.
It advised LFIs to address risks associated with money laundering and the funding of terrorism by adopting a risk-based strategy.
According to a report released this month by research firm Markets and Markets, global money laundering activity is expected to more than double to $5.8 billion by 2027 from an estimated $2.8 billion in that year.
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To combat and end money laundering in the country, the UAE has started a variety of efforts.
In recent months, the Central Bank has punished banks and financial organizations for failing to follow AML regulations.
An exchange house operating in the nation was fined last week by the authorities for not meeting the required standards of AML compliance.
In compliance with the law on AML/CFT and the financing of criminal organizations, it assessed the exchange house a fine of Dh5.2 million ($1.4m).
In the first half of 2022, the UAE’s anti-money laundering task force fined more than Dh41 million in an effort to stop the illegal financial activity.
According to Hamid Al Zaabi, director general of the executive office of AML/CFT, the Emirates’ higher committee in charge of the national policy on AML/CFT has increased its efforts to support requests and situations involving global collaboration and reciprocal legal help.
In order to share information and fight worldwide money laundering and terrorism financing, the Financial Intelligence Unit of the UAE and the China Anti-Money Laundering Monitoring and Analysis Centre teamed up in August of last year.
The Ministry of Economy also asked auditors, gold dealers, real estate brokers, and corporate service providers to register with the appropriate AML system earlier this year to prevent a license revocation.
