Recent years have seen significant strides taken by the United Arab Emirates (UAE) to strengthen its legal and regulatory framework in combatting money laundering (ML), terrorism financing (TF), proliferation financing (PF) and other forms of financial crime. Recent changes to relevant laws have increased coverage of regulated entities while prompting businesses to become more familiar with their obligations.
Historically, regulated companies consisted of financial institutions, insurance companies and banks; however, due to recent amendments to anti-money laundering (AML) laws, more obligations have been extended to designated nonfinancial businesses and professions (DNFBPs), such as lawyers, accountants, real estate brokers, dealers in precious metals and corporate service providers.
To ensure compliance, new authorities have been charged with monitoring DNFBPs’ reporting and registration requirements, including lawyers and notaries registering with the Ministry of Justice as well as businesses registered with the Ministry of Economy for most other businesses. Furthermore, over the last three years, both Executive Office for Control & Non Proliferation (EOCN) and the National Anti-Money Laundering and Combatting Financing of Terrorism and Financing of Illegal Organizations Committee (NAMLCFTC) were established resulting in more frequent inspection visits as well as training sessions for businesses.
Companies operating in the UAE must now take steps to comply with AML, CTF, PF and sanctions policies. These steps include:
- Regular risk evaluations should be undertaken, at least every year or when introducing new products and services, to create policies specific to their business and client base
- Implement effective Know Your Customer (KYC) procedures that include an organized framework for rating client risk and collecting any necessary documentation
- Establishing an Anti Money Laundering Reporting Officer (MLRO) or Compliance Officer can assist organizations with ensuring adherence to laws and regulations as well as communicating with relevant authorities
- Training team members on the importance of tracking and reporting any suspicious transactions are paramount to their safety and the success of your business
As compliance operations become more sophisticated and costly, businesses should dedicate a specific budget for compliance activities. Acknowledging and fulfilling AML/CTF/PF and sanctions obligations promptly is crucial; any delays could cause increased costs and difficulties in the long run.
Businesses must embrace emerging technologies for KYC and screening purposes, particularly artificial intelligence compliance solutions that help companies reduce human errors while streamlining operations and accessing cutting-edge technologies.
Businesses operating in the UAE must take compliance obligations seriously and be cognizant of any associated risks, particularly penalties and fines that may ensue from breaches. Penalties or fines aside, breaches can have devastating repercussions for partnerships, banking relationships and the ability to access funding as well as retain clients.
