THE NATIONAL STRATEGY ON AMLCFT OF THE U.A.E IS BASED ON FOUR PILLARS WITH ITS OWN STRATEGIC PRIORITIES
- Legislative & Regulatory Measures
Increase effectiveness and efficiency of legislative and regulatory policies and ensure compliance
- Transparent Analysis of Intelligence
Leverage the use of financial databases and the development of information analysis systems to enhance the transparent analysis and dissemination of financial intelligence information
- Domestic and International Cooperation & Coordination
Promote the efficiency and effectiveness of domestic and international coordination and cooperation with regard to the availability and exchange of information
- Compliance and Law Enforcement
Ensure the effective investigation and prosecution of ML/FT crimes and the timely implementation of TFS
APPLICABILITY
- All Designated Non-Financial Businesses and Professions, and the members of their boards of directors, management and employees.
- Auditors and accountants;
- Lawyers, notaries and other legal professionals and practitioners;
- Company and trust service providers;
- Dealers in precious metals and stones;
- Real estate agents and brokers;
- Any other DNFBP not mentioned above
HIGHLIGHTS OF KEY PROVISIONS AFFECTING DNFBPS
A) SUMMARY OF MINIMUM STATUTORY OBLIGATIONS OF SUPERVISED INSTITUTIONS
- To identify, assess, understand risks
- To define the scope of and take necessary due diligence measures
- To appoint a compliance officer, with relevant qualification and expertise and in line with the requirements of the relevant Supervisory Authority
- To put in place adequate management and information systems, internal controls, policies, procedures to mitigate risks and monitor implementation
- To put in place indicators to identify suspicious transactions
- To report suspicious activity and cooperate with Competent Authorities
- To promptly apply directives of Competent Authorities for implementing UN Security Council decisions under Chapter 7 of the UN Convention for the Prohibition and Suppression of the FT and Proliferation
- To maintain adequate records
B) CONFIDENTIALITY AND DATA PROTECTION
- DNFBPs are obliged to report to the UAE’s Financial Intelligence Unit (FIU) when they have reasonable grounds to suspect a transaction or funds representing all or some proceeds, or suspicion of their relationship to a Crime
- In reporting their suspicions, they must maintain confidentiality with regard to both the information being reported and to the act of reporting itself, and make reasonable efforts to ensure the information and data reported are protected from access by any unauthorised person.
- DNFBPs, or their managers or employees, permitted to inform a Customer or the representative of a Business Relationship, either directly or indirectly, that a report has been made, under penalty of sanctions
- DNFBPs are not permitted to object to the statutory reporting of suspicions on the grounds of Customer confidentiality or data privacy, under penalty of sanctions
- Under specific circumstances, the AML-CFT Law and the AML-CFT Decision provide an exemption to the statutory reporting obligation on the grounds of professional secrecy for DNFBPs that are “lawyers, notary publics, other legal stakeholders and independent legal auditors” who have obtained the information during the course of advising or defending their customers against legal or judicial proceedings
C) PROTECTION AGAINST LIABILITY FOR REPORTING PERSONS
- Protection from any administrative, civil or criminal liability resulting from their good-faith performance of their statutory obligation to report suspicious activity to the FIU
- This protection is also applicable if they did not know precisely what the underlying criminal activity was, and regardless of whether illegal activity actually occurred
D) STATUTORY PROHIBITIONS
DNFBPs are prohibited from the following activities:
- Establishing or maintaining any Customer or Business Relationship, conducting any financial or commercial transactions, keeping any Business Relationship under an anonymous or fictitious name or by pseudonym or number;
- Establishing or maintaining a Business Relationship or executing any business dealing in the event they are unable to complete adequate risk-based CDD measures in respect of the Customer for any reason;
- Dealing in any way with Shell Banks, whether to open accounts with them for their Customers or to facilitate any banking transactions for themselves or on behalf of their Customers;
- Invoking banking, professional or contractual secrecy as a pretext for refusing to perform their statutory reporting obligation in regard to suspicious activity;
- Facilitating issuance of bearer shares or bearer share warrants.
E) MONEY LAUNDERING
The AML-CFT Law defines money laundering as engaging in any of the following acts wilfully, having knowledge that the funds are the proceeds of a felony or a misdemeanour (i.e., a predicate offence):
- Facilitating the transfer or movement of proceeds or conducting any transaction which results in concealing or disguising their Illegal source;
- Concealing or disguising the true nature, source or location of the proceeds as well as the method involving their disposition, movement, ownership of or rights with respect to said proceeds;
- Acquiring, possessing or using proceeds upon receipt;
- Assisting the perpetrator of the predicate offense to escape punishment.
F) PREDICATE OFFENCES
A predicate offence is therefore any crime, whether felony or misdemeanour, which is punishable in the UAE, regardless of whether it is committed within the State or in any other country in which it is also a criminal offence
- Top threats – Fraud, counterfeiting and piracy of products, illicit trafficking in narcotic drugs and psychotropic substances, and professional third-party money laundering.
- Medium-high threats – Insider trading and market manipulation, robbery and theft, illicit trafficking in stolen and other goods, forgery, smuggling (including in relation to customs and excise duties and taxes), tax crimes (related to direct taxes and indirect taxes), and terrorism (including terrorist financing)
G) FINANCING OF TERRORISM & ILLEGAL ORGANISATIONS
H) THE ML PHASES
The crime of money laundering is consisting of three distinct (though sometimes overlapping) phases:
- Placement– In this phase, criminals attempt to introduce Funds or the Proceeds of Crime into the financial system using a variety of techniques such as Blending of funds, Purchasing of foreign exchange with illegal funds, Currency smuggling, Repayment of legitimate loans using laundered cash etc.
- Layering– In this layering phase, criminals attempt to disguise the illicit nature of the Funds or Proceeds of Crime by engaging in transactions, or layers of transactions, which aim to conceal their origin by Converting the cash placed into monetary instruments, Reselling high-value goods, Investing in legitimate businesses, Using shell companies to obscure the ultimate beneficial owner and assets etc.
- Integration– In this phase, criminals attempt to return, or integrate, their “laundered” Funds or the Proceeds of Crime back into the economy, or to use it to commit new criminal offences, through transactions or activities that appear to be legitimate.
I) SANCTIONS AGAINST PERSONS VIOLATING REPORTING OBLIGATIONS
The AML-CFT Law provides for the following sanctions against any DNFBPs, their managers or their employees, who fail to perform, whether purposely or through gross negligence, their statutory obligation to report a suspicion of money laundering or the financing of terrorism or of illegal organisations:
- Imprisonment and fine of no less than AED100,000 and no more than AED1,000,000; or
- Any of these two sanctions.
The AML-CFT Law provides for sanctions against anyone who warns or notifies a person of a suspicious transaction report or reveals that a transaction is under review or investigation by the Competent Authorities, as follows:
- Imprisonment for no less than six months and a penalty of no less than AED100,000 and no more than AED500,000; or
- Any of these two sanctions
IDENTIFICATION AND ASSESSMENT OF ML/FT RISKS
- Risk-Based Approach (RBA)
An RBA to AML/CFT means that DNFBPs should identify, assess and understand the ML/TF risks to which they are exposed and take AML/CFT measures commensurate to those risks in order to mitigate them effectively
- Assessing Business-wide Risks
- Risk Factors
- Customer Risk
- Geographic Risk
- Product-, Service-, Transaction-Related Risk
- Delivery Channel-Related Risk
- Assessing New Product and New Technologies Risks
- Risk Assessment Methodology and Documentation
ML/TF business risk assessment allows for a systematic categorisation and prioritization of inherent and residual ML/FT risks, which in turn allows DNFBPs to determine the types and appropriate levels of AML/CFT resources needed for mitigation purposes.
- Risk Assessment Methodology
- Documentation and Updating
MITIGATION OF ML/FT RISKS
Both the AML-CFT Law and the AML-CFT Decision provide that DNFBPs may utilize a risk-based approach with respect to mitigation of ML/FT risks.
- Internal Policies, Controls and Procedures
- Customer Due Diligence (CDD)
AML/CFT ADMINISTRATION AND REPORTING
Role of the Financial Intelligence Unit
- Receiving and analysing STRs from FIs and DNFBPs, and disseminating the results of its analysis to the Competent Authorities of the State;
- Receiving and analysing reports of suspicious cases from the Federal Customs Authority;
- Requesting additional information and documents relating to STRs, or any other data or information it deems necessary to perform its duties, from FIs, DNFBPs, and Competent Authorities, including information relating to customs disclosures;
- Cooperating and coordinating with Supervisory Authorities by disseminating the outcomes of its analysis, specifically with respect to the quality of STRs, to ensure the compliance of FIs and DNFBPs with their statutory AML/CFT obligations;
- Sending data relating to STRs and the outcomes of its analyses and other relevant data, including information obtained from foreign FIUs, to national Law Enforcement Authorities, prosecutorial authorities and judiciary authorities when actions are required by those authorities in relation to a suspected crime;
- Exchanging information with its counterparts in other countries, with respect to STRs or any other information to which it has access.
