The UAE tightens measures to combat money laundering and terrorist financing

The Central Bank of the Emirates announced the issuance of new guidelines to counter money laundering and combat the financing of terrorism, for licensed financial institutions that provide their services to businesses that use cash heavily.

And the Emirates News Agency (WAM) stated on Sunday that licensed financial institutions must “demonstrate compliance with the requirements of the Central Bank within one month of the entry into force of these guidelines, which started as of September 28, 2021.”

She explained that demonstrating compliance "will contribute to increasing the awareness of licensed financial institutions and broadening their awareness and knowledge of the requirements for implementing legal obligations related to effectively combating money laundering and combating terrorist financing."

The agency quoted Central Bank Governor Khaled Muhammad Balama as saying, "These new guidelines confirm our commitment to applying the highest regulatory standards to licensed financial institutions and their dealings with businesses that use cash heavily, and to complement the UAE's path to actively participate in international efforts to counter money laundering and combat financing terrorism".

He added, "We will continue our efforts to issue similar regulatory guidelines to ensure enhancing the efficiency and robustness of the banking and financial system in the country and in line with the Financial Action Task Force (FATF) standards."

The new guidelines identified businesses that use cash heavily, as businesses that receive large-scale cash flows within different industrial sectors, such as retail and wholesale trade, travel and transportation, and in some aspects, they may be businesses that involve money carriers, cash deposits, currency exchange and cross-border cash movement, in activities Money laundering or terrorist financing and illegal organization financing.

The guidelines require authorized financial institutions that provide their services to cash-intensive businesses, "to adopt a risk-based approach in their anti-money laundering programs, by evaluating all clients of these firms to determine the degree of risk associated with them."

The Guidelines mandate appropriate customer due diligence measures, which include identification of customers and beneficial owners, understanding the nature of their business, and ongoing monitoring of the business relationship.

Financial institutions are required to obtain appropriate information regarding the source of cash deposited in the customer's account, and authorize the use of the Emirates ID for cash deposits at ATMs.

It must also maintain transaction monitoring systems equipped to identify patterns of unusual and potentially suspicious activities, as it must report any suspicious behavior that may be linked to money laundering, terrorist financing or criminal offenses, by submitting a report of suspicious activities or transactions directly to the Information Unit The state finances using the "goAML" portal.

It is worth noting that the UAE, which has Dubai as the financial center in the Middle East, has worked over the past years to overcome the perception that it is a hot spot for illegal money.

Last August, the Dubai Government Media Office announced that the emirate had established a court specialized in money laundering crimes, in a move to enhance the integrity of the financial system. Last February, the government established the Executive Office for Combating Money Laundering and Terrorist Financing.