The Central Bank of the UAE issued new guidelines to help licensed financial institutions (LFIs) to combat money laundering and terrorism financing on risks related to payments.
LFIs, including lenders, are obliged to develop internal policies, controls and procedures to manage risks linked to money laundering and the financing of terrorism, the banking regulator said in a statement on Monday.
The regulator requires LFIs, within one month, to demonstrate compliance with its requirements.
The guidance will assist LFIs in understanding risks and the effective implementation of their statutory anti-money laundering and combating the financing of terrorism (AML/CFT) obligations, the Central Bank said.
It also takes Financial Action Task Force standards into account.
“We are committed to implementing high regulatory control over LFIs and their payment operations, including products, services and exposure," said Khaled Balama, governor of the Central Bank of the UAE.
“The new guidance ensures that all LFIs in the UAE understand their AML/CFT responsibilities and have compliance programmes to mitigate payment-related risks."
The guidelines also require LFIs to conduct a regular risk assessment to cover all the payment products, services, relationships and exposure to domestic and foreign payment sector participants.
“New payment products and services might bring risks to the financial system because of the rapid movement of funds between payment participants and across borders, and LFIs might be exposed to participants licensed by the Central Bank of the UAE and those operating globally," the regulator said.
Financial institutions are responsible for conducting due diligence on customers, monitoring all transactions processed or conducted through the LFIs and reporting suspicious transactions to the UAE’s Financial Intelligence Unit, the Central Bank said.
They should also have a sanctions compliance programme with systems that screen transactions and transmit required information throughout the payment cycle.
“LFIs should take a risk-based approach to mitigate and manage money laundering and the financing of terrorism risks,” it said.
Globally, money laundering activity is projected to more than double to $5.8 billion by 2027 from an estimated $2.8bn in 2022, research company Markets and Markets said in a report this month.
The UAE has announced various measures to fight and prevent money laundering in the country.
The Central Bank has fined financial institutions and banks for not complying with AML rules in the past few months.
Last week, the regulator penalised an exchange house operating in the country for failing to achieve appropriate levels of compliance with AML.
It imposed a fine of Dh5.2 million ($1.4m) against the exchange house in accordance with the law on AML/CFT and the financing of illegal organisations.
The UAE's anti-money laundering task force imposed fines of more than Dh41m in the first six months of 2022, as it continues to rein in illicit financial activity.
The Emirates' higher committee overseeing the national strategy on AML/CFT also doubled its efforts to assist in international co-operation and mutual legal assistance cases and requests, Hamid Al Zaabi, director general of the executive office of AML/CFT, said last month.
Last August, the UAE’s Financial Intelligence Unit joined forces with the China Anti-Money Laundering Monitoring and Analysis Centre to exchange information and help crack down on global money laundering and terrorism financing.
Earlier this year, the Ministry of Economy also urged real estate agents, gold dealers, auditors and corporate service providers to register with the relevant AML system to avoid revocation of licences.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Abu Dhabi GP starting grid
1 Lewis Hamilton (Mercedes)
2 Valtteri Bottas (Mercedes)
3 Sebastian Vettel (Ferrari)
4 Kimi Raikkonen (Ferrari)
5 Daniel Ricciardo (Red Bull)
6 Max Verstappen (Red Bull)
7 Romain Grosjean (Haas)
8 Charles Leclerc (Sauber)
9 Esteban Ocon (Force India)
10 Nico Hulkenberg (Renault)
11 Carlos Sainz (Renault)
12 Marcus Ericsson (Sauber)
13 Kevin Magnussen (Haas)
14 Sergio Perez (Force India)
15 Fernando Alonso (McLaren)
16 Brendon Hartley (Toro Rosso)
17 Pierre Gasly (Toro Rosso)
18 Stoffe Vandoorne (McLaren)
19 Sergey Sirotkin (Williams)
20 Lance Stroll (Williams)
Results
Stage 4
1. Dylan Groenewegen (NED) Jumbo-Visma 04:16:13
2. Gaviria (COL) UAE Team Emirates
3. Pascal Ackermann (GER) Bora-Hansgrohe
4. Sam Bennett (IRL) Deceuninck-QuickStep
5. Caleb Ewan (AUS) Lotto Soudal
General Classification:
1. Adam Yates (GBR) Mitchelton-Scott 16:46:15
2. Tadej Pogacar (SLO) UAE Team Emirates 0:01:07
3. Alexey Lutsenko (KAZ) Astana Pro Team 0:01:35
4. David Gaudu (FRA) Groupama-FDJ 0:01:40
5. Rafal Majka (POL) Bora-Hansgrohe
