UAE Central Bank issues new anti-money laundering guidelines

Licensed financial institutions required to develop internal policies to manage risks related to payments

The Central Bank of the UAE has mandated banks and financial institutions to develop policies, controls and procedures to manage risks linked to money laundering. Photo: Central Bank of the UAE
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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.

Updated: May 30, 2023, 12:17 PM