ADGM launches report to help mitigate money laundering and terrorism financing risks

Findings of new report will help align the financial centre with the UAE's national risk assessment endeavours

The ADGM is one of the fastest growing financial hubs in the region. Ruel Pableo / The National

The Abu Dhabi Global Market, one of the region's fastest-growing financial hubs, has launched a study that will help it maintain an effective money laundering and counter-terrorism financing (AML/CFT) system within its jurisdiction.

The findings of the inaugural Money Laundering and Terrorist Financing Risk Assessment of ADGM Legal Persons and Arrangements report also help align the onshore financial centre with the UAE's national risk assessment endeavours, the ADGM said in a statement on Thursday.

“We are steadfast in our commitment to combat financial crime and uphold the highest standards of integrity,” said Ahmed Al Zaabi, chairman of the Abu Dhabi Department of Economic Development and the ADGM.

“This assessment not only enhances our granular understanding and detailed knowledge of risks specific to each ADGM legal person and arrangement [LPA] type but also fosters stronger collaboration with regulated entities, regulatory bodies and law enforcement agencies.”

The UAE has passed strict laws to prevent money laundering and the financing of terrorism and has also been cracking down on violators.

Hamid Al Zaabi, director general of the Executive Office for AML/CFT, told state news agency Wam in April that the organisation was working closely with the Financial Action Task Force.

He said the UAE was an important trade and investment hub and the federal government was working closely with authorities across the country and the private sector to ensure that all entities were enacting effective AML/CFT measures.

The in-house model and methodology developed by the ADGM for the report has incorporated best practices derived from FATF recommendations.

It also benchmarked against key international bodies and jurisdictions including the European Commission, the UK, Luxembourg and Ireland.

The model evaluates “threats, inherent vulnerabilities, the probability of exploitation and the effectiveness of mitigating measures for each LPA type”, the ADGM said.

The ADGM's findings are designed to supplement and support the UAE's national LPA risk assessment and the collaborative effort strengthens the country’s AML/CFT framework.

Stakeholders, including financial institutions and designated non-financial businesses and professions, can benefit from the report’s insights to enhance their risk assessments when engaging with ADGM entities.

The insights gained from the assessment will also empower the ADGM, especially the financial centre’s registry staff, to conduct “more effective risk assessments of registration applications and monitor the compliance of existing firms”, it said.

It will also help in further strengthen the ADGM's financial ecosystem through enhanced policies, procedures and controls to manage money laundering and terrorism financing risks within its jurisdiction.

“This assessment will be reviewed and updated periodically with the aim of using the findings as a basis to strengthen knowledge and insights on ML/TF [money laundering and terrorism financing] risks and ADGM LPA vulnerabilities,” the ADGM said.