AML and ABC Compliance in UAE

The United Arab Emirates (UAE) has gone ahead to establish robust Anti-Money Laundering (AML) and Anti-Bribery and Corruption (ABC) frameworks as a way of combating financial crime and maintaining its reputation as a leading global financial hub. These are regulations that ensure the financial system in the UAE is not utilized for illicit activities, such as terrorist financing, drug trafficking, and corruption.

Also read: UAE AML/CTF Compliance

What are Anti-Money Laundering (AML) and Anti-Bribery and Corruption (ABC)?

AML (Anti-Money Laundering) means the action of preventing money-laundering practices derived from criminal activities. It includes the identification, prevention, and reporting of suspicious transactions. ABC (Anti-Bribery and Corruption) concerns the prevention and detection of acts of bribery and corruption that may damage the integrity of businesses and governments.

Key AML Regulations in the UAE

The structure of AML in the UAE is based on international standards decided by the Financial Action Task Force (FATF). Some of the main legislative pillars for AML compliance in the UAE include:

1. Federal Decree-Law No. (20) of 2018: The law defines money laundering, creates reporting obligations for suspicious transactions, and outlines measures and sanctions for non-compliance.
2. Cabinet Decision No. (10) of 2019: The decision adopts the detailed implementation regulation that complements Federal Decree-Law No. 20 of 2018 on AML, which helps businesses understand the compliance obligations of businesses under the law.
3. Central Bank Circulars: The Central Bank of the UAE from time to time issues circulars, including Targeted Financial Sanctions to be adopted by financial institutions, in furtherance of UN Security Council Resolutions, hereinafter called TFS.

These frameworks have imposed an obligation on businesses in general, and financial institutions and DNFBPs in particular, toward the adoption of risk-based approaches, customer due diligence, and reporting suspicious activities using the goAML platform maintained by the UAE Central Bank.

Also read: AML CTF Solutions for Accountants and Legal Professionals in UAE

Anti-Bribery and Corruption (ABC) Compliance

The UAE ABC Compliance Law is enacted to counter bribery, corruption, and other forms of unlawful financial dealing. The main legislation governing compliance concerning ABC in the United Arab Emirates is Federal Decree-Law No. 31/2021 on Issuing Crimes and Penalties Law, as amended.

This is a law criminalizing bribery and corruption both in the public and private sectors.

This law criminalizes bribery and corruption in the public and private sectors. It spells out penalties for various offenses related to these crimes. It provides for a wide scope of bribery and corrupt activities, including:

• Bribery of public officials: Offering, giving, accepting, or soliciting bribes by public officials or those entrusted with public service.
• Commercial bribery: Offering, giving, accepting, or soliciting bribes in connection with business transactions.
• Embezzlement: Misappropriating funds or property placed in an individual’s care.
• Fraud: Deceitful practices for the receipt of an undue advantage.
• Money laundering: Conceal or disguise the proceeds of a criminal activity.

The law provides mechanisms for investigating, prosecuting, and punishing offenses relating to bribery and corruption. The responsible authorities are hereby vested with the power to investigate and prosecute, with penalties that include fines and imprisonment in cases where one is found guilty.

Apart from federal law, there might also be specific regulations or guidelines about ABC compliance that a particular emirate issues. For example, Dubai has enacted Dubai Law No. 27 of 2006 of the Department of Human Resources of the Government of Dubai.

Also read: AML in Cryptocurrency in the UAE

Abu Dhabi, on the other hand, has Abu Dhabi Law No. 6 of 2016, certain provisions of which (including Article 53) serve to curb corrupt practices.

Regulatory Authorities and Key Institutions

Several regulatory bodies are responsible for sectoral AML/ABC compliance, which includes:

• Central Bank of the UAE: In charge of monitoring financial institutions and imposing any kind of sanction in cases of non-compliance.
• Ministry of Economy: Establishes necessary controls on DNFBPs, including real estate brokers, dealers of precious metals, etc.
• Securities and Commodities Authority (SCA): Ensures that any anti-money laundering/combating the financing of terrorism policies adopted are complied with in the capital markets.
• Executive Office for Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT): Engages in inter-agency coordination and performs supervisory roles over high-risk sectors.

Accordingly, these authorities have to work together to ensure businesses are transparent and at the same time protect the financial system from crime.

Compliance Obligations for Businesses

1. KYC and Due Diligence: Every financial institution, along with DNFBP, must identify customers and their risk profiling.
2. Suspicious Activity Reporting: Businesses will be obliged to report any suspicious or unusual transaction with no delay using the goAML system.
3. Programs for Employee Training: The organization should make sure that at regular intervals, training programs are imparted to the employees to keep themselves updated on compliance obligations.
4. Business Risk Assessments: Each organization needs to design efficient internal controls that can help them mitigate money laundering and corruption-related risks.

Non-compliance with these requirements may lead to certain penalties, including heavy fines and operational restrictions, among others.

Importance of Compliance

Protection of the Financial System

AML and ABC compliance is important from the point of view of the integrity of the financial system in the UAE. Money laundering and corruption are prevented in the UAE to make sure that the same financial institutions remain safe and sound.

International Repute

Compliance with AML and ABC regulations enhances the reputation of the UAE as an International Finance Centre. Compliance with international standards invites Foreign Direct Investment and promotes economic growth.

Avoiding Penalties

Non-compliance with AML and ABC laws may result in severe punishments, including high fines and even imprisonment. Organizations should be seriously concerned with compliance issues since this would save them from legal consequences and also preserve their operational reputation.

Enforcement and Penalties

The UAE has shown zero tolerance for non-compliance with AML and ABC regulations through proactive monitoring and enforcement actions. In the past couple of years, various organizations have been sanctioned for poor AML controls.

This has brought into focus the application of preventive measures through effective coordination between public and private sectors, combined with robust compliance mechanisms regarding local and international requirements.

In addition, designating financial sanctions prohibits transactions with organizations or individuals associated with terrorism or under UN sanctions for states, and this emphasizes the UAE’s commitment to global financial security.

How Farahat & Co. Can Assist You

Farhat & Co. undertakes a wide range of AML and ABC compliance services continuously, those services being tailored precisely to ensure relevance to the business of our clients.

Our AML professionals at Farahat & Co. will be happy to assist your organization with the regulatory framework in which you operate, the implementation of effective compliance programs, and ensuring your business continues to meet the requirements of relevant UAE laws.

Please contact us today to learn about how we may assist with your compliance program.