In its effort to Combat Money Laundering and Terrorism Financing in the Country, the UAE Government has laws and regulations that guide the activities of all persons, whether natural or entities. The Audit Profession/ Business as one of the businesses classified under the Designated Non-Financial Business Profession (DNFBPs) has various roles under the UAE Anti Money Laundering Law to combat money laundering and terrorism financing activities.
Due to the nature of their business of examining accounts, books, records, papers, policies, and procedures of their clients, the Audit professionals are in a unique position to identify potential money laundering risk and detect potentially suspicious activities. It is therefore vital that audit professionals understand their obligations under the Anti Money Laundering Law in UAE.
In this writes up, we shall focus on the responsibilities of Audit professionals under the UAE Anti Money Laundering Law.
Audit professionals perform a variety of roles or functions relating to their activities under UAE audit law, which include;
Audit Professionals, as DNFBPs, are required to fulfill certain obligations, which constitute the basis of an effective risk-based Anti-Money Laundering program. These obligations include:
The UAE Anti Money Laundering Law requires the Audit professionals to identify and assess the Money Laundering and /Financing Terrorism risks to which they are exposed. They are required to put certain factors into consideration when identifying and assessing money laundering risks. Audit business is considered a unique business and Audit professionals carrying out their duties under the UAE Anti Money Laundering Laws are required to approach risk assessment in two perspectives as follows;
While carrying out some roles, Audit professionals may receive money from their clients and carry out valuations on assets or liabilities of a company. Their activities may also include the approval of changes in a company’s capital structure or the payout of dividends, the approval of a write-off of uncollected debts, etc. These roles and more can expose Audit Professionals to money laundering risk; thus, they are required to consider factors such as customer risk, geographic risk, product and services risks, delivery channel risk when performing their risk identification and assessment.
Audit Professionals under the UAE AML are required to consider factors such as
Audit professionals are required to consider the risk factors when performing audit functions on a client’s internal controls on anti-money laundering matters. To mitigate anti-money laundering risks, they are to pay attention to the client’s internal policies, procedures, rules, and governance structures. They are to formulate an effective risk-based approach involving appropriate internal resources such as the Anti-Money Laundering compliance officer, senior management, and a process for the periodic review and update of the risk assessment.
Audit professionals may utilize various methods in assessing money laundering risk, depending on the nature and size of their businesses. Whatever methods they use, either in evaluating their risks or that of the client, should be proportional to the size and nature of the business. They are also required to document the method and the rationale for adopting the method. Audit Professionals should apply it consistently across the related business activities.
In line with the nature of their work, they are required to have robust Customer Due Diligence Measures, whether in connection with their own Anti Money Laundering obligations or connection with the AML obligations of their clients.
Under the UAE Anti-Money Laundering Law, audit professionals are required to conduct background checks on their customers before any business relationship. They are required to get information about their customer’s identities and verify such information using reliable, independent sources.
Audit professionals must have a procedure for screening clients, both old and prospective clients, inclusive of their beneficial owners and their managements against Sanctions Lists.
Auditors are required to pay attention to the register of the true beneficial owner of their clients.
Read more on Beneficial Owner: How to protect Trade Secret in UAE with a Non-Disclosure Agreement
Audit professionals are required to report suspicious transactions to the Federal Intelligence Unit (FIU). Under the UAE Anti-Money Laundering Law, Audit professionals must immediately report any transaction they reasonably suspect is a suspicious transaction to the FIU. They must put in place indicators to help them detect suspicious transactions and are mandated under the UAE Anti-Money Laundering law to register with the goAML. The goAML is the medium through which the Audit professionals can submit their Suspicious Transaction reports to the Federal Intelligence Unit.
To know more about Filing Suspicious Transaction Reports (STRs) by DNFBPs under the UAE Anti- Money Laundering Law
Under the UAE audit law, Audit professionals are required to appoint a compliance officer who shall be competent to carry out his or her role as a compliance offer as spelled out under the UAE Anti–Money Laundering Law.
You need to know the: Roles of a Compliance Officer
Audit Professionals under the UAE Anti-Money Laundering Law are to also comply with the directives of the Competent Authorities of the State in relation to the United Nations Security Council resolutions on sanction list under Chapter VII of the Charter of the United Nations. They are required to register in the automatic reporting system for sanctions lists to obtain automatically and instantly updated lists of targeted financial sanctions from the United Nations Security Council consolidated sanctions lists and domestic terrorism lists.
In conclusion, due to the role of Audit Professionals in the UAE, the Anti-Money Laundering Laws in force in the Country have mandated all Audit Professionals to adhere strictly to the crucial provisions of the UAE audit Laws guiding their businesses to enable them to combat money laundering and terrorism financing risks.
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