As part of the measures put in place by the UAE government to combat Money Laundering and Terrorism Financing in the Country, Financial Institutions and Designated Non-Financial Business Professionals (DNFBPs) in the UAE have the responsibility to identify and report suspicious transactions.
Under the Law Designated Non-Financial Business Professions (DNFBPs) are classified as firms that conduct
one or more of the following activities:
- Real Estate agent involved in buying and selling of real estate;
- Dealer of precious metals and stones;
- Company Service Providers;
- Auditors and accountants;
- Law firms.
Thus, the above-listed firms or professionals are required under the UAE AML legislation to report any transaction they reasonably suspect to be a suspicious transaction.
Suspicious Transactions under the UAE AML
Suspicious Transactions have been defined under the Anti-Money Laundering Law as "transactions related to funds for which there are reasonable grounds to suspect that they are earned from any felony or misdemeanor related to the financing of terrorism or of illegal organizations, whether committed or attempted.”
Funds have further been defined as assets in whatever form, whether tangible, intangible, movable, or immovable, including national currency, foreign currencies, documents, or notes evidencing the ownership of those assets or associated rights in any form, including electronic or digital forms or any interests, profits or income originating or earned from these assets
When to Report Suspicious Transactions under the UAE AML
The anti money laundering laws and regulations Law requires that if DNFBPs feel apprehension or mistrust about the transaction, they are to report such transactions as suspicious transactions. These suspicions may be due to the transaction's unusual nature or circumstances; it may also be about a person or group of persons involved in the transaction. Whatever the reasons for suspecting such a transaction as suspicious, the DNFBPs must immediately report the transaction as suspicious transactions to the relevant authority.
Means to detect Suspicious Transactions
The Law requires the DNFBPs to put in place indicators that can be used to identify the suspicion of the occurrence of the Crime in order to report Suspicious Transaction Reports (STRs). They are also required to regularly update these indicators following the development and method used to commit such crimes..
Indicators are red flags that make reporting entity to question the legitimacy of a transaction.
Relevant authority to receive Suspicious Transaction Reports (STRs) under the UAE AML
Once there is a reasonable ground to suspect an entity that a transaction or attempted transaction constitutes crime proceeds, the entity must immediately report to the relevant authority. The authority saddled with the duty to receive Reports of Suspicious Transactions is the Financial Intelligence Unit (FIU). The reporting entity can report Suspicious Transactions to the Federal Intelligence Unit through electronic means or any other means approved by the FIU.
Confidentiality on Suspicious Transaction Reports under the UAE AML
The entities are required to maintain confidentiality with regard to the information. The data reported must not get to the knowledge of an unauthorized person, and the Customer whose transaction has been reported must not be aware that a report has been sent to the Federal Intelligence Unit.
Duties of Federal Intelligence Unit under the UAE AML
In the UAE, the Financial Intelligence Unit is responsible for analyzing suspicious transactions and activities involving money laundering, terrorism financing, or illegal organization. The Federal Intelligence Unit analyses any report of a suspicious transaction obtained from the entity. The Federal Unit also welcomes collaboration with DNFBPs by sharing knowledge and developing shared network platforms to combat money laundering and terrorism financing.
The medium for the submission of Suspicious Transactions Reports (STRs) under the UAE AML Law
All entities in the UAE are required to submit all Suspicious Transaction Reports to the Federal Intelligence Units using the goAML portal.
The Federal Intelligence Unit carries out its analysis duty using an integrated system called the goAML system. The United National Office on Drugs and Crime (UNODC) developed the goAML system to combat money laundering and related crimes. The goAML system receives, analyzes, and distributes suspicious transaction reports in a fast and efficient manner..
All entities in the UAE must submit all Suspicious Transaction Reports (STRs) to the Federal Intelligence Unit using the goAML portal. All entities must register on the goAML portal by the 31st day of March 2021; otherwise, the Ministry of Economics will consider that the entity has contravened Article 20(2) for failing to put procedures in place to report the Suspicious Transactions.
Penalties for violating the provisions of the Law on Suspicious Transaction Reports
Administrative penalties may be imposed on DNFBPs by the Ministry of Economy (MOE) for any violation of the -Law and Regulation. Under the UAE Anti- Money Laundering Law, anyone including DNFBPs managers and employees who fails to report a suspicious transaction is liable to a fine of no less than AED100,000 and no more than AED1,000,000 and/or imprisonment..
Under the UAE AML Law, failure to report suspicions of money laundering or terrorist financing is a criminal offense punishable under the Law.
Exceptions to the Law on Suspicious Transaction Reports
There are some statutory exemptions to Suspicious Transactions Reports on the grounds of professional secrecy for certain professionals. For example, professionals such as lawyers, notary publics, legal stakeholders, and independent legal auditors who got the information in their course of defending or advising their client in a legal proceeding are exempted from reporting the information as Suspicious Transactions.
Furthermore, DNFBPs board members, employees, and authorized representatives shall not be legally liable for any administrative, civil, or criminal liability for reporting to the Federal Intelligence Unit when the information is given in good faith.
If you have questions relating to a Suspicious Transaction Report, contact Farahat & Co. today.
- Cabinet Decision No. 10 of 2019
- التاريخ : 07/11/2007 (economy.gov.ae)
- التاريخ : 07/11/2007 (economy.gov.ae)
- Article 17 of the Cabinet Decision No. 10 of 2019
- Article 16 of the Cabinet Decision No. 10 of 2019
- Article 17 (a) of the Cabinet Decision No. 10 of 2019
- Article 18 of the Cabinet Decision of No. 10 of 2019
- Suspicious Transaction Reports (economy.gov.ae)
- Overview (economy.gov.ae)
- Article 14 of the Federal Decree-Law No. 20 of 2018
- Article 2 of the Federal Decree-Law No. 20 of 2018
- Article 17 (2) (3) of the Cabinet Decision No 10. 0f 2019