The Government of Dubai launched a new law on VARA (Virtual Assets and Related Activities). The principles offer complete detail on the Virtual Asset (VA) Framework. These regulations have been designed on cross-border financial security and economic sustainability values.
CRM (Compliance and Risk Management) Rulebook offers a complete procedure to Audit Your Virtual Asset Holdings. This rulebook helps VASPs (Virtual Assets Services Providers) to handle and conduct audits effectively and efficiently.
Also read: Guide to VARA Audit in Dubai
What Are the Key Compliance Obligations to Conduct an Audit of VA Holdings As per VARA?
Some important Compliance Requirements to conduct a VARA audit in Dubai of Your Virtual Asset Holdings are;
| Obligations | Details |
| Registration | Registration is a main Key Compliance Obligation. I usually depend on your role such as VA transactions or exchanges. In any case, you may essential to register as a VASP with VARA. |
| Tax implications | It is very essential to be aware of tax implications related to VA holdings. It guarantees audit reports obey all the applicable tax regulations. |
| Record-keeping | Record-keeping is one of the major obligations to conduct an Audit of VA Holdings as per VARA. It is essential to keep comprehensive records of all VA transactions, such as amounts, counterparts, dates, and wallet addresses. |
| Audit Frequency | It is fundamental to obey all the VARA's stated audit frequencies based on your Virtual Assets holding size. |
| AML/ KYC Procedures | Implementation of strong AML/ KYC procedures is important for several reasons such as transaction monitoring, identity verification, and reporting to VARA. |
| Reporting to VARA | Last but not least obligation is to submit periodic reports, such as financial statements and transaction logs, to VARA according to their requirements. |
What Is the Process to Audit Your Virtual Asset Holdings As per VARA?
VARA compliance audit comprises thorough planning and implementation. The step-by-step process VARA audit in Dubai is as per VARA is;
Preparation
The first phase follows the following steps for Preparation such as;
Plan the drive of the audit clearly, whether for tax considerations, compliance, or risk management valuation.
Collect all the important applicable records. These records include;
- Purchase histories
- Transaction histories
- Wallet addresses
- Private keys
- Smart contract details
- Tax documents related to your VA holdings
Select an audit method. It must align with your requirements and difficulty level such as;
- Self-audit
- Professional auditor
- Specialized software
The step of this phase is to comprehend VARA obligations related to your category concerning audit requirements.
Detailed Data Collection and Verification
The second phase includes the process of full Data Gathering and Verification. The steps for this are;
Firstly, validate all your accounts. It must align with exchange and wallet statements to guarantee precision and extensiveness.
Implementation of blockchain explorers or other tools can help you to confirm your ownership of each Virtual Asset holding.
The last but not the least step of this phase is to discourse;
- Wrong information
- Inconsistencies
- Suspicious activity identified during the verification process
This step is very important to ensure the precision of Data Collection and Verification.
Assessment and Reporting Phase
The last phase to Audit Your Virtual Asset Holdings as per VARA is the Evaluation and Reporting Phase;
The first step is to choose a consistent method for assessing your Virtual Assets because;
- Market capitalization
- Fair market value
- Relevant tax implications
Gather all the related documents of your audit findings. These documents include;
The category and quantity of each Virtual Asset held
- Purchase details
- Current market values
- Any recognized risks or vulnerabilities
The last step of this phase is to submit the audit report within stated deadlines depending on VARA guidelines and your category.
Conclusion
It is essential to ensure regulatory obedience and safeguard virtual asset holdings to conduct a VARA compliance audit. The association with trustworthy audit firms like Farahat & Co. can modernize the procedure to Audit Your Virtual Asset Holdings as per VARA.
Sometimes clients come across challenges such as addressing inconsistencies and complex record settlements, which could lead to heavy penalties if not handled efficiently. Our team has the potential to address these pain points according to the new regulations of VARA effectively.
FAQs
What Is a VASP?
A VASP is authorized by the FATF (Financial Action Task Force). The main goal of VASP is to conduct one or more of the following activities in the best interests of its clients such as;
- Exchange between VA (virtual assets) and FC (fiat currencies)
- Exchange between 1 or more forms of VA (virtual assets)
- Transfer of virtual assets
What Are Common Examples of Virtual Assets?
Some prominent examples of virtual assets are;
- Crypto assets
- Decentralized autonomous organization tokens
- Non-fungible tokens
- Tokens requesting to be financed by possessions
- Other underlying assets
What is Dubai VARA?
VARA is associated with the DWTCA (Dubai World Trade Centre Authority).
It is the capable entity in charge of;
- Regulating Virtual Assets and VA Activities
- Supervising Virtual Assets and VA Activities
- Overseeing Virtual Assets and VA Activities
They handle all zones across the Emirate of Dubai, counting Special Development Zones and Free Zones not including the Dubai International.
