What Is the UAE’s Targeted Financial Sanctions Regime?
The UAE implements United Nations Security Council Resolutions on Targeted Financial Sanctions through Cabinet Resolution No. 74 of 2020, which remains the current operative instrument governing the UAE’s Local Terrorist List and the implementation of UN sanctions obligations, alongside the broader AML/CFT framework under Federal Decree-Law No. 10 of 2025.
Under Cabinet Resolution No. 74 of 2020, all persons in the UAE, whether natural or legal, along with Financial Institutions and Designated Non-Financial Businesses and Professions (DNFBPs), carry specific obligations connected to the Targeted Financial Sanctions regime. These obligations cover registration, screening, implementing sanctions measures, notifying the Supervisory Authority, maintaining internal controls, and cooperating with regulatory oversight.
What Is the Duty to Register Under Cabinet Resolution No. 74 of 2020?
All persons in the UAE are required to register on the Executive Office’s website to receive automated notifications of new listing, re-listing, updating, or de-listing decisions issued by the UN Security Council, the Sanctions Committee, or under the UAE’s Local Terrorist List. This registration is the mechanism through which entities stay current on sanctions list changes as they happen, rather than relying on periodic manual checks.
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What Are the Screening Obligations Under UAE Targeted Financial Sanctions?
Natural persons and entities in the UAE must screen their databases and transactions on a regular basis, conducting checks to identify possible matches against names on sanctions lists issued by the UN Security Council, the Sanctions Committee, or the UAE’s Local Terrorist Lists. This screening obligation extends across several categories:
- Existing customer databases
- The names of parties to any business relationship or transaction
- Databases of potential customers
- The names of beneficial owners
- Persons and entities with a direct or indirect relationship to the reporting entity
- Any customer, prior to conducting a transaction or entering a business relationship
- Directors and agents acting on behalf of customers, including individuals acting under power of attorney
Screening must be carried out before onboarding a customer and before facilitating a transaction, and entities are expected to run these checks on their own initiative rather than waiting for a prompt, since sanctions lists are updated continuously by the Executive Office and the United Nations.
How Must Entities Implement Freezing Measures?
Where a screening match is confirmed against the UN List or the UAE’s Local Terrorist List, entities and natural persons must freeze all funds connected to the listed person or entity without delay and without prior notice to that person, generally within 24 hours of the match being identified. Freezing measures must also be lifted without delay where a relevant UN Security Council Resolution or a UAE Cabinet decision removes a person or entity from the applicable list.
A person who freezes funds, or declines to provide financial services connected to a listed person, group, or entity, in good faith and in line with these obligations, is protected from civil, penal, or administrative liability arising from that action.
When Must Entities Notify the Supervisory Authority?
Under UAE AML/CFT law, entities must notify the relevant Supervisory Authority immediately in several circumstances, including where they identify funds or actions connected to a relevant UN Security Council Resolution or Local List, where a screening match is found against a listed person or entity, or where they discover that a current or former customer is listed or suspected of a connection to a listed person. Notification is also required where an entity has not acted on a potential match because it could not be dismissed as a false positive using available information.
Financial Institutions and DNFBPs must report any freezing measure taken, along with any attempted transaction connected to a listed person, to the relevant Supervisory Authority and the Executive Office within two business days.
What Internal Controls Must Entities Maintain?
Entities are required to establish and implement internal controls and procedures to ensure compliance with their obligations under Cabinet Resolution No. 74 of 2020. This includes policies preventing staff from informing a customer or any third party, directly or indirectly, that a freezing action or other sanctions measure is being applied or is about to be applied. Defining these internal processes clearly allows an entity to implement its Targeted Financial Sanctions obligations in a way that reflects the specific risks connected to its own business activity.
What Is the Obligation to Cooperate With the Supervisory Authority?
All persons in the UAE must cooperate with the Executive Office and the relevant Supervisory Authority to verify the accuracy of information submitted in connection with Targeted Financial Sanctions obligations. Where a relevant UN Security Council Resolution or UAE Cabinet decision calls for a freezing measure to be lifted or cancelled, entities must implement that decision without delay.
What Penalties Apply for Non-Compliance With Targeted Financial Sanctions?
Under Article 33 of Federal Decree-Law No. 10 of 2025, a person who fails to comply with Targeted Financial Sanctions obligations under Cabinet Resolution No. 74 of 2020 faces a fine of not less than AED 20,000, imprisonment, or both. Separately, reporting entities found non-compliant may also face administrative enforcement action under Article 17 of the same law, which allows Supervisory Authorities to impose penalties ranging from AED 10,000 to AED 5,000,000 depending on the nature of the violation.
Frequently Asked Questions (FAQs)
What law governs Targeted Financial Sanctions in the UAE?
How quickly must funds be frozen after a sanctions list match is found?
Who must screen against UAE sanctions lists?
What happens if an entity freezes funds in good faith based on a false match?
What are the penalties for failing to comply with Targeted Financial Sanctions obligations?
Need Expert Advice?
Contact the team at Farahat & Co. for professional support and expert insights for businesses operating in the UAE.
How Farahat & Co. Can Help
Farahat & Co. assists UAE businesses with Targeted Financial Sanctions compliance, including sanctions screening procedures, internal control design, and reporting obligations under Cabinet Resolution No. 74 of 2020.
Contact Farahat & Co. today to discuss your Targeted Financial Sanctions compliance requirements.
