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AML, CTF & Sanctions Compliance

Aml, ctf & sanctions compliance

Money laundering and terrorist financing can destabilise communities, economic sectors, or whole national economies. Criminals and terrorist networks may be able to carry out their criminal and potentially destructive activities through undetected financial support structures.

The DFSA as a supervisory authority is committed to maintaining a regime that acts as a significant deterrent to any criminal elements, including money launderers and persons wishing to assist, in any way, acts of terrorism.

The DFSA is committed to maintaining this page as a useful and valuable resource to Relevant Persons. Should you have any comments, feedback on the contents of this page or suggestions for further topics, please do not hesitate to contact the DFSA via the Supervised Firm Contact Form.

Please keep in mind:This material is intended only as informal guidance, is not intended to be all encompassing and is not any form of, and must not be relied upon on any basis whatsoever as, legal or other advice or directions. Although the DFSA does regularly consider AML/CTF matters, the information on this page may not always be current, complete or accurate. You should consider whether any relevant laws, regulations, rules, directives, standards or other requirements may apply to you. The DFSA’s informal guidance is no substitute or compensation for, or mitigation of, your own responsibility.

 

the uae federal aml legislation 

The Anti-Money Laundering and Countering Financing of Terrorism and its regulations place obligations on all financial institutions and Designated Non-Financial Businesses and Professions to detect and deter money laundering and terrorism financing in the UAE.

The relevant Federal laws that apply to anti money laundering (“AML”) and counter terrorism financing (“CTF”) in the UAE are as follows:

  1. Federal Law No. 4/2002 Issued on 22/01/2002 On Anti-Money Laundering and Combating Financing of Terrorism amended by virtue of Federal Law No. 9/2014 dated 26/10/2014.

  2. Cabinet Resolution 38/2014 Concerning the Executive Resolution of Federal Law 4/2002.

  3. Federal Law No. (7) of 2014 Issued on 20/08/2014 On Combating Terrorism Offences.

  4. Regulations regarding Declaration by Travellers entering or leaving the United Arab Emirates carrying cash and monetary or financial bearer instruments 2011.

  5. Federal Law 5/2012 on Combating Cyber Crimes.

  6. Federal Penal Law 3/1987 (as amended).

  7. Federal Penal Procedures Law 35/1992 (as amended).

  8. UAE Central Bank (“CBUAE”) and/or the Financial Intelligence Department of the CBUAE circulars issued from time to time. Although the CBUAE does not have oversight of Relevant Persons in the DIFC, such circulars cover specific local and regional concerns or changes to the international anti-money laundering and countering financing terrorism directives, standards or structure which may be a useful reference.

All Federal laws issued by the UAE are available on the Ministry of Justice’s Legislation Portal (available in Arabic and English).

The above list may not be all encompassing and may also be subject to change by relevant Federal authorities. Accordingly, Relevant Persons should contact the relevant Federal authorities.

difc aml/ctf legal regime

The DIFC is governed by two separate and complementary regimes in relation to AML/CTF regulation, both administered by the DFSA:

  1. the Federal regime: Under Article 3 of Federal Law No. 8 of 2004, the provisions of Federal Law No. 4 of 2002 on Combating Money Laundering and Terrorist Financing and Federal Law No. 7 of 2014 on Combating Terrorism Offences and the implementing regulations under those laws apply in the DIFC. The DFSA, as the DIFC’s supervisory authority for the purposes of those laws, is obliged to issue regulations and guidance in the DIFC relating to the regulation of anti-money laundering and combating the financing of terrorism and unlawful organisations. The DFSA may also impose administrative penalties for breaches of those laws and the implementing regulations. See Article 11(2) of Federal Law No. 4 of 2002 and also Article 17 of Cabinet Resolution No. 38 of 2014; and
  2. the DIFC regime: Under Article 70(3) of the DIFC Regulatory Law 2004 (the “Regulatory Law”), the DFSA has jurisdiction for the regulation of anti-money laundering in the DIFC relating to Relevant Persons (see para 4 below) and their officers, employees and agents. The DIFC specific regime is contained in Anti-Money Laundering, Counter-Terrorist Financing and Sanctions Module (AML) Chapter 2 of Part 4 of the Regulatory Law and any DFSA Rules made in connection with anti-money laundering measures, policies and procedures.

Note that under Article 71(1) of the Regulatory Law, the DIFC regime requires compliance with the Federal regime. It follows that a failure to comply with a provision of Federal Law No. 4 of 2002 on Combating Money Laundering and Terrorist Financing or Federal Law No. 7 of 2014 on Combating Terrorism Offences or the implementing regulations under those laws, may also provide evidence of failure to comply with Article 71(1), which may then be addressed under the disciplinary and remedial provisions of the Regulatory Law and DFSA Rules.

The DFSA’s supervisory regime for Anti-Money Laundering (AML), Counter Terrorist Financing (CTF) and Sanctions Compliance applies to:

  1. an Authorised Firm other than a Credit Rating agency;
  2. an Authorised Market Institution;
  3. a Designated Non-Financial Business and Profession (DNFBP); and
  4. a Registered Auditor,

collectively referred to as “Relevant Persons”.

the aml module of the dfsa rulebook

The AML Module of the DFSA Rulebook contains all of the DFSA requirements on Anti-Money Laundering, Counter-Terrorist Financing, and relevant sanctions in one module.

The AML module has been designed to provide a single reference point for all persons and entities (collectively called Relevant Persons) who are supervised by the DFSA for Anti-Money Laundering (AML), Counter-Terrorist Financing (CTF) and sanctions compliance under the regimes referred to above.

It is important for Relevant Persons to familiarise themselves with the AML Module and assess the extent to which the Rules apply to them, and on a continuing basis.

the risk-based approach

FATF Guidance in relation to the Risk-Based Approach

The FATF has developed specific guidance in relation to the Risk-Based Approach. Relevant Persons can access the guidance by clicking here.

suspicious activity report (sar)

The requirement to lodge a suspicious transaction report with the Financial Intelligence Department (FID) of the Central Bank of the UAE (formerly known as Anti-Money Laundering and Suspicious Cases Unit (AMLSCU) is contained in UAE Federal Law No. 4 of 2002 regarding criminalisation of money laundering.

The AML Module of the DFSA Rulebook also contains a requirement that Relevant Persons report suspicious activities, including transactions, to the Financial Intelligence Department. A Relevant Person is also required to notify the DFSA immediately following the submission to the FID.

Relevant Persons are reminded that the failure to report suspicions of money laundering or terrorist financing may constitute a criminal offence that is punishable under the laws of the UAE.

dfsa annual aml return

All Relevant Persons are required to complete the DFSA annual AML Return and submit it to the DFSA by the end of September each year. The annual AML Return covers the period from 1 August of the previous year to 31 July of the reporting year.

Information from the AML Return provides the DFSA with important information on the Relevant Persons we supervise.  The information also helps us to:

  a. understand the risk of money laundering and financing of terrorism activities in each Relevant Person;

  b. ensure that information we have for our reporting entities is complete, accurate and current; and

  c. determine the best use of our resources in meeting our AML/CTF regulatory objective

compliance with international obligations

The DFSA wishes to emphasise that the particular obligations set out below are not all encompassing. It is the responsibility of each Relevant Person to ascertain and assess the relevant international obligations to which they are subject.

UN Security Council Resolutions

As a member state of the United Nations (“UN”), the United Arab Emirates is committed to implementing the UN Security Council Resolutions (“UNSCRs”). Amongst other measures, the UNSCRs may impose targeted financial sanctions against specific individuals and entities identified by the UN Security Council (or relevant UN Committees) as contributing to a particular threat to, or breach of, international peace and security.
The DFSA requires Relevant Persons to establish and maintain systems and controls to obtain and make appropriate use of relevant resolutions or sanctions issued by the UN Security Council or relevant UN Committees. These include:

  1. immediately freeze funds, other financial assets or economic resources of designated individuals and entities;

  2. restrictions on entering into financial transactions with or providing financial assistance or services in relation to: (i) designated individuals, entities or specifically referenced items; or (ii) proliferation and nuclear, or other sanctioned activities; and

  3. inform the DFSA of any fact or information relating to the funds, other financial assets or economic resources owned or controlled, directly or indirectly, by any designated individual or entity.

 
Please note that DFSA will not issue any notifications in relation to the frequent amendments to the UN Consolidated List made by the United Nations Sanctions Committee. Accordingly, Relevant Persons need to ensure that their systems and controls are able to monitor any relevant changes.
The DFSA encourages all Relevant Persons to regularly check and monitor these lists, where applicable, as a matter of good practice. You may access the current UN Security Council Resolutions using the following link: www.un.org/sc/committees/ or access the Consolidated UNSCR List using the following link: https://www.un.org/sc/suborg/en/sanctions/un-sc-consolidated-list.


UAE’s list of designated terrorist organisations and groups

All natural and legal persons have to comply with other targeted financial sanctions found in the Federal Law No. 7 of 2014 On Combating Terrorist Offences (the “Law”). The UAE Government updated the UAE’s list of designated terrorist organisations and groups (the “List”) maintained pursuant to the Law. The List can be found in the UAE’s Federal Official Gazette issued by the Ministry of Justice.

The UAE Government announces changes to the List via the Emirates News Agency (“WAM”). Following the WAM public announcement, the DFSA will consider the announcement and may issue a ‘Dear SEO’ Letter if the DFSA considers it appropriate to do so. Relevant Persons can find the WAM announcements along with the UAE Cabinet of Ministers' Resolution reference number here.


The Financial Action Task Force

The Financial Action Task Force (“FATF”) is the global standard-setting body for anti-money laundering and combating the financing of terrorism (“AML/CTF”).  The FATF is an inter-governmental body, which promotes effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing (“ML/TF”) and other related threats to the integrity of the international financial system.  The FATF monitors the progress of implementing necessary measures, reviews money laundering and terrorist financing techniques and counter-measures, and promotes the adoption and implementation of appropriate measures globally.  For more information, please refer to the following link: http://www.fatf-gafi.org/about/

The FATF also identifies jurisdictions that have strategic deficiencies and works with them to address those deficiencies that pose a risk to the international financial system.  The identified jurisdictions are set out in two FATF public documents that are issued three times a year. Click here to view the FATF public statements and click here to view the latest DFSA announcements.

FATF Guidance

The FATF has developed the guidance and best practices to assist jurisdictions in their implementation of the FATF Recommendations. The DFSA encourages all Relevant Persons to regularly check the FATF website and ensure that they consider all issued guidance, as a matter of good practice. Click here to view the FATF Guidance.