Anti-Money Laundering and Combatting the Financing of Terrorism (AML/CFT)

To institutionalise its stringent efforts in the field, the CBUAE established a dedicated Department in August 2020 to handle all matters pertaining to Anti-Money Laundering and Combatting the Financing of Terrorism (AML/CFT) which had previously fallen under the remit of the Banking Supervision Department. The Anti-Money Laundering and Combatting the Financing of Terrorism Supervision Department (AMLD) serves three vital objectives: examining Licensed Financial Institutions (LFIs), ensuring adherence to the UAE’s AML/CFT legal and regulatory framework, and identifying relevant threats, vulnerabilities and emerging risks concerning the UAE's financial sector. Through AMLD, the CBUAE coordinates closely with the UAE’s National AML/CFT Committee to effectively implement the National Action Plan.

The CBUAE has created three divisions with distinct mandates within the AMLD: 

  • Compliance and Examination: Devises the annual AML/CFT risk-based supervisory plan, conducts supervisory examinations and issues corrective actions to LFIs. It also recommends sanctions and disciplinary measures in addressing cases of non-adherence by LFIs. 
  • Policy and Cooperation: Prepares policies and guidance for supervised LFIs, performs outreach activities, handles requests for information from local and international regulators, manages coordination with national committees and other authorities, and liaises with domestic and international stakeholders.
  • Research and Risk Analysis: Collects AML/CFT-related data points from LFIs and other stakeholders, performs institutional and sectoral risk assessments, and creates dashboards of risk analysis to identify areas of vulnerability in LFIs for input into the compliance and examination plans compiled by the CBUAE.

Within the CBUAE, the AMLD coordinates with the Examination Division of the Banking Supervision Department to exchange AML/CFT information on LFIs, and also works closely with the Enforcement Division to impose penalties required as outlined within the CBUAE’s legal, regulatory and enforcement framework.

Externally, the AMLD acts as the interface between the CBUAE and domestic stakeholders with a focus on facilitating cooperation to enhance the compliance of LFIs with AML/CFT requirements, often alongside the UAE's supervisory, regulatory and law enforcement authorities, and the UAE Financial Intelligence Unit (FIU). The AMLD also collaborates with international stakeholders to exchange information on best practices concerning conducting AML/CFT processes and with foreign supervisors to handle requests for information on AML/CFT cases and perform joint AML/CFT examinations.

Examination activities in 2020

The CBUAE's AML/CFT examinations, conducted in 2020, covered areas of risk assessment, risk culture and governance, while focusing on the expertise, systems, tools and processes necessary for LFIs to maintain an effective AML/CFT framework. In addition, the CBUAE evaluated the transaction monitoring systems of LFIs to ensure suspicious activities and transactions are reported with a sound rationale and in a timely manner.

The CBUAE enhanced its supervisory tools by introducing an automated tool that was used to test the adequacy and effectiveness of over 90 sanctions screening systems of 35 LFIs. The aim of this review was to determine whether the sanctions screening systems are capable of detecting all sanctioned persons and entities as per the United Nations Security Council Resolutions, in line with the UAE’s Federal Decree Law No. (20) of 2018 and Cabinet Decision No. (10) of 2019.

Furthermore, during 2020, the CBUAE performed a comprehensive AML/CFT data collection exercise to evaluate and risk-rate inherent money laundering and terrorist financing risks, controls and residual risks in all LFIs.

In April 2020, the Financial Action Task Force (FATF) issued its Mutual Evaluation Report (MER) on the UAE’s AML/CFT measures. Based on an assessment conducted in 2019, the MER analyses the level of the UAE’s compliance with the FATF 40 Recommendations and the effectiveness of its AML/CFT system, as well as providing recommendations on how the system could be strengthened.

To read FATF MER on the UAE
www.fatf-gafi.org
www.menafatf.org

The UAE’s National AML/CFT Committee (NAMLCFTC), chaired by His Excellency the Governor of the CBUAE, revised the UAE’s National Strategy in line with the risks identified in the MER and the UAE’s National Risk Assessment. This is supported by an enhanced National Action Plan that outlines a detailed series of initiatives and actions with multiple domestic stakeholders and authorities to implement the MER’s recommendations.The CBUAE has defined compliance with the MER's recommendations as the key strategic objective and focus area for 2020-2021 and contributed significantly to the development of detailed action items for the National Action Plan.

www.namlcftc.gov.ae
High Risk Countries

A fundamental pillar of the UAE’s efforts to combat money laundering and countering the financing of terrorism is Federal Decree No. (20) of 2018. Under its provisions, a committee dedicated to AML/CFT objectives under the chairmanship of the Governor of the CBUAE was set up, and an independent Financial Information Unit was established within the CBUAE to receive and investigate all reports submitted by financial institutions and other corporate establishments regarding suspected illicit financial activity. In its entirety and as implemented by Cabinet Decision No. (10) of 2019, Federal Decree No. (20) of 2018 has raised the effectiveness of the legal and institutional framework of the nation in the field of AML/CFT, in line with the requirements and recommendations of the Financial Action Task Force (FATF). 

Federal Decree-Law No. (20) of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Financing of Illegal Organisations

Cabinet Decision No. (10) of 2019 concerning the Implementing Regulation of Decree Law No. (20) of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Financing of Illegal Organisations

Two Cabinet Decisions in 2020 further tightened the UAE's AML/CFT regulatory regime. While Cabinet Decision No. (74) of 2020 stipulated the implementation of relevant UN Security Council Resolutions, Cabinet Decision No. (58) introduced new requirements for entities to disclose its beneficial owners, aiming to enhance transparency of entities registered in the UAE as well as to develop effective and sustainable executive and regulatory mechanisms and procedures in respect of beneficial owner data.

Cabinet Decision No. (74) of 2020 Regarding Terrorism Lists Regulation and Implementation of UN Security Council Resolutions on the Suppression and Combating of Terrorism, Terrorist Financing, Countering the Proliferation of Weapons of Mass Destruction an

Cabinet Decision No. (58) of 2020 Regulating the Beneficial Owner Procedures

Between 2018 and 2020, the CBUAE bolstered the national AML/CFT framework with new regulations an and procedures. One regulation set out the CBUAE's right to examine the compliance of financial institutions with Federal Decree-Law No. (20) of 2018 as well as with relevant Cabinet Decisions, along with its right to impose and publish administrative sanctions. Other CBUAE guidelines enforced the registration of service providers in the hawala business effective December 2020 and introduced new baseline requirements for exchange houses operating in the UAE.  

Procedures for Anti-Money Laundering and Combating the Financing of Terrorism and Illicit Organizations

Registered Hawala Providers Regulation

The Standards for the Regulations Regarding Licensing and Monitoring of Exchange Business

In June 2019, the CBUAE issued AML/CFT guidelines for financial institutions aimed at furthering the effective performance of their statutory obligations under the legal and regulatory framework in force in the UAE. These Guidelines were updated in June 2021. The guidelines were prepared as a joint effort between Supervisory Authorities of the UAE and set out the minimum expectations of each when identifying, assessing and mitigating the risks of money-laundering, the financing of terrorism, and the financing of illegal organisations.

Furthermore, the CBUAE periodically issues additional Guidances on selected topics.

Guidelines on Anti-Money Laundering and Combating the Financing of Terrorism and Illegal Organisations for Financial Institutions

AMLCFT Guidance for LFIs on STR

AMLCFT Guidance for LFIs providing services to LP_LA

Joint Guidance on the Treatment of Financial Crime Risks and Obligations in the UAE in the Context of the COVID-19 Crisis

The UAE Financial Intelligence Unit (FIU) analyses suspicious transactions and activities that may involve money laundering, terrorism financing and related criminal activities, on the basis of data and reports from financial institutions and designated non-financial business and professions who collaborate and share knowledge to detect and act against such activities. In order to submit a suspicious transaction report to the FIU, a reporting entity should be connected to the goAML platform, which is the dedicated reporting platform launched in June 2019.

www.uaefiu.gov.ae


Jointly with the FIU, the CBUAE conducts outreach and awareness-raising efforts on the reporting of suspicious transactions for supervised sectors.

STR Outreach & Awareness - All Banks & Finance Companies

STR Outreach & Awareness - Exchange Houses

STR Outreach & Awareness - Hawala Providers

STR Outreach & Awareness - Insurance Sector

The Decree Federal Law requires financial institutions and designated non-financial businesses and professions to immediately implement the directives issued by the Competent Authorities in the State for implementing the resolutions issued by the United Nations Security Council (UNSC) under Chapter (7) of UN Charter for the Prohibition and Suppression of the Financing of Terrorism, and Proliferation of weapons of mass destruction and their financing, and other related directives. 

All banks and other financial institutions are required to comply with the following instructions issued by the CBUAE:

  1. Update their records on a daily basis in order to identify individuals and entities designated by the UNSC and/or the UAE Cabinet. Banks and other financial institutions must have appropriate internal controls in place to ensure compliance with the most recent publication of targeted financial sanctions of the UNSC Consolidated lists and the Local lists
  2. Rely on the official website of the UNSC for the daily updates of their records for implementation of UNSC Resolutions immediately and without delay: www.un.org
  3. Rely on the official website of the Committee for Goods & Material Subjected to Import & Export Control to obtain the most recent publication of the Local lists issued by the UAE Cabinet. In addition, subscribe to the email subscription service provided in the website in order to receive relevant updates to both the UNSC Consolidated lists and the Local lists: www.uaeiec.gov.ae
  4. Ensure full compliance with Articles (15) and (21) of Cabinet Decision No. (74) of 2020 regarding Terrorism Lists Regulation and Implementation of UN Security Council Resolutions on the Suppression and Combating of Terrorism, Terrorist Financing, Countering the Proliferation of Weapons of Mass Destruction and its Financing and Relevant Resolutions
  5. Apply the procedures for freezing/unfreezing of funds and notification to the CBUAE: When a match to a listing or delisting of names of individuals or entities to the UNSC Consolidated lists or Local lists is identified, banks and other financial institutions are to take the necessary action immediately and without delay, by:

- Freezing of funds in the case of a listing of names; or

- Cancelling the freeze in the case of a delisting of names;

- Fill out the enclosed notification form; and

- Send the completed Notification Form to the Banking Supervision Department at the CBUAE within a maximum period of 3 working days via the approved email address: BSDUN@cbuae.gov.ae 

Non-compliance will subject the bank or financial institution to administrative penalties as per the abovementioned Decree Federal Law, its Implementing Regulation and the aforementioned Cabinet Decision
  
Jointly with the Committee for Goods and Material subject to Import & Export Control, the CBUAE conducts outreach and awareness-raising efforts on Targeted Financial Sanctions for supervised sectors. 

Guidance on Targeted Financial Sanctions For FIs and DNFBPs from the Executive Office of the IEC

Notification Form

Cabinet Decision No 74 of 2020 regarding Terrorism Lists Regulation and UNSC Resolutions

Typologies on the circumvention of Targeted Sanctions against Terrorism and the Proliferation of Weapons of Mass Destruction from the Executive Office of the IEC

A resident natural person or a juridical person may not carry on Hawala activity in the UAE unless they hold a Hawala Provider Certificate issued by the CBUAE in accordance with its Regulation. A Registered Hawala Provider must strictly comply with the UAE Decree Federal Law and Executive Regulation, and any Regulations and directions issued by the CBUAE in this regard.

The CBUAE conducts outreach and awareness-raising efforts for Registered Hawala Providers.

Registered Hawala Providers Regulation

Application for Registration of Hawala Provider

Application for Re-registration of Hawala Provider

Introductory Statement

Undertakings of Hawala Provider Application

The CBUAE conducts thematic reviews, outreach and organises awareness events for its supervised sectors. Furthermore, it actively participates in forums to discuss issues and challenges facing the banking industry in relation to AML/CFT, often alongside the private sector. 

Sanctions Screening Testing Thematic Review

UBF Conference on Regulatory Financial Crime Implementations Across the UAE Financial Sector, 25 November 2020

National Summit on Counter-Terrorist Financing and Sanctions 17 Nov 2019

National Summit on Counter-Terrorist Financing and Sanctions 18 Nov 2019

The CBUAE requires all LFIs to comply with the UAE Decree Federal Law and Executive Regulation, and any regulations and directions issued by the CBUAE in this regard. As a general principle, the CBUAE will publish outcomes of administrative and financial sanctions and penalties imposed as result of enforcement action.

CBUAE Imposes financial sanction on an exchange house operating in the UAE 22/04/2021

CBUAE imposes financial and administrative sanctions on a non-authorised individual related to an exchange house 25/02/2021
CBUAE imposes financial sanction on an exchange house operating in the UAE 10/02/2021
CBUAE imposes financial sanctions on 11 banks operating in the UAE 31/01/2021
CBUAE imposes administrative sanctions on two exchange houses operating in the UAE 26/10/2020