Anti-Money Laundering and Combating The Financing Of Terrorism (AML/CFT)

AML Compliance Services in UAE

UAE’s strong commitment to adopt the finest international business practices is evident in its stringent AML audit Dubai framework. In April, 2020 the Financial Action Task Force (FATF) issued a Mutual Evaluation Report (MER) on the UAE’s compliance level with the FATF 40 recommendations and the level of effectiveness of the existing compliance system. The evaluation also aimed in identifying the threats, vulnerabilities and emerging risks in the UAE’s financial sector. Pursuant to this Central Bank of UAE(CBUAE) established a dedicated wing to handle all AML compliance in UAE and Combatting the Financing of Terrorism issues.

Relevant Legislations for AML Compliance Services in UAE

Federal Decree Law No. 20 of 2018, supplemented by Cabinet Decision No. 10 of 2019, forms the foundation of the AML Compliance Services in UAE framework. Additional guidance is provided by Cabinet Decision No. 58 of 2020 regulating beneficial owner procedures and Cabinet Decision No. 74 of 2020 regarding Terrorism List Regulation and the implementation of UN Security Council Resolutions on Suppression and Combatting of terrorism. This robust legal structure ensures comprehensive AML audit services in Dubai.

1. Appropriate internal policies, procedures and controls to identify and mitigate the risk of ML/FT crimes. Including AML audit services in Dubai:
Conducting customer due diligence: FI & DNFBPs should undertake CDD measures in the following cases:

• Establishing business relationships
• Carrying out occasional transactions with a customer for amounts>=AED 55,000.
• Carrying out occasional wire transfers of amount>= AED 3,500
• Suspicious transactions
• Where there are doubts about the adequacy of previously obtained customer data.
  Establishing adequate KYC procedures to identify the customer and assess the risk

Establishing adequate KYC procedures to identify the customer and assess the risk

Screening of your customers: Identifying if customers fall under sanction lists issued by the UN Security Council or local authorities. Regular updates and subscriptions to sanction mailing lists are essential parts of AML compliance in UAE.

Risk based profiling of your customers: Entities should categories their customers based on the risk factors like:

• Customer risk : Enterprise level/ Business relationship specific
• Geographic risk
• Product, service, transaction value risk
• Delivery channel related risk
• Other factors as considered appropriate for the entity.

Enhanced Due Diligence: Once customers are categorized based on risk, enhanced due diligence should be done for customer under High-risk category including Politically Exposed Persons(PEPs). Special approval from senior management should be taken for transactions with customers in this category. A well set KYC policy helps identifying if a particular customer needs EDD.

2. Suspicious Transactions Reporting: Any suspicious transactions should be reported to the Financial Intelligence Unit (FIU) without any delay.
3. Record Retention: All the relevant records, documents and supporting should be retained for a minimum period of 5 years so as to enable the authorities to trace and identify any crimes under AML/CFT.
4. Appoint an AML/CFT Compliance Officer: This is crucial to setting up of an effective AML/CFT overseeing framework. The compliance officer shall be in house employed or outsourced. It’s the duty of the compliance officer to report any crimes of money laundering or terrorism financing, managing the AML/CFT governance in the organization and giving appropriate training and awareness to the management and employees.

Red Flag Indicators for Suspicious Transactions in AML Audit Dubai

A general guidance to identify suspicious transactions include:

• No economic purpose to the transaction
• Geographic location of the customer
• The channel through which the transaction is routed.
• Inability of the customer to give required information or documentation or explain particular transaction.
• Deposits immediately followed by withdrawals.
• Using a single bank account for multiple business.
• Unusual forms of payments like use of traveler’s cheques.
• Unusual payment terms.
• For DPMS: Where Trading is happening in large volumes with countries which are not part of a specific precious metals and stones pipeline.
• Details of transaction different from details in the commercial invoice.
• Mortgages are repayed quickly without appropriate explanations.
• If the collateral provided for a transaction is located in a high – risk country or owned by a high-risk organization.