The Central Bank of the UAE (CBUAE) has issued a new anti-money laundering (AML) guide and combatting the financing of terrorism (AML/CFT) for licenced financial institutions (LFIs) on risks related to politically exposed persons (PEPs), the regulator announced on Tuesday (2 August 2022). This set of guidelines comes to effect immediately.
Globally, money laundering activity is projected to more than double to $5.8 billion by 2027 from an estimated $2.8bn in 2022, research company Markets and Markets said in a report last month. The anti-money laundering task force imposed fines of more than Dh41 million ($11.16m) in the first six months of 2022 as it continues to rein in illicit financial activity. UAE imposed $11.2 million in penalties for anti-money laundering cases during the first half of 2022
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Licensed financial institutions (LFIs) offering services to politically exposed persons (PEPs) have been asked to develop “risk-based policies.” According to the state news agency, WAM, the guidelines consider Financial Action Task Force (FATF) standards and require LFIs to comply with its requirements within one month.
Under the new CBUAE guidelines, customers that are PEPs and transactions involving PEPs may expose LFIs to a heightened risk of terrorism financing, money laundering and other illicit finance – and these guidelines follow CBUAE’s recently introduced AML/ CFT guidance for licensed financial institutions on payment risks. The new guidance “will assist LFIs’ understanding of risks and effective implementation of their statutory AML/CFT obligations, and takes Financial Action Task Force (FATF) standards into account,” WAM said in a statement, adding that LFIs must comply with the regulator within a month.
PEPs and transactions related to them may expose LFIs to a higher risk of money laundering and terror financing, the lender said.
The guidance enables LFIs to do due diligence on PEPs and their direct family members or close associates.
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Governor of the CBUAE, Khaled Mohamed Balama, said, “We are keen to ensure that all LFIs comprehensively understand their role and responsibilities in mitigating relevant AML/CFT risks and safeguarding the UAE financial system from illicit activities. This guidance provides LFIs with further requirements and measures they must fulfil before and after initiating business relationships with politically exposed persons to stay anti-money laundering compliant. We will continue our efforts to issue similar regulatory guidelines, to enhance the efficiency and robustness of our financial system in line with international standards related to anti-money laundering and the financing of terrorism.”
Balama added this guidance provides LFIs with further requirements and measures they must fulfil before and after initiating business relationships with PEPs to stay compliant with anti-money laundering.
LFIs providing services to PEPs must develop risk-based policies, the lender said, adding this would ensure accurately identified PEPs or related customers before the start of the business relationship, risk rating and applying equivalent customer due diligence.
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The regulator also said LFIs must constantly monitor business relationships and maintain a transaction monitoring system to track suspicious transactions.
Any unusual activity would then be reported to the UAE’s financial intelligence unit using the ‘goAML’ portal.
The UAE has announced various measures to fight and prevent money laundering in the country, including renewing anti-money laundering policies for payment risks.
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