The new guidelines require LFIs, including lenders, to create internal policies and procedures to manage risks linked to money laundering and the financing of terrorism. According to the central bank guidelines, LFIs must prove compliance with these requirements in the time span of one month.
The new guidelines issued by the Central Bank of UAE are redacted taking into account the Financial Action Task Force standards and are meant to ensure LFIs in the UAE understand their AML/CFT responsibilities and have compliance programmes to mitigate payment-related risks, as per the statement of the governor of the Central Bank of UAW, Khaled Balama.
The guidelines require LFIs to conduct regular risk assessments in order to cover all the payment products, services, relationships and exposure to domestic and foreign payment sector participants.
Another relevant guideline to be taken into account by financial institutions (Fis) is conducting due diligence on customers, monitoring all transactions processed or conducted through the LFIs and reporting suspicious transactions to the UAE’s Financial Intelligence Unit.
Furthermore, FIs are mandated to have a sanctions compliance programme with systems that screen transactions and transmit required information throughout the payment cycle.
According to a recent report from Markets and Markets cited by The National News, money laundering activity is projected to more than double to USD 5.8 billion by 2027 from an estimated USD 2.8 billion in 2022.
The Central Bank has fined financial institutions and banks for not complying with AML rules in the past few months. The new AML/KYC guidelines aimed at licensed financial institutions are tied in with similar requirements imposed in 2021 for licensed exchange houses. Essential components of the AML/CFT programme included a dedicated compliance function, strong customer due diligence, continuous transaction monitoring and full compliance with the UAE’s requirements on targeted financial sanctions and suspicious transaction reporting.
The UAE's anti-money laundering task force imposed fines of more than USD 11 million in the first six months of 2022, as it continues to rein in illicit financial activity.
In August 2021, The UAE’s Financial Intelligence Unit (established in 1988 by the Central Bank of UAE) has joined forces with the China Anti-Money Laundering Monitoring and Analysis Centre to exchange intelligence in order to double down on money laundering and combat the financing of terrorism on a global level.
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