What risk factors must be considered by the DPMS while assessing the risk?

To adequately carry out the risk assessment, the dealers in precious metals and stones must consider the following factors:Customer or Business Relationship specific riskProducts and transaction-related riskDelivery channel-related risksGeographical risk

AML Compliance Requirements for Jewellers in UAE

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AML Compliance Requirements for Jewellers in UAE

Precious metals and stones have undoubtedly been a point of attraction among financial criminals, given their characteristics such as:

Small size, high value
Easy to transport
Use as a store of value
Use as a medium of exchange
Worldwide acceptability
Retains value and is subject to lesser value fluctuation

Criminals or money launderers use dirty money to buy gold, diamonds, etc., which is subsequently resold to bring the money back into the financial markets, merging the funds disguised as if obtained authentically.

To safeguard the precious metals and stones segment against financial crimes, the AML regulations mandate that dealers in precious metals and stones design and implement robust ML/FT risk mitigation measures.

Here is a comprehensive guide for dealers in precious metals and stones to understand and navigate their AML compliance journey in the UAE.

UAE’s AML Legislative Landscape for the Dealers in Precious Metals & Stones

The primary law governing the anti-money laundering framework in the UAE is Federal Decree by Law No. (10) of 2025 Regarding Anti-Money Laundering, and Combating the Financing of Terrorism and Proliferation Financing and Illegal Organizations. Cabinet Resolution No. (134) of 2025 Concerning the Executive Regulations of Federal Decree-Law No. (10) of 2025 Concerning Combating Money Laundering, Terrorist Financing, and the Financing of the Proliferation of Weapons.

AML compliance is not complete without Targeted Financial Sanctions compliance. For this, the UAE authorities have issued Cabinet Resolution 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, which lays down the detailed directives for the regulated entities around sanctions compliance.

These fundamental laws and regulations, along with the guidelines issued by the supervisory authorities*, help the DPMS sector understand its risk exposure and customise the AML/CFT program, focusing on timely detection and reporting of money laundering, terrorist financing, and proliferation financing vulnerabilities.

* The Ministry of Economy is the AML supervisory authority for the DPMS licensed in the UAE, with the following exceptions:

The supervisory authority for dealers in precious metals and stones operating in or from the Abu Dhabi Global Market (ADGM) the ADGM’s Financial Service Regulatory Authority.
For DPMS licensed with the Dubai International Financial Centre (DIFC), it is the Dubai Financial Service Authority.

The primary guidelines which a DPMS is required to adopt for necessary guidance around complying with AML requirements are:

Central Bank of UAE issued AML/CFT Guidelines for Designated Non-Financial Businesses and Professions
UAE Ministry of Economy’s Supplemental Guidance for Dealers in Precious Metals and Stones
ADGM or DIFC AML and Sanctions Compliance Rulebook

Understanding the DPMS subject to AML Compliance

Under the UAE AML laws, dealer in precious metals and stones engaged in conducting single cash transaction or several interlinked transactions amounting to AED 55,000 or more would be considered as one of the Designated Non-Financial Businesses and Professions (DNFBPs), obliged to implement AML measures.

Here, for the purpose of AML compliance, “Precious Metals and Stones (PMS)” would include:

Precious Metals

Gold, with a minimum purity of 500 parts per 1,000
Silver, with a minimum purity of 800 parts per 1,000
Platinum, with a minimum purity of 850 parts per 1,000
Palladium, with a minimum purity of 500 parts per 1,000

Precious Stones

Diamonds (rough) of any weight in carats
Diamonds (polished), with a minimum weight of 0.3 carats per stone if loose or a minimum weight of 0.5 carats per any single stone mounted in a setting
Colored Gemstones (polished Emeralds, Rubies, Sapphires), with a minimum weight of 1 carat per stone if loose or a minimum weight of 2 carats per any single stone mounted in a setting

Pearls

Loose, with a minimum diameter of 3 millimeters per bead
Strung or mounted in a setting, with a minimum diameter of 10 millimeters per any single bead

Other

Any object whose at least 50% monetary value is comprised of PMS
High-value industrial metal (e.g., wolframite, cassiterite, and coltan), cobalt, and other platinoid metals (e.g., rhodium, etc.)
Semi-precious gemstones (e.g., amethysts, opals, jade, etc.)
Synthetic, treated, or artificial gemstones

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AML Compliance Obligations of a Dealer in Precious Metals and Stones

As entities subject to AML compliance, DPMS must detect and report ML/FT-related suspicious transactions promptly to the UAE’s Financial Intelligence Unit. To adhere to this reporting obligation effectively, the DPMS must comply with federal AML legislation and AML/CFT guidelines issued by the AML supervisory authorities.

The following are the core AML compliance components a dealer in precious metals and stones in the UAE must adhere to:

goAML Registration

Every DPMS in the UAE must get itself registered with the FIU’s goAML Portal, adequately completing the two-stage application process.

When making a registration application on the goAML Portal, the DPMS must furnish details about the person who will act as an AML Compliance Officer and the organisational details.

Appointing a right AML Compliance Officer

Every dealer in precious metals and stones is required to appoint a capable AML Compliance Officer or a Money Laundering Reporting Officer (MLRO) to design, implement, and oversee the effective implementation of the AML functions across the organisation.

The appointment of the Compliance Officer is subject to approval from the AML supervisory authority (which is applied for in the first stage of the goAML registration process).

Performing Enterprise-Wide Risk Assessment (EWRA) to uncover the potential risks

Each DPMS faces different ML/FT risks, which warrant a thorough analysis of these financial crime risks.

To evaluate potential vulnerabilities and adopt the risk-based approach as prescribed under the law, the dealer in precious metals and stones must conduct a comprehensive Business Risk Assessment or Enterprise-Wide Risk Assessment process.

EWRA shall help the DPMS assess the overall risk of money laundering, financing of terrorism (ML/FT), and proliferation financing (PF), understand the likelihood of each risk scenario materialising, its possible impact on the business, and the measures required to manage these risks. Further, as part of EWRA, the quality of the existing controls must be evaluated, and additional measures required to manage the residual risk must be documented.

While assessing the risk, the DPMS must consider all the potential risk parameters, such as:

the nature and type of customers and suppliers it deals with
the type of products offered
the size, volume, and complexities of the transactions
the geographies it operates in and the jurisdiction of its customers/suppliers
delivery/distribution channel deployed, etc.

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Tailoring the AML/CFT Policies, Procedures, and Controls

As the ML/FT risk varies, every DPMS must customise its risk management program, detailing the AML/CFT policies and procedures. This program must be proportional to the nature and size of the DPMS’ operations and risk identified during EWRA.

Additionally, the AML program must provide for the controls and risk mitigation measures the DPMS shall deploy commensurate to the risk and the defined policies and procedures.

The AML/CFT program must match the latest AML/CFT regulations, covering the application compliance obligations and factoring in the evolving ML/FT trends and typologies around the precious metals and precious stones sector.

The AML/CFT policies and procedures must be clear and comprehensive to help the AML Compliance Officer and the staff understand their compliance responsibilities and navigate the AML tasks.

Customer Due Diligence (CDD) Measures

One of the essential components of the AML compliance framework for every regulated entity, including the DPMS, is to identify the customers and suppliers, including the ultimate beneficial owners.

The dealers in precious metals and stones must implement a robust and adequate “Know Your Customer” (KYC) program to identify customers, their activities, the nature of the business relationship and the intended purpose of the transaction, the ownership and controlling structure if the customer is a legal entity, etc. As part of KYC, once the details are obtained, the DPMS must verify their identities using independent and reliable sources.

For verification of the identity, the DPMS may rely on the government issued valid identity documents such as:

Individual: Passport, Emirates ID, Driving License, etc.
Legal entity: Trade License/Certificate of Incorporation and Memorandum & Articles of Association

This also includes appropriate address verification of customers, which helps the DPMS strengthen its efforts around the customer identification process.

Having adequately identified the customer’s basic details, the DPMS must carry out customer screening. The screening process shall assist the DPMS in determining whether the customer, their ultimate beneficial owners (UBOs), or senior management is designated under the Sanctions Lists—UNSC Consolidated List, UAE Local Terrorist List, or other international sanctions lists.

In addition to sanctions screening, the dealers in precious metals and stones must also screen the customers against the Politically Exposed Person (PEP) database to understand if the customer is PEP or associated with PEP, which may increase the ML/FT exposure in the particular business relationship.

The screening exercise must also be extended to cover adverse media and social media checks to verify customers’ connections with financial crime, be it fraud, money laundering, tax evasion, bribery, or other predicate offences that affect the risk.

Considering the customer identification and transactional (proposed or executed) details, along with screening results, the DPMS must perform customer risk profiling to identify the ML/FT risk the customer poses to the business and classify them as high, medium, or low.

When the customer is categorised as high-risk, the DPMS must apply Enhanced Due Diligence (EDD) measures and obtain additional details to establish the legitimacy of the customer’s identity. Further, checks must also be applied to understand and verify the customer’s source of funds and wealth using reliable sources.

Ongoing Monitoring of Transactions and Business Relationships

Dealers in precious metals and stones must keep their customers’ and suppliers’ databases up-to-date and capture valid and accurate identification details.

The CDD information must be closely monitored to ensure that the assessed customer risk is relevant during the ongoing business relationship, and if there is any change in the customer details that impacts the risk exposure, the same is immediately identified.

As part of transaction monitoring, the DPMS must check for the compatibility of the customer’s profile with the transactional pattern to see if values and volumes are within the customer’s known financial and commercial profile.

Further, ongoing monitoring of the transactions is also very important to identify any unusual activities or transactions by the customer that contradict the customer’s risk profile.

For high-risk customers, enhanced and more stringent monitoring measures must be applied.

Compliance with Targeted Financial Sanctions (TFS)

As a DNFBP, the dealers in precious metals and stones are required to implement a comprehensive Targeted Financial Sanctions compliance program in accordance with Cabinet Decision No. (74) of 2020.

As a first step towards the TFS program, the DPMS must subscribe to the Executive Officer for Control and Non-Proliferation (EOCN) Notification System to receive alert emails regarding additions, delisting, or any amendments in the United Nations Consolidated List and the UAE Local Terrorist List.

All the customers, their UBOs and senior management personnel must be screened against these sanctions lists, including any other relevant international sanctions regime.

Upon screening, if any matches are identified with the UNSC Consolidated List or the UAE Local Terrorist List, the DPMS must undertake the following actions, depending on the nature of the match observed (confirmed or partial name match where the DPMS is unable to determine if it is a confirmed match or a false hit):

apply adequate TFS measures (such as freezing the funds, terminating or
suspending the business relationship) and
Filing a Confirmed Name Match Report (CNMR) or a Partial Name Match Report (PNMR) on the goAML portal.

Identifying and Reporting Suspicious Activities or Transactions

Dealers in Precious Metals and Stones are required to design and implement adequate mechanisms to identify potential ML/FT risk indicators and report suspicious activities or transactions to the FIU in a timely manner. To enable this, the DPMS must understand and document the industry-specific ML/FT/PF red flags for precious metals and stones and create awareness among the staff and relevant stakeholders.

Some of the red flags related to the precious metals and stones industry may include the following:

Large value transactions in cash, without adequate justification around the source of such funds
Involves the frequent trading of diamonds and gold in small incremental amounts
Involves the barter or exchange of PMS with reasonable margins within a short span of time
The customer is not willing to provide complete or accurate financial references, contact information, or any type of business affiliations
The supplier or customer attempts to maintain a high degree of secrecy about a transaction
PMS with characteristics that are unusual or do not conform to market standards
Payments being paid through a third-party account
Sales or purchases don’t conform to industry standards.
Sales or purchases are unusual for a particular supplier or customer
Transactions involving foreigners or non-residents from sanctioned, high-risk, or weak AML-regime countries
Customer makes unusual requests before transactions

Additionally, the procedures and controls must be in place to encourage the staff to report the observed risk indicators to the AML Compliance Officer, who later independently evaluates the suspicions and determines whether a report must be made with FIU.

The suspicious transactions or activities must be reported on the UAE’s FIU by the entity’s AML Compliance Officer by filing a Suspicious Activity Report (SAR) or Suspicious Transaction Report (STR), as the case may be.

AML Training

AML staff training is a critical compliance obligation for every dealer in precious metals and stones. Regular training must be provided to the staff and senior management to create awareness about AML compliance obligations and their roles and responsibilities.

Adequate AML training must be part of the new employee orientation program, and a refresher course must be designed for all employees to keep them updated with recent AML developments.

The training must not be restricted to mere AML regulations laws. The Compliance Officer must understand the training needs of the employees and design a personalised training program for the team, depending upon their involvement in AML activities (for example, for the customer-facing team, the training agenda must cover the Customer Due Diligence program and identification and reporting of red flags).

Focused. Flexible. Tailor-made

AML training for the Jewellery Sector by Certified AML Specialists.

AML Governance

To establish a robust AML compliance culture within the organisation, the AML/CFT program must be supported by senior management.

The senior management must set the right tone at the top. To enable this, the regulations require the Compliance Officer to prepare and submit a periodic AML/CFT report to the senior management, covering the necessary details on the compliance and the entity’s risk exposure, bringing management on board the AML compliance function. Senior management must review this report and provide inputs/feedback to the Compliance Officer to enhance the AML/CFT measures and risk mitigation capabilities.

Employee engagement is equally important for the effective functioning of the AML measures across the business. This calls for an adequate staff screening program, ensuring high standards in staff hiring, and imparting regular AML training to the staff (as discussed in the preceding point).

Further, DPMS must also implement an independent AML Audit function to ensure periodic testing of the quality and adequacy of the AML/CFT measures deployed and remediate any gaps.

Other goAML Reporting

Checkout the goAML reports you need to apply as a Dealer in Precious Metals and Stones Report (DPMSR)

Dealer in Precious Metals and Stones Report (DPMSR)

The DPMS is required to file a Dealer in Precious Metals and Stones Report (DPMSR) on the goAML portal to report the cash transactions or transactions involving international wire transfers (in the case of a legal person) amounting to AED 55,000 or more.

AML Record Keeping

Every dealer in precious metals and stones must maintain all AML-related records and documents, CDD files including identification details and documents, transactional records, reports submitted on the goAML Portal, etc., for five (5) years.

The record retention period is six (6) years for the DPMS registered with DFSA or the ADGM’s FSRA.

How can AML UAE assist Dealers in Precious Metals & Stones with AML Compliance?

AML compliance is critical for dealers in precious metals and stones operating in the UAE to safeguard their business operations and the overall PMS ecosystem from being exploited by money launderers.

With our domain knowledge and understanding of the AML regulatory requirements, we assist you with achieving AML compliance obligations while keeping your guard high against the financial crime risk.

AML UAE is a leading AML consultancy service provider. It assists DNFBPs, including dealers in precious metals and stones, with assessing business risk, customising AML/CFT policies and procedures, and training staff to adopt the best AML practices for combatting financing crimes.

FAQs: AML Compliance for Dealers in Precious Metals and Stones in the UAE

Criminals use gold, diamonds, and other precious metals/stones to launder illicit funds. Tracing the origin of such PMS is difficult, given its inherent characteristics of easy movement, high value-minimal size, and global market. Further, the PMS sector is a cash-intensive segment, wherein the transactions happen in cash, which can be brought from any source, giving criminals a larger window to introduce illegal proceeds.

No, if transactions are for the specified amount (i.e., equal to or exceeding AED 55,000), both B2B and B2C transactions must be reported in DPMSR on the goAML portal.

To adequately carry out the risk assessment, the dealers in precious metals and stones must consider the following factors:

Customer or Business Relationship specific risk
Products and transaction-related risk
Delivery channel-related risks
Geographical risk

Yes, adequate due diligence measures must be applied to identify the suppliers, their UBOs and verify the identity details using reliable, independent sources.

Ghost shipping under AML indicates a bogus or fictitious transaction, wherein buyer and seller come together to prepare fake documents for the fictitious transaction indicating that the PMS was supplied and payments were made, where neither there has been any goods movement nor any payments transferred. Ghost shipping is one of the Trade-Based Money Laundering methods.

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About the Author

Pathik Shah

FCA, CAMS, CISA, CS, DISA (ICAI), FAFP (ICAI)

Pathik is an ACAMS-certified AML consultant specialising in governance, risk, and compliance for regulated entities in the UAE. He brings over 28 years of experience, with 1,000+ hours of AML training and 200+ advisory engagements across DNFBPs, VASPs, and FIs. He supports businesses in aligning with AML/CFT requirements from the CBUAE, DFSA, MoET, MoJ, VARA, CMA, FSRA, and FATF. Known for translating complex regulations into audit-ready procedures, Pathik enables operational clarity and compliance readiness.

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Aligning Your Business with Global Sanctions Lists – Don’t Get Caught Short

Aligning Your Business with Global Sanctions Lists - Don't Get Caught Short

With global financial markets being interconnected, businesses in UAE engage with a diverse range of customers and partners from around the world. The Anti-Money Laundering (AML) and Targeted Financial Sanctions (TFS) regulations in UAE mandate businesses to implement effective sanctions-screening processes.

This involves designing, aligning, and implementing sanctions compliance programs with sanctions screening processes that cover national as well as global sanctions lists.

However, many businesses tend to fall short with the interlinking of these global sanctions lists within their AML/TFS compliance framework, which poses significant risks to businesses.

Here’s a list of factors that businesses need to be aware of to evade falling short of, while aligning global sanctions lists with their AML/TFS program:

Reputation Risk

Businesses must be mindful of not falling short in implementing global sanctions lists, as this can negatively impact their reputation. Associating with sanctioned individuals or entities, whether knowingly or unknowingly, can expose businesses to probable ML/FT and PF risks, which upon materialising can lead to negative publicity, loss of trust in the eyes of customers as well as regulatory authorities and damage the overall brand image.

Regulatory Risk

Regulated entities with their exposure to international clients must not ignore implementing global sanctions lists, as it would expose businesses to regulatory noncompliance consequences such as potential license cancellation, liquidation, or asset seizure. These risks arise from violations of regulatory requirements enforced by the regulatory authorities in the UAE. Further, it also leads to the imposition of administrative consequences and regulatory penalties such as fines, which significantly increase financial burdens and disrupt operations.

Criminal Charges

The inability to screen customers and partners against UNSC sanction lists and other relevant and applicable global sanctions can lead to criminal charges upon the business itself and its employees, such as the imposition of fines and penalties and the probability of imprisonment on the directors, senior management or compliance officers of the business. Both intentional and unintentional conduct resulting in the lack of adequate application of measures under TFS regulations may also trigger criminal liability for businesses.

Increased Supervision

TFS non-compliance results in increased regulatory scrutiny and supervision. Regulated entities must take into consideration the relevant sanctions lists in accordance with the legal requirements and the risk-based approach adopted by them.

Missed Red Flags

An entity having a global business must adhere to the legal obligations of the jurisdictions it does business with. Failure to take into consideration the relevant sanctions lists may lead leads to the onboarding of sanctioned individuals and entities likely to engage in illicit activities, including money laundering and financing terrorism.

Overlooking screening individuals and entities against global sanction lists would enable perpetrators to slip through weak sanctions screening programs, as no alert would be generated to stop them in their tracks. This would increase the likelihood of businesses missing out on red flags indicating involvement in illicit activities.

Financial Crime Risk

Any business’s failure to align with the relevant and applicable global lists opens the business to the chance of unknowingly facilitating financial crimes. Regulated entities dealing with foreign customers and suppliers must consider the sanctions lists of the respective countries to comply with TFS requirements.

Supply Chain Risk

Not identifying sanctioned individuals and entities in a timely manner across relevant and applicable global lists leads to supply chain vulnerabilities. Businesses face the risk of engaging with sanctioned suppliers, exposing themselves to regulatory penalties. This oversight compromises supply chain integrity by affecting production and distribution due to the potential involvement of criminals in misusing the supply chain of the business for their illicit purposes.

Export Control Violations

Entities engaged in import and export business must screen their customers, suppliers, and third-parties against the relevant sanctions lists. A failure to do so may result in selling or purchasing restricted products or dual-use goods to sanctioned entities or individuals, which can result in export control violations. Further, entities must have relevant license to deal in dual-use items.

Funding Risks

When a business is unable to meet sanctions compliance adequately, it may affect access to funding and financial services. Once a business gets penalised or flagged for non-compliance with AML/CFT and TFS laws, it becomes difficult for them to obtain funding from banks and financial institutions as they are viewed as high risk by these banks and financial institutions. This may lead to higher interest rates or difficulty in acquiring funding, disrupting cash flow and growth opportunities, and hindering smooth operations.

Business Continuity Risk

Businesses must adhere to TFS requirements as non-compliance consequences such as criminal charges and penalties would lead to uncertainty and instability in business operations. It increases legal challenges and regulatory scrutiny and damages reputation, which undermines long-term growth, making it difficult to manage business operations and safeguard the business to continue its operations smoothly.

Global Expansion Risk

Businesses must strive to evade global expansion risk by having in place an adequate global sanctions compliance program as authorities, prior to granting permission to operate in their country, perform due diligence on businesses, and any finding of noncompliance with global sanctions flags businesses and restricts their expansion plans as countries do want to let businesses with weak compliance operate within their jurisdictions.

Conclusion

For effective compliance with AML/TFS laws, businesses must align both domestic and international sanctions lists to ensure that they screen their customers, partners, and suppliers against the relevant sanction lists. Sanctions screening software can help automate this process and streamline compliance operations.

Role-Specific AML/CFT/CPF Compliance Training

The Federal Decree Law and Cabinet Decision on AML/CFT and TFS compliance requires businesses operating in the UAE to impart AML/CFT compliance training to their employees. The anti-money laundering, combating the financing of terrorism, and counter-proliferation financing (AML/CFT/CPF) compliance training allows staff to detect possible unusual or suspicious transactions, activities, and behaviour. In addition, these AML/CFT/CPF training programs ensure that the staff are well-qualified, well-trained, well-equipped, and well-aware of their responsibility to prevent and combat ML/FT threats.

Role-specific AML/CFT/CPF training programs aim to equip employees with the necessary knowledge and skills required to fulfil their roles and duties effectively within their organisation’s internal AML framework. This not only enhances the capabilities of the business in preventing and detecting risks but also helps the business from being exploited by criminals, maintains its reputation, and builds customer trust in the business.

The Role-Specific AML/CFT/CPF Compliance Training Program can be categorised as follows:

General Training to New Staff (Irrespective of their role/title)

Onboarding employees is a continuous process for any business or company. Thus, businesses need to ensure that new staff hired are given general AML training, irrespective of their role or responsibilities within the organisation.

Introduction of money laundering, financing of terrorism, and proliferation financing (ML/FT/PF) concepts and the AML/CFT/CPF legal framework. This would help staff members understand AML topologies, key AML international and national regulations and the impact of ML/FT/PF activities.
Explain the need to identify ML/FT/PF risks in order to safeguard the business against criminal activities.
Describe the obligation to report any identified suspicious activities and transactions to the MLRO so that the MLRO can take further action as required by law.
Explain the offence of tipping off to make them understand the importance of confidentiality and discretion in reporting suspicious activities (“tipping off”).

Frontline staff:

Frontline staff play a crucial role in the business’s AML/CFT strategy due to their role as the first point of contact with customers.

Explain the importance of the frontline staff in the regulated entity’s AML/CFT strategy and maintaining regulatory compliance. By helping them outline their responsibilities, they can understand AML measures and implement them effectively.
As frontline staff interact directly with customers, they must know internal policies and procedures in relation to KYC, CDD, and record-keeping, which helps them verify customer identities, assess risks, maintain accurate records, and keep compliance efforts.
Discuss and establish red flags and common ML/TF typologies. This will enable front-line staff to take a proactive approach to identify illicit activities and equip employees to be aware of transactions that deviate from normal behaviour.
Describe policies and procedures for reporting suspicious activities and transactions, as well as steps involved in filing the internal SAR/STR. Explain the tipping-off provisions so that they don’t end up informing their decision to file SAR/STR to suspicious customers and others.
Explain the concept of targeted financial sanctions and their purpose, the implications of non-compliance, and screening procedures. This will help employees better understand TFS obligations and prevent transactions with sanctioned individuals or entities.
Discuss strategies and guidelines for maintaining client relationships after filing a SAR/STR. This will help businesses in managing client relationships post-filing of a SAR/STR, which requires sensitivity.

Compliance Team:

Compliance Team plays a key role in supporting and facilitating communication across the entire office.

Explain the meaning of Ultimate Beneficial Owners (UBOs), their significance in due diligence, and the procedure to identify and verify UBO information. With such a program, AML/CFT compliance staff would be able to assess the risk associated with UBOs and ensure compliance with AML/CFT regulations.
Outline and discuss the procedure of Customer Due Diligence, Enhanced Due Diligence, and Customer Risk Assessment. As compliance staff is responsible for conducting these procedures, employees can effectively employ a risk-based approach to mitigating customer-related risks by understanding them.
Explain the purpose and scope of Targeted Financial Sanctions, identify sanctions lists, describe screening procedures, and the consequences of non-compliance. Understanding TFS is critical due to the role of compliance staff in preventing transactions with sanctioned individuals or entities.
Discuss the importance of ongoing monitoring of a business relationship and outline techniques and tools for the same. Compliance staff ensure ongoing monitoring; thus, with this training, they can promptly identify and evaluate potential risks and take action that may require further investigation.
Describe the organisation’s transaction monitoring procedures and explain automated and manual review procedures. Understanding transaction monitoring procedures enables staff to detect suspicious activities and patterns, allowing timely intervention and reporting.
Explain the regulatory reporting procedures around SAR, STR, HRC, HRCA, DPMSR, REAR, CNMR, PNMR, AIF, AIFT, RFI, and RFIT.
Explain the mandatory record-keeping requirements and types of records to be maintained, their storage and security-related aspects.

Managers:

Managers oversee the business environment and assign and assess what each employee is doing. Their role is crucial within AML compliance as they know the individual roles and responsibilities of employees.

Explain key AML/CFT laws and regulations, regulatory obligations specific to the organisation’s business operations, and the consequences of non-compliance. Such training is necessary due to the managers’ role in ensuring organisational compliance and creating a compliance culture.
Customise and provide specific training around AML/CFT compliance requirements, considering the nature of the business and the regulatory environment governing it. Such tailored training ensures that managers understand AML/CFT compliance requirements of the regulatory environment in which it operates.
Explain the purpose and benefits of the Enterprise-Wide Risk Assessment. A better understanding of conducting EWRA enables managers to identify, assess, and mitigate AML/CFT risks across all facets of the organisation’s operations.
Explain the purpose and scope of Targeted Financial Sanctions, identify sanctions lists, describe screening procedures, and the consequences of non-compliance.
Training around supervision of the overall compliance function and helping them understand the role of monitoring and AML measures in strengthening the AML/CFT compliance framework. This training is important as managers oversee the organisation’s compliance function, ensuring that AML/CFT policies and procedures are effectively implemented and adhered to.
Explain and describe the objectives for conducting health checks and internal audits. Managers would be better able to understand the importance of health checks and ensure that the required data is made available for the same. They would also be able to implement recommendations and corrective actions to address identified deficiencies.
Explain regulatory reporting requirements and discuss the implications of inaccurate or delayed regulatory reporting. This is important for timely and accurate reporting of AML/CFT activities to regulatory authorities, demonstrating transparency and compliance with regulatory obligations.
Insights into the AML software available in the market for compliance automation.

Compliance Officer/Money Laundering Reporting Officer (MLRO):

Compliance Officers (CO)/MLROs have the most important role as they work to combat financial crime in their businesses. Thus, for efficient implementation of AML frameworks within their organisation, businesses must conduct training for MLRO, which:

Elements of the latest National Risk Assessment (NRA) addressing the risks associated with the business sector, emerging typologies and guidance provided by the authorities.
Training on procedures for assessing and analysing internal Suspicious Activity Reports (SARs), Suspicious Transaction Reports (STRs), and other regulatory reports. This enables the MLRO to detect trends, patterns, and emerging risks.
Training focused on the guidelines for submission of regulatory reports on the UAE FIU’s goAML portal and tipping-off provisions so that MLRO understands any compliance gaps.
Training to keep abreast of AML/CFT regulatory changes and global best practices. With such training, MLRO would be able to enhance the overall capabilities of the business’s AML framework.
Compliance Officer’s duties towards the government and the employer.

Furthermore, businesses may conduct these programs online, in classroom training, or in hybrid mode. Each of these modes of training has its own speciality and advantages. Therefore, businesses must figure out which mode is suitable for which role for better performance.

About AML UAE

AML UAE can help your business empower your team against financial crime with role-specific AML/CFT/CPF compliance training. With our tailored approach, your business can equip your employees with the knowledge and skills to identify and mitigate risks effectively. Strengthen your business’s defences and uphold regulatory compliance with AML UAE training programs.

The Inter-Relationship of Money Laundering and Terrorist Financing

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It is essential to understand the concepts of Money Laundering (ML) and Terrorism Financing (TF) when embarking upon exploring the field of financial crime and Anti-Money Laundering (AML)/ Counter Financing of Terrorism (CFT) laws. This blog intends to enable financial crime enthusiasts and professionals to develop an understanding of basic concepts of ML/TF and delve into the inter-relationship of Money Laundering and Terrorist Financing.

Definition of Money Laundering

Money Laundering can be defined a process where illicit, ill-gotten gains, or profits of crime are disguised to make them appear as if such an income or profit was earned through legitimate sources.

Background of Money Laundering

Criminals, criminal syndicates or cartels, corrupt officials and politicians commit crimes or assist in the execution of crimes because of the motive to earn quick financial profits or gains. However, these financial gains earned due to criminal activities are often in the form of large amounts of cash, wire transfers in tax haven or regulatory haven countries, or in the form of virtual assets such as Bitcoin and Ethereum, to name a few. The concept of money laundering originated due to the requirement of evading detection by law enforcement agencies.

The catch situation these criminals face is that they cannot, like a straightforward law-abiding citizen earning genuine salary or business profits, go and deposit proceeds of crime into a bank account or transfer proceeds of crime from one criminal or syndicate to another by internet banking or wire-transfer services offered by banks and other financial institutions.

Any individuals or corporates wanting to use formal banking and financial institution services need to provide their details to fulfil regulatory compliances such as Know Your Customer (KYC) and Customer Due Diligence (CDD) requirements.

If criminals or criminal syndicates make use of formal banking and financial institution services, they would also end up being subjected to regulatory compliance requirements, which, if they truthfully provide, then they would end up being prosecuted as providing details of their own and their sources of income would establish their connection with crimes.

Criminals and criminal syndicates resort to money laundering to avoid such detection of earnings because of crime and prosecution by law enforcement agencies.

The word “launder” in the concept of money laundering refers to the act of washing away the traces of the criminal or illicit origin of funds acquired by various illicit activities such as extortion, drug dealing, human trafficking, and so on.

Process of Money Laundering

The process of money laundering enables criminals and criminal syndicates to separate the connection between them and the proceeds of crime acquired by them. Money laundering makes it possible to do so as the process of money laundering contains three steps:

Placement: At this first stage, the proceeds of crime in cash form or other assets acquired as profits from criminal activity are introduced into the legitimate financial system. Examples include:
- Dividing large sums of money into smaller chunks and depositing the same in multiple bank accounts to avoid crossing the reporting threshold and triggering reporting requirements.
- Buying foreign exchange in cash with illicit cash.
- Purchasing gift cards with stored value in cash and using gift cards to transfer funds/carry cash.
Layering: At this second stage of money laundering, the illegally acquired money is separated from its origin by the introduction of layers that help conceal or disguise the illicit origin and give fake legitimate proof of such gains. Examples include:
- Moving funds within the same group of shell companies by creating fake invoices.
- Converting deposited cash into financial instruments.
- Investing in real estate and high-value precious metals such as gold and silver.
Integration: At this third and last stage of the money laundering process, legitimacy is given to the illicit income by facilitating the re-entry of layered funds into the mainstream economy. Examples include:
- Creating business relationships and contracts with legitimate businesses and investing funds in such businesses
- Investing or purchasing high-value assets such as yachts, artwork and high-priced limited-edition vehicles and watches.

In simple words, money laundering is a process that disguises illegal sources of gains or income and makes it appear as if the same was acquired legitimately. Criminals resort to money laundering techniques to avoid detection and prosecution by law enforcement authorities.

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Definition of Terrorist Financing

In order to understand the definition and concept of terrorism financing, it is essential to understand what terrorism means. Terrorism is the use of force, violence, and destruction of property and human life, with the intent to intimidate or force governments and people at large to support or comply with the objectives and demands of people carrying out terrorism, also known as terrorists. Examples of terrorism include mass killings through suicide bombers, hijacking and destruction of monuments.

Carrying out terrorist activities requires extensive funding for the purchase of weapons and explosives, training of individuals to further out terrorist activities, recruitment of terrorists, and related activities.

Process of Terrorism Financing

Terrorism Financing is a process through which terrorist organisations or individual terrorists acquire funds to further their terrorist activities. Terrorists can acquire funds for their motives through multiple means, including legal and illegal means. The process of terrorism financing is carried out in four stages:

Raise: At this first stage, terrorists acquire funds by evading formal channels and collecting funds that help them in carrying out terrorist activities. Examples include:

- Seeking funds through donations under false pretexts, such as donations for surgery of underprivileged children.
- Collecting donations from supporters of similar fanatic ideologies.

Store: At this second stage, terrorists, after raising funds, look to store the funds until it is safe to move these funds to prevent detection by authorities. Examples include:

- Purchasing cryptocurrencies or virtual assets.
- Purchase of high-value assets such as art and antiques.
- Depositing cash in several bank accounts.

Move: At this stage, terrorists mobilise the funds. The movement of funds is carried out by various formal and informal ways of channelling funds. Examples include:

- Sale/Transfer of virtual assets.
- Bulk cash couriers.

Use: At this stage, the goal of terrorism financing is within reach of terrorists. They utilise funds for:

- Purchase of weapons.
- Purchase of destructive materials.
- Recruitment of people for terrorist motives.

Importance of Understanding the Inter-Relationship between Money Laundering and Terrorist Financing

Effective implementation of ML/TF risk mitigation measures requires persons involved in their implementation to have basic training and an understanding of core concepts of AML compliance, such as what ML/TF is and the interrelationship between them.

The persons involved in the implementation of AML compliance measures are the customer-facing staff, the compliance team, including the AML compliance officer, and the senior management of the business, responsible for signing off the onboarding and continuation of business relationships with high-risk customers.

Knowledge of the inter-relationship between money laundering and terrorist financing also enables businesses such as DNFBPs and VASPs to implement the risk-based approach in curtailing ML/TF in a more effective manner, as both ML/TF have similar countermeasures and red flags where one helps identify and curb another at the same time.

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Similarities between ML/TF

When it comes to addressing similarities between ML/TF, following considerations need to be made:

1. The countermeasures in preventing the occurrence of money laundering and terrorism financing serve dual purposes, such as:

Identification of suspicious activities and transactions by having suitable and adequate Know Your Customer (KYC) / Customer Due Diligence (CDD) practices in place.
Regular monitoring of transactions.
Compliance with AML/CFT laws and regulations.

2. ML/TF have similar channels of execution:

Relying on cash couriers, exchange houses, and similar channels to “layer” or “move” funds for illicit purposes.

Difference between ML/TF

Money Laundering	Terrorism Financing
Motive: Money laundering is conducted with the motive to wash away or disguise the illicit origin of funds to enable the launderer to use funds and separate the illegal origin of money from the money itself.	Motive: Terrorism financing is conducted with a singular goal to further religious ideologies and spread fear and destruction by conducting terror events such as bombings or hijackings.
Source: The source of money laundering is always through an illegal activity, a predicate offence.	Source: The source of terrorism financing can be both legitimate or illegal; for example, terrorists may collect funds legally through crowdfunding or may collect funds illegally by utilising proceeds of crime earned by committing other crimes such as extortion or human trafficking racket.
Methodology: The process of money laundering is circular in nature, meaning that the person acquiring illicit proceeds is the beneficiary or the ultimate user of laundered funds.	Methodology: The process of terrorism financing starts with collecting funds from various legal and illegal sources and ends up being used by terrorists in conducting terror events. Thus, the movement of funds is linear in nature.

Inter-relationship of Money Laundering and Terrorist Financing

Money laundering and terrorism financing are closely interlinked concepts due to their inherent nature of facilitating the movement of illicit funds through multiple channels till they are ready for final use. Both ML/TF use and rely on similar channels of carrying out the “layering” or the “moving” of money, such as cash couriers, or exchange houses. Other than this, the red flags for ML or TF might indicate the presence of another and help curtail both.

1. Shell Companies

Both Money Laundering and Terrorist Financing involve Shell companies to hide the Ultimate Beneficial Owners.

2. Complex Transactions

Criminals resort to complex financial transactions to make it difficult for regulatory authorities to reach the ultimate source of their ill-gotten money. This holds true for both money laundering and terrorist financing.

3. Trade-Based Money Laundering (TBML)

Both Money Laundering and Terrorist Financing involve manipulation of trade transactions to disguise the movement of funds.

4. Shared Vulnerabilities

The word vulnerability refers to the openness to being attacked. In the context of ML/TF risk, businesses are vulnerable to being misused as a channel or instrument to further ML/TF activities by launderers or terrorists. This shared vulnerability exists due to the presence of similar structures or channels to conduct money laundering or terrorism financing. The infrastructure relied on by businesses to conduct cross-border transactions or international business transactions, or while dealing with virtual assets, is often targeted by money launderers and terrorism financing groups for exploitation and transferring proceeds for their illicit motives.

5. Overlap in Regulatory Obligations

The regulated entities have to craft AML/CFT policies and procedures, conduct KYC and CDD, perform transaction monitoring, maintain records, appoint independent auditors, submit regulatory reports like SAR/STR, and have a proper governance framework to counter ML/TF. These obligations are aimed at tackling money laundering and terrorist financing issues simultaneously.

6. International Cooperation

Given the cross-border nature of money laundering and terrorist financing, the countermeasures require international cooperation.

7. Socio-Economic Impact

The prevalence of money laundering and terrorist financing have a devastating socio-economic impact. They can affect economies adversely and undermine public trust in banks and financial institutions, and therefore, it is important to address both issues together.

8. Mutual Dependence Between Money Laundering and Terrorist Financing

As discussed earlier, terrorists always require large amounts of funding regularly to support their activities, such as the training and recruitment of new terrorists, purchase of weapons, ammunition, tracking and interception equipment, and so on. The primary motive of TF is to spread fear and destroy human lives in the name of ideologies, which is only possible through conducting terrorist activities supported by a supply of funding.

The funding for TF is supplied through legal and illegal means. Terrorists acquire funds legally through a collection of small donations from a substantial number of individuals supporting the ideology or may receive state-sponsored funds. Terrorists can also acquire funds illegally through a collection of funds in the name of donation under a false agenda or through other crimes such as drug dealing, human trafficking, drug trafficking, and other crimes.

Whenever the element of cross-border or international transfer of funds from one country to another comes into the picture, terrorists inevitably have to rely on money laundering processes such as layering as well as integration, where the ultimate user of illicit proceeds can access the funding across the globe, easily and without raising suspicion in the eyes of law enforcement agencies.

The sly and swift manner in which launderers transfer and disguise copious amounts of funds is what draws terrorist groups to rely on money laundering channels to move and store their funds, waiting for the right time to make use of such funds in a manner which avoids alerting law enforcement agencies.

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Challenges in Combatting Money Laundering and Terrorism Financing

The challenges in combatting ML and TF are multi-fold, arising due to a variety of factors, such as:

1. Emergence of New Typologies

With increasing regulations and compliance requirements in countries that strive to combat ML/TF effectively, the launderers and terrorists frequently manage to find loopholes to circumnavigate the regulatory checks and balances to curb ML/TF risks.

The conduct of finding loopholes and innovating ways to avoid detection and prosecution by law results in the emergence of new ML/TF typologies.

New ML/TF typologies are used by criminals on a daily basis across the globe, making it difficult for businesses implementing detection mechanisms to identify new typologies and the regulators investigating and deciding on Suspicious Activity Reports (SARs) and Suspicious Transaction Reports (STRs) submitted to them whether certain behaviour or transaction is actually a red-flag indicating ML/TF motive or false alert.

New typologies of ML/TF make it difficult for businesses to report them as they might not be aware of new means of conducting ML/TF used by criminals, leading to non-reporting of such activity or transaction and criminals passing through compliance filters without consequences.

2. Mismatch in Regulatory Controls

The degree and extent of effectiveness and stringency of ML/TF regulations vary from country to country. This results in launderers or terrorists resorting to funnel their illicit proceeds from one weak regulatory country to another with ease and decreased chances of detection.

This mismatch of stringency in regulatory controls results in enabling launderers and terrorists to mobilise and channel their illicit proceeds for ultimate use in laundering money and conducting terrorist events.

3. Non-Adherence to Global Standards

The Financial Action Task Force (FATF) is a global watchdog for ML/TF controls across the world. It sets out recommendations for countries and businesses operating within to combat ML/TF risks more effectively.

However, there are still countries that do not follow or come in alignment with FATF and other global standards, resulting in increased risk of ML/TF risks in those countries. This impact of increased risk flows from weak AML/CFT jurisdiction to countries that have their regulations in place.

4. Lack of trained AML Professionals

The lack of trained AML professionals contributes to the compliance deficit. Many countries face a lack of trained AML professionals who can be employed by regulated businesses in their country to look after AML/CFT compliances. This lack of appropriate talent results in difficulty for businesses in adhering to applicable ML/TF compliances in totality.

5. Lack of Awareness in Non-Financial Sector

Most medium and small–scale DNFBPs and VASPs are unaware of their AML/CFT regulatory compliance obligations. They usually go on conducting business until a fine/ penalty or inspection from the regulator takes place. This results in business being already used as a channel for laundering or terrorism financing before compliance measures are implemented.

Global Efforts in Fighting ML/TF

The FATF, United Nations, Wolfsberg Group, Egmont Group, and multiple FATF Styled Regional Bodies (FSRBs) are testament to global efforts in fighting ML/TF. They collect and disseminate information about potential ML/TF threats in the form of suspicious activity and transaction reports received by Financial Intelligence Units (FIUs) of various countries. They analyse and map trends of ML/TF typologies and threats. By doing so, they produce new methodologies and suggestions to curb ML/TF.

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About the Author

Pathik Shah

FCA, CAMS, CISA, CS, DISA (ICAI), FAFP (ICAI)

Pathik is an ACAMS-certified AML consultant specialising in governance, risk, and compliance for regulated entities in the UAE. He brings over 28 years of experience, with 1,000+ hours of AML training and 200+ advisory engagements across DNFBPs, VASPs, and FIs. He supports businesses in aligning with AML/CFT requirements from the CBUAE, DFSA, MoET, MoJ, VARA, CMA, FSRA, and FATF. Known for translating complex regulations into audit-ready procedures, Pathik enables operational clarity and compliance readiness.

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AML Compliance eBook for DPMS

The Bling of jewellery is a point of attraction for common masses and criminals alike. This makes the Precious Metals and Stones Industry vulnerable to Money Laundering (ML), Financing Terrorism (FT), Proliferation Financing (PF), and other financial offences. Dealers in Precious Metals and Stones (DPMS), due to the high-risk nature of their products, which can be easily liquidated, smuggled, transported, misused, and exchanged by criminals to further their illegal motives, need to exercise great caution while conducting usual transactions.

Dealers in Precious Metals and Stones need to have in place a dedicated internal Anti-Money Laundering (AML) Framework. The AML Framework needs to be formulated on the foundational stones of Risk-Based Approach (RBA), that mandates applying risk mitigation measures in proportion to the nature, extent and degree of ML/FT and PF risk to which it is exposed.

This Guide navigates the complexities of AML Compliance and provides an in-depth understanding of the AML compliance obligations of Dealers in Precious Metals and Stones (DPMS) as Designated Non-Financial Businesses and Professions (DNFBPs).

This guide includes:

All About goAML Registration for Dealers in Precious Metals and Stones: A step-by-step guide to assure a seamless registration process on goAML portal, which is a mandatory AML compliance requirement.
Tailoring AML/CFT Policies and Procedures: A comprehensive AML framework that helps DPMS formulate, design, customize, and implement their policies in line with organizational goals and requirements.
A-Z of AML Compliance: From A for Appointment of Compliance Officer, B for Business Relationships handling and monitoring, C for Customer Due Diligence (CDD) and R for Record Keeping, this guide contains all.
Comprehensive Coverage of Reporting Requirements: A complete instruction on factors to be considered and situations necessitating the filing of DPMS Report (DPMSR), High-Risk Country and Activity Reports (HRC)/(HRCA) and other goAML reporting.
AML Training and Governance Simplified: Everything a DPMS needs know about creating a robust AML compliance culture within their organization.
FAQs on AML Compliance for Dealers in Precious Metals and Stones (DPMS): The guide answers several frequently encountered queries about DPMS AML compliance.

After reading this guide, DPMS will learn about implementing the right and necessary AML compliance measures to prevent ML/FT and PF through their business.

Check out the booklet now!

Switching Sanctions Screening Software: Pain or Gain?

Sanction screening is an essential element of the Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) framework. The UAE’s AML/CFT regulatory framework mandates regulated entities to undertake sanction screening processes to effectively detect sanctioned individuals and entities and adopt mitigating measures for them.

The regulated entities are free to determine whether they want to conduct sanctions screening manually or use screening software. If an entity is performing name screening manually and then it decides to switch to name screening software, it is not that easy. The same is true for an entity trying to switch from one sanctions screening software to another.

Manual sanctions screening processes are inefficient and time-consuming. Further, screening against the outdated sanctions list increases the risk of money laundering, financing terrorism, and proliferation financing (ML/FT and PF). Since everything is manual, one has to keep a constant eye on changes in the sanctions list, which is virtually impossible.

The regulated entities are required to maintain AML/CFT records for a minimum of 5 years. With manual screening, it is difficult to meet this requirement. This necessitates a switch to sanctions screening software.

Constantly changing regulatory requirements, business expansion, and inefficient sanctions screening software necessitate a switch from one sanctions screening software to another.

The regulated entities also decide to switch from one name-screening software to another when the vendor fails to provide the required support or features. A change in front office solution also necessitates API-based support for sanctions screening, and not all software vendors carry that API-based support. However, change is always painful, and so is the case with a change in the sanctions screening software.

Pain Points in Sanctions Screening Software Switches

Here’s a list of key pain points associated with the switch from manual processes to sanctions screening software and a change from one screening software to another:

Data Migration:

Migrating existing data from manual records to screening software is a time-consuming task. The same is the case with migrating data from one screening software to another. It requires careful planning, data cleansing, and validation to ensure accuracy and compliance.

Integration with Other Systems:

Integrating new sanction screening software with other systems, such as customer relationship management and other AML software, can disrupt workflows and require adjustments to the overall AML framework.

Configuration:

Configuring sanction screening software to business requirements needs time investment and a thorough understanding of the system’s capabilities. Which might not be available to regulated entities.

Training:

Implementing new sanction screening software requires expertise and skill for which regulated entities need to provide training programs to their employees, delaying the AML measure and making it more expensive.

Disruption and Downtime:

Switching to sanction screening software inevitably leads to disruptions in regular operations and potential downtime during the implementation phase

License Cost:

Implementing new sanction screening software requires procurement of licenses from vendors, which puts a significant financial burden on regulated entities.

False Positives/Negatives:

There is a possibility that upgraded software screening software may generate false positives or negatives, potentially impacting the efficiency of operations and compliance effectiveness of regulated entities.

Rigidity:

There could be issues related to scalability. The sanctions screening software may not be capable of scaling in line with business growth, or sometimes it is just too expensive to upscale. A downfall in business may necessitate surrendering of extra licenses and sometimes the licensing policy of the vendor does not allow it.

Vendor Lock-in:

Switching sanction screening software can be challenging for regulated entities as they may have paid upfront for the software usage, and a switch to new software makes those licenses redundant. In some cases, the businesses are required to pay for the software for a minimum of 12 months. This type of vendor lock-in makes it difficult for entities to switch from one software to another.

Customisation:

Regulated entities need to implement sanction screening software that is customised to their need. However, customisation takes time, increases costs, and makes it difficult for regulated entities to switch from one software to another.

Support:

Access to reliable and spontaneous support services for resolving issues and addressing concerns for smooth software can be difficult and may not be available on time, which can hamper the overall sanction screening process.

Gain Points in Sanctions Screening Software Switches

Even though there are various headaches attached to switching sanction screening software, it is still worth it for regulated entities.

Here is the list of the key gain points that make switching to sanction screening software beneficial and necessary for regulated entities aiming to mitigate ML/FT and PF risks:

Accuracy:

Upgrading sanction screening software helps regulated entities achieve the accuracy of identifying potential matches. Switching from one software to another or manual processes to an automated one that uses advanced algorithms and database capabilities ensures more concise results. With such a switch, regulated entities can reduce false positives and enhance their overall effectiveness in risk detection.

Improved AML/CFT Compliance:

Technology keeps getting updated, and so does AML software. Switching to upgraded sanction screening software offers enhanced compliance functionalities that also align with evolving regulatory requirements. Therefore, by switching sanction screening software, regulated entities can enhance their compliance with AML/CFT regulations and reduce compliance risks. Furthermore, regulated entities can reduce the risk of screening against unwanted or outdated information and achieve accuracy in risk management.

Enhanced CDD and EDD:

With global reach and advanced features, switching to upgraded sanctions screening processes, regulated entities in UAE would be better at undertaking effective customer due diligence and enhanced due diligence processes. This includes better identification of sanctioned individuals and entities, segregating them based on the risk attached to each customer, and helping regulated entities adopt appropriate counter-measures, thereby strengthening overall risk management practices.

Efficiency:

Switching to new sanction screening software that has more capabilities and advanced features for data collection, matching, and reporting, regulated entities can optimise the screening process. This streamlines the screening process, saves time and resources, and increases the efficiency of the business.

Global Coverage:

Upgraded sanction screening software provides extensive coverage of global databases and regulatory lists. With such global coverage, regulated entities can identify risks associated with international customers, entities, and transactions, thereby strengthening the business’s risk management framework.

Advanced Features:

The latest sanction screening software offers advanced features such as machine learning algorithms, global databases, and matching techniques. These advanced capabilities improve the ability of regulated entities to detect potential matches and complex patterns, enhancing the accuracy and efficiency of the screening process.

Scalability:

With the growth in the business or any updates in regulatory requirements, upscaling is necessary. A switch to new software, which is scalable to support more users, features, and modules, helps entities meet their compliance objectives. The upscaling or downscaling requirements can result from increased transaction volumes, new markets, and additional compliance demands. The scalability of upgraded software ensures that the regulated entity is adaptable to any change in the business or regulatory landscape.

Better Return on Investment (ROI):

Although there are initial costs associated with switching to new and upgraded sanction screening software, its long-term benefits are often more than the investment. With enhanced efficiency, reduced compliance risks, global coverage, and improved risk mitigation, regulated entities can reduce their overall operational costs, mitigate risks, and safeguard their reputation, thereby having a better ROI.

Enhanced Reporting and Audit Trail:

Modern and upgraded sanction screening software uses technologies that reduce false positives and negatives in sanctions screening. Enhanced reporting features not only save time but also costs associated with compliance. The AML software also maintains a complete audit trail, helping entities face inspections and audits confidently.

Par with Industry Standards:

Switching to upgraded sanction screening software enables regulated entities to adhere to new technology, best capabilities, and standards in AML/CFT compliance. This not only ensures the credibility of regulated entities in combating ML/FT and PF risk but also allows regulated entities to adopt strategic initiatives.

Security:

Sometimes, a switch from manual processes to automated and one solution to another is necessary from a security standpoint. The new AML software might have better security features to protect client and compliance records.

Integration for API Support:

The legacy system may not have the API support to facilitate integration with the point of sale or back-office systems. A switch to a new AML software helps integrate various modules like sanctions screening, KYC, customer risk assessment, case management, and transaction monitoring with the front and back-office systems.

Better Vendor Support:

Sometimes, a switch to new AML software is necessary for the poor support provided by the existing vendor. A new vendor might provide better support services.

Customer Experience:

Erstwhile manual or legacy systems may cause delays in processing customer information from a compliance standpoint. A new AML software can provide self-service features, providing a lot of ease in doing business.

Conclusion

Therefore, even though switching to sanction screening software has many pains associated with it, regulated entities can gain effectiveness in mitigating the ML/FT risks while enhancing operational efficiency and regulatory compliance by switching it.

The significance of cash thresholds in fighting money laundering and terrorist financing

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Money Laundering and Terrorist Financing are global concerns. They have an adverse effect on the economy and society. Governments across the world have enacted various laws and regulations. One of the important controls implemented by regulators across the world is establishing cash thresholds, i.e., setting up cash transaction limits to ensure that criminals don’t indulge in large-scale placement of their illicit money.

Definition of cash thresholds

Cash thresholds are the limitations on cash transactions that regulatory authorities impose to monitor them. Cash threshold is a monetary limit and if the transaction value exceeds that limit, the regulated entities are required to report it to the authorities.

This article focuses on the significance of cash thresholds in the fight against money laundering and terrorist financing. We will understand how criminals generate illicit cash by committing predicate offences and try to place it into the legitimate economy and how regulators try to control it, and the blog throws light on the following:

Importance of UBO identification in cash transactions
Challenges in implementing cash thresholds
Best practices to implement cash transaction limits effectively
Role of technology in enforcing cash thresholds

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Overview of how cash thresholds function in AML/CFT framework

Overview of money laundering and terrorist financing

Money laundering and terrorism financing are foremost matters of interest worldwide. These are types of financial crimes that are damaging the international financial system. These crimes can also affect people’s security, economic stability, and a country’s integrity.

Money laundering involves hiding the origin of illegal funds and placing them in the legal financial system. Terrorist financing means funding activities related to or causing terrorism. Thus, both are financial crimes plaguing the global economy.

Importance of fighting ML/TF for global stability and security

These are transnational crimes that affect many countries worldwide. So, regulators need to implement proper AML/CTF measures to prevent or mitigate these threats. Fighting against ML and TF guarantees strong financial systems and economies worldwide.

By fighting against ML and TF, you can also contribute to global stability, security, and integrity in the following ways:

The proper drafting and implementation of AML/CFT regulations help curb financial crimes, creating a stable, trustworthy, and secure financial system.
The AML/CFT measures aimed at blocking illicit funds from entering the financial system help prevent and detect financial crimes. They also ensure that legitimate businesses are not used as conduits for conducting illegal activities.
The fight against terrorist financing helps ensure the safety and security of citizens.
Various ML/TF countermeasures like cash transaction limits help track funds generated from other illegal activities like corruption, drug or human trafficking, bribery, and fraud. Thus, these measures help reduce crimes in the world, making it secure and better.
The implementation of proper AML/CTF measures contributes to international cooperation in the fight against the ML/TF.

How can cash transactions be used for money laundering and terrorist financing?

Cash payment is the most convenient way for customers to buy products and services. At the same time, it’s the most accessible medium for money launderers to commit crimes. Financial criminals use cash to launder money or finance illicit activities.

Money Laundering

Cash transactions can enable any of the three stages of money laundering – placement, layering, and integration. Whether it is placing illegal funds in the legitimate financial system, creating layers to hide its source, or bringing back the illicit money into the financial system in a clean form, cash transactions facilitate all three.

Money laundering and cash transactions:

Conducting small cash transactions from different bank branches or accounts.
Using illegal cash to buy property and then selling it at lower prices.
Overvaluing or undervaluing the property price to launder the difference.
Using illegal cash to buy luxury items and resell them to make the transaction legitimate.
Using cash-intensive businesses like restaurants to mix dirty money with legal revenues.
Placing illegal cash between legitimate cash transactions and showing higher business revenues.
Processing illicit cash transactions through shell companies or offshore bank accounts.
Using money mules to conduct multiple small cash transactions across borders.
Using dirty money in cash form to buy insurance or securities.
Converting illicit cash into different currencies through currency exchange services.
Using illegal cash in gambling and casinos and requesting a cheque for the remaining amount to make it look legal.
Moving cash across borders by over or under-invoicing or misrepresenting the quantity or quality of goods.

Terrorist financing

Cash transactions also enable the four stages of terrorism financing – collecting, storing, moving, and using funds for terrorist activities. Since one can use cash in any of these stages, terrorist financing becomes possible with cash transactions in the following ways:

Terrorist financing and cash transactions:

Direct cash transactions to buy weapons, explosives, or any other items necessary for terrorism.
Using cash to support the living needs of terrorists.
Buying luxury items with illicit cash and selling them later to raise funds for terrorist activities.
Terrorists run cash-intensive businesses like casinos, restaurants, etc., and disguise illicit money as cash generated from legitimate business activities.
Cash can be transported across borders via individuals, bags, or vehicles using multiple routes to avoid detection.
Creating charitable and religious organisations to receive cash donations and use them in terrorism activities.
Misrepresentation of quality, quantity, or value of goods in international trade to fund terrorism.
Terrorists over or under-invoice goods across borders for international trade to hide illegal cash movements.
Using cash to support terrorist movements across borders by blending them with refugees or migrants.
Using students, tourists, or other mules to transfer cash across borders to fund terrorism activities.

Why do criminals prefer cash transactions?

Criminals prefer cash transactions to conduct various activities for the following reasons:

No records

Cash transactions leave no trail, so criminals prefer them.

Involvement of third parties

It is easier to include third parties or intermediaries in cash transactions. No need to maintain records of such persons and use as many to add layers of complexity.

Convenience

Cash is a preferred way of conducting a financial transaction in several jurisdictions. In particular, cash-intensive businesses like restaurants, casinos, and retail stores. One can mix illegal money with the revenues of such businesses to show exaggerated revenues.

Easy and fast

Cash transactions are easy and fast, involving no hassles or tedious procedures.

Easy to smuggle

It is easier to smuggle cash across jurisdictions.

Convertible

Cash is the preferred payment method to buy luxury goods or deposit in bank accounts. Thus, one can convert dirty money into legitimate money.

Easy to hide

It is easier to hide illicit cash. Moreover, one can break down a large cash transaction into several smaller valued ones. Whatever way one uses, one can avoid thresholds or restrictions.

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Cash thresholds and AML/CFT regulatory requirements

The UAE has laid relevant cash threshold requirements under AML/CFT regulations to curb ML/TF. Here is the list of Cash Transaction Limit in UAE:

Cash Transaction Limit for Real Estate Agents and Lawyers

Real Estate Cash Transaction Limit for Free Hold Real Estate Buy/Sale Transactions:

Real Estate Agents and Lawyers are required to report any single cash transaction or several transactions that appear to be interrelated equal to or exceeding AED 55,000/- to the UAE FIU in the form of a Real Estate Activity Report (REAR).

Cash Transaction Limit for Dealers in Precious Metals and Stones

Gold, Jewellery, Precious Stones Cash Transaction Limit:

Dealers in Precious Metals and Stones are required to submit Dealers in Precious Metals and Stones Report (DPMSR) with the UAE FIU for any single cash transaction or several transactions that appear to be interrelated equal to or exceeding AED 55,000/-.

Other AML/CFT Regulatory thresholds

Customer Due Diligence

Ocassional Transaction Limit:

Customer Due Diligence is a mandatory requirement for establishing a business relationship. In case of occasional transactions, if the transaction value equals to or exceeds AED 55,000/-, Customer Due Diligence must be performed.

If the occasional transaction involves a wire transfer equal to or exceeding AED 3,500/-, customer due diligence must be performed.

Further, Virtual Asset Service Providers (VASPs) have to carry out customer due diligence when conducting occasional transactions in favour of a client for amounts equal to or exceeding AED 3,500, whether the transaction is carried out in a single transaction or in several transactions that appear to be linked.

Threshold related to DPMS and Applicability of AML/CFT Laws

Dealers in Precious Metals and Stones when they engage in carrying out any single monetary transaction, or several transactions which appear to be interrelated, whose value is equal to or greater than AED 55,000 are required to follow AML/CFT obligations under the AML/CFT legislative and regulatory framework of the United Arab Emirates.

Record keeping

UAE requires regulated entities to maintain records of all transactions for five years. However, the record keeping duration varies from one supervisory authority to another.

The Virtual Assets Regulatory Authority (VARA) mandates Virtual Assets Service Providers (VASPs) to maintain records for a duration of 8 years
Dubai International Financial Centre (DIFC) requires DNFBPs to maintain AML/CFT compliance and CDD records for 6 years.
UAE Securities and Commodities Authority (SCA) requires regulated entities to maintain AML/CFT compliance and CDD records for 10 years.

This applies to transactions above and below the cash thresholds.

Customs Declaration Form

Besides AML/CFT regulations, Travellers entering or leaving the UAE carrying currencies, negotiable bearer financial instruments, precious metals, or precious stones of value exceeding AED 60,000 have to submit the customs declaration form.

Thus, cash thresholds are a significant part of AML/CTF regulations. With these limits, one can detect and report suspicious transactions.

Why is it important to identify UBOs in cash transactions?

By the risk factors of cash transactions, you would have understood why AML measures are necessary for them. These AML measures enable an intense fight against cash transaction threats. You can also prevent possible money laundering and terrorism financing activities.

Such appropriate AML measures include KYC and CDD. Identifying UBOs is a critical element of KYC and CDD. So, make it a practice to identify the ultimate beneficial owners of cash transactions.

A UBO means an individual controlling, owning, or benefitting from an entity. They might not be the apparent owners, but they receive all the benefits or control the operations in the background. In the case of a cash transaction, it means the individual that benefits from the cash transaction.

Identifying UBOs of cash transactions helps figure out the actual person behind a cash transaction and check if they are sanctioned individuals, PEPs, or persons with criminal history. If there are any red flags around the UBOs, you can take a risk-based approach, conduct EDD and submit SAR/STR as per the facts of the case.

Significance of cash thresholds in fighting ML/TF

Cash transaction limits play a huge role in the early detection of a possible crime. Here are the points highlighting the significance of cash thresholds in fighting money laundering and terrorist financing:

Helps identify suspicious activities

Cash transaction thresholds help identify suspicious activities where customers resort to purposefully keeping transaction amounts below the regulatory reporting thresholds.

Helps fight ML/TF effectively

Cash transaction thresholds enable the identification of suspicious activities. You can stop them or conduct further investigations to confirm the suspicion. Thus, these cash transaction limitations help you strengthen your fight against money laundering, terrorism financing, and other crimes.

Ensures regulatory compliance

Setting cash transaction thresholds helps you detect reportable transactions to the UAE FIU. Hence, it ensures regulatory compliance with UAE’s AML laws.

Ongoing monitoring

Cash transaction thresholds help in the ongoing monitoring of a business relationship. One can study various trends and patterns and identify customers who structure their transactions to avoid them being reported to the authorities.

Discourages illicit activities

Cash transaction thresholds discourage illicit activities because it makes it difficult for criminals to make large-scale cash deposits.

Helps take a risk-based approach

Setting a cash transaction limit helps you identify customers conducting such risky transactions. You know their risk levels and define enhanced due diligence measures for them. Thus, you can take a risk-based approach to AML measures against money laundering and terrorism financing.

Facilitates international cooperation

Defining cash thresholds and implementing them helps follow global best practices and FATF recommendations. It shows commitment to the global fight against financial crimes by facilitating cross-border investigations.

Challenges in establishing and enforcing cash transaction thresholds

So, you can see that the significance of cash transaction thresholds is in the prevention of financial crimes. However, it is not easy to establish these thresholds, here is the list of challenges:

Structuring

Criminals tend to structure transactions in such a way that they are able to avoid reporting thresholds. The detection of this is resource-intensive, and not all small and medium-sized businesses are equipped to detect such transactions.

Use of multiple accounts

Another way criminals avoid cash thresholds is by conducting transactions through multiple accounts. When they use different accounts in the same or different financial institutions, they can avoid detection.

Resource-intensive

Cash threshold necessitates transaction monitoring to detect and analyse various trends and patterns. This increases operational burden.

False positives

Another challenge of cash thresholds is the number of wrong suspicions they generate. Many transactions exceed the cash transaction limits when they are linked, so you mark them as suspicious and generate reports. However, on further investigation, many of them will be false. Dealing with such false positives can overwhelm you and regulatory authorities.

Data quality

Data quality is also a critical test in such cash thresholds. The customer data you check has little to no information on all factors. Or the data is inaccurate. Handling all these data quality issues is a big challenge while enforcing cash thresholds.

Varying AML/CFT regulations

The problem in cash threshold implementation occurs at the time of cross-border transactions. The varying limits around cash transaction reporting make it difficult to detect illicit transactions. It becomes challenging when a customer prefers transactions in jurisdictions with no cash thresholds or limits.

Privacy concerns

Data privacy is a challenge while enforcing cash thresholds. Per the transaction monitoring requirements under AML, one needs to collect a lot of personal information about the customers. Customers might find all these queries invasive and not cooperate or form a business relationship. Thus, compliance with data privacy laws becomes a challenge with implementing cash transaction thresholds.

Employee awareness and training

Establishing and enforcing cash thresholds becomes difficult if the employees are not trained. Awareness of these cash thresholds, red flags of suspicious transactions, and managing the procedure is essential. In the absence of such awareness and training, it becomes challenging to enforce cash transaction limits.

Insider threats

Insider threats are crucial challenges in any compliance-related topic. If employees comingle with criminals, the regulatory threshold enforcement becomes next to impossible.

Evolving methods of ML/TF

Money launderers keep innovating to have as many opportunities to conduct crimes. They engage in discovering techniques to circumvent AML measures. In such cases, the existing cash thresholds might not serve the purpose.

Multiple-party transactions

A big challenge in enforcing cash thresholds is complex customer transactions. Complexity increases when there are multiple parties or jurisdictions in a transaction. The multiplicity makes tracking and detection challenging.

Cash-based economies

Establishing cash thresholds in cash-based economies is a challenge. Since most of the transactions in cash-based economies are in cash, highlighting each suspicious transaction above the cash threshold and further investigating it will be an operational burden. Thus, cash thresholds in cash-intensive countries are a challenge.

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Best practices in enforcing cash transaction thresholds to fight ML/TF

To address these challenges in establishing and enforcing cash thresholds, one must adopt the following best practices:

KYC and CDD

Regulated must adopt comprehensive KYC procedures to collect all the required details of customers and carry out identity verification checks. The documentary evidence should be cross-checked, and proper due diligence must be carried out to understand the customer’s business, the expected volume of transactions, beneficial owners, and the risks associated with them. The data points resulting from KYC and CDD help create customer risk profiles. If you have these risk details on customers, it is easier to enforce cash thresholds.

Transaction monitoring software

A robust transaction monitoring software helps track transactions. It helps you create rules based on potential red flags of money laundering in your industry. Based on these rules, the software spots patterns, trends, and anomalies for you to investigate them further.

The software generates an alert if the transaction exceeds the cash threshold amount. Such software enables real-time monitoring of transactions to detect suspicion as and when they are being conducted. Thus, the software facilitates quick identification, reporting, and recording of transactions equal to or exceeding reporting thresholds.

Advanced analytics and AI

The latest advanced technologies canhelp identify linked transactions which are carried out to circumvent reporting thresholds. Data analytics allow the detection of patterns, unusual trends, or anomalies. Machine learning algorithms make pattern detection accurate. You can reduce the number of false positives and improve genuine alerts. It also helps you adapt to the evolving ML/TF risks.

Staff training

Cash threshold enforcement is enhanced if the staff is aware of its importance. Knowledge of transaction monitoring tools and cash thresholds help comply with the regulatory requirements around cash transaction reporting.

Besides training, motivating employees to align with AML/CTF initiatives is crucial.

Data privacy

Data privacy and confidentiality are common challenges in such AML compliance measures. Since you monitor your customers and their transactions, you have tons of data on them. It’s possible that you lose data, it gets hacked, or some employee leaks the data.

To solve this concern, you must implement effective data protection policies. With such data confidentiality and privacy guarantees, your customers trust you more with their details. They will give due importance to AML measures and cooperate with you.

Keeping up with regulatory updates

Despite the implementation of cash transaction threshold rules, one might commit errors in AML compliance. One must stay up-to-date with UAE’s AML requirements to avoid such mistakes. Keep checking the latest guidelines and updates on AML rules. One must also keep an eye on international AML standards.

The internal AML policies, procedures, and controls must align with national regulations and international AML best practices.

Insider threat mitigation

Insider threat is a critical challenge for regulated entities under AML laws. Insiders in the business might misuse customer data. They might also collude with customers to avoid detection of their transactions as suspicious.

One must be wary of such insider threats. Segregate the duties based on employee skills, past performance, and behaviour. Hold them accountable and responsible for the AML procedures they perform. Insider threat mitigation helps one implement cash transaction limits more effectively.

Continuous learning and adaptation

One best practice while enforcing cash thresholds is learning from past experience and innovations. One can make this possible by conducting regular reviews and health checks. One can improve upon the areas where there are gaps.

Concentrate on high-risk areas

One needs to take a risk-based approach and prioritise risks to target. Customers coming from high-risk jurisdictions, known ML/TF typologies and red flags, cash-intensive business, etc., must be taken into consideration while designing controls and cash transaction thresholds.

Global information sharing

The regulatory authorities conduct a National Risk Assessment and provide information about inherent risks related to ML/TF. Regulated entities should participate in this exercise and provide all the required information and assistance to the authorities to counter the global menace of money laundering and terrorist financing.

Record-keeping

Record-keeping is a best practice for all entities. The regulated entities must maintain all the records related to KYC, screening, risk assessment, business transactions, and regulatory reporting.

Public awareness campaigns

The regulators must run public awareness campaigns around the cash transaction threshold limits so that genuine customers cooperate with regulated entities in providing the required information.

Role of technology in enforcing cash transaction thresholds

Technology is one of the key best practices for establishing and enforcing cash thresholds. It helps you fight most of the challenges of implementing cash thresholds while monitoring transactions. Technology solutions provide the following benefits:

Automated reporting with transaction monitoring systems

Transaction monitoring systems have a reporting feature. This feature allows the generation of reports on transactions equal to or exceeding the reporting thresholds.

Thus, this automated reporting feature enables accurate and timely reports that you can submit to authorities, making you AML-compliant. Technology solutions also streamline data storage and record keeping.

Data analytics and patterns identification

Technology solutions make transaction monitoring faster, more accurate, and easier. Data analytics, predictive analytics, and machine learning help you study the data and identify patterns. You can detect the possible anomalies in transactions and better understand them.

Customer risk assessment

AML software enables ongoing monitoring of a business relationship. This helps detect trends and patterns and assign appropriate risk ratings to customers. This goes a long way in prioritising resources and countering money laundering and terrorist financing.

Real-time alerts and notifications

The best feature of transaction monitoring solutions is alerts. The solution generates alerts when it spots a reportable transaction. It also notifies you of the suspicion or a pattern or trend identified in a transaction so that you can take the required action.

Predictive analytics

Transaction monitoring technology systems use predictive analytics techniques. This technique allows you to predict future outcomes. The system generates alerts when it detects a linked

transaction crossing the statutory threshold. Such predictive analytics lets you take proactive measures so that issues do not escalate.

Adaptive learning and scalability

Transaction monitoring software with cash thresholds is adaptive to changes. Over a period of time, your business grows, risks change, new customers come, transactions increase, and various other adjustments happen. Amid all these amendments, your system also updates. It adapts to the new transaction monitoring rules based on customer and transaction characteristics. Thus, your existing system learns the new patterns, assesses large cash transactions, and adapts to changes.

AML compliance automation

AML compliance is the biggest concern for reporting entities under AML laws. With such technology systems, you can perform the AML procedures efficiently. They automate KYC, CDD, customer screening, and transaction monitoring processes. Such automation helps you achieve compliance in a faster, comprehensive, and more accurate way. Moreover, there are fewer possibilities of violating cash transaction threshold compliance requirements with audit facilities.

Location-based monitoring

Such technology systems for monitoring transactions allow location-based monitoring. This means that if the transaction is from a high-risk jurisdiction, the system highlights it. Since transactions from high-risk jurisdictions are highly risky, you can put such transactions on hold and submit the necessary SAR/STR.

Summarized output

Technology solutions enable summarized results through dashboards. User-friendly interfaces provide detailed and summarized insights to help management make quick decisions. This also facilitates collaboration with other industry players and authorities.

Security

Technology solutions for enforcing cash transaction thresholds are secure and safe systems. These solutions come with biometric and multi-factor authentication features, ensuring no unauthorised access. Data encryption and secured storage facilities keep your data private and protected from cyber threats.

Conclusion

Thus, cash thresholds play a critical role in AML/CFT compliance framework. You must understand the significance of identifying reportable transactions by setting appropriate limits on cash transactions.

Since cash will always remain a critical part of most economies, implementing cash thresholds is an excellent prevention technique. Moreover, using technological solutions with AI, machine learning, and data analytics features makes them more capable.

So, use cash thresholds to detect suspicious transactions and reduce the likelihood of money laundering in cash transactions. If you need help with these AML measures, AMLUAE is your one-stop destination. We provide a wide range of AML compliance services to help your business from the impact of money laundering, terrorism financing, and other crimes.

Enhance your defence against financial crimes,

With AMLUAE’s initiatives to prevent the risks
in money laundering.

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About the Author

Pathik Shah

FCA, CAMS, CISA, CS, DISA (ICAI), FAFP (ICAI)

Pathik is an ACAMS-certified AML consultant specialising in governance, risk, and compliance for regulated entities in the UAE. He brings over 28 years of experience, with 1,000+ hours of AML training and 200+ advisory engagements across DNFBPs, VASPs, and FIs. He supports businesses in aligning with AML/CFT requirements from the CBUAE, DFSA, MoET, MoJ, VARA, CMA, FSRA, and FATF. Known for translating complex regulations into audit-ready procedures, Pathik enables operational clarity and compliance readiness.

Reach Out to Pathik

Assessing AML Control Effectiveness for an Audit Firm

AML UAE assessed the effectiveness and efficiency of existing AML control measures for a UAE-based audit firm.

The client was a leading audit firm providing external audit services. It faced challenges in identifying gaps in the existing control measures and implementing effective control measures to combat financial crime risks, including ML/FT and PF.

Customer Goals:

The client struggled with the measurement of AML/CFT control effectiveness. Therefore, the client wanted an assessment of its AML control measures to identify any gaps in the control program and strengthen the quality of its Anti-Money Laundering compliance framework.

Challenges:

The main challenge was navigating complex AML regulations and assessing the effectiveness of control measures. With evolving trends in financial crimes and constantly changing compliance requirements, it became difficult for the client to stay ahead of illicit activities with the existing ML/FT and PF control measures.

Further, the client wasn’t sure if the enforced AML/CFT controls were working as intended. The qualitative review of AML/CFT controls implementation was a major challenge since the underlying data was available in silos, and most of the compliance processes were manual.

Legal Background:

The audit firm was governed by the following regulations:

Federal Decree by Law No. (10) of 2025 Regarding Anti-Money Laundering, and Combating the Financing of Terrorism and Proliferation Financing
Federal Decree Law No (26) of 2021 to amend certain provisions of Federal Decree Law No (20) of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Illegal Organisations
Cabinet Resolution No. (134) of 2025 Concerning the Executive Regulations of Federal Decree-Law No. (10) of 2025 Concerning Combating Money Laundering, Terrorist Financing, and the Financing of the Proliferation of Weapons.
Guidelines for Designated Non-Financial Businesses and Professions (DNFBPs)
Supplemental Guidance issued for auditors by the Ministry of Economy

The regulatory framework lists audit firms among the Designated Non-Financial Businesses and Professions (DNFBPs). Therefore, it is mandatory for all audit firms established in the UAE to comply with the regulatory framework governing AML compliance.

As part of the AML regulatory framework, DNFBPS needs to draft and implement internal policies, procedures, and control measures. To combat ML/FT crimes and PF risks, they need to implement effective and efficient control measures.

Solution Provided by AML UAE Team:

AML control measures are crucial to prevent illicit activities, and assessing these measures ensures they are effective and working as intended. AML UAE conducted a thorough assessment of AML control measures of the audit firm and documented gaps and areas for improvement.

AML UAE provided a thorough AML/CFT consultant who performed the following tasks:

Carried out a review of the Risk-Based Approach adopted by the audit firm, risk appetite statement, and Enterprise-Wide Risk Assessment.
Conducted a thorough review and assessment of AML policies, procedures, and controls.
Carried out tests of controls to identify if controls exist and they are effective.
Conducted interviews with the front office, back office, compliance, and senior management to understand the awareness about the controls and the quality of implementation.
Documented control weaknesses and action items.
Performed gap analysis, documented control weaknesses and action items, and suggested alternative controls wherever controls were difficult to implement

End Result:

We helped the client transition from a tick-box approach to a risk-based approach, which resulted in savings in time and costs, regulatory compliance, and a robust framework to counter financial crimes.

Enhancing the quality of controls and implementing alternative or new controls to counter ML/TF brought the residual risk down to an acceptable level.

Through our efforts, we aided the client in reinforcing regulatory compliance and aligning it with global AML standards.

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FATF Grey List June 2024 – Jamaica and Türkiye removed, Monaco and Venezuela added

FATF Grey List June 2024 - Jamaica and Türkiye removed, Monaco and Venezuela added

On June 28, 2024, Jamaica and Türkiye have been removed from the FATF Grey List, also known as Jurisdiction under Increased Monitoring list, which includes countries that are actively working with the FATF to address strategic deficiencies in their regimes to counter money laundering, terrorist financing and proliferation financing.

At the Financial Action Task Force plenary meeting ending June 28, 2024, Jamaica and Türkiye were confirmed as having successfully completed their action plans to resolve the strategic deficiencies identified earlier during their mutual evaluations within the agreed timeframe and consequently removed from the FATF Grey List.

Changes in Financial Action Task Force (FATF) Grey List

Countries Removed from FATF's Grey List (Jurisdiction Under Increased Monitoring):

Jamaica
Türkiye

Countries Added to FATF's Grey List (Jurisdictions under Increased Monitoring):

Monaco
Venezuela

FATF Grey List as of 28th June 2024

1. Bulgaria
2. Burkina Faso
3. Cameroon
4. Croatia
5. Democratic Republic of the Congo
6. Haiti
7. Kenya
8. Mali
9. Monaco
10. Mozambique
11. Namibia

12. Nigeria
13. Philippines
14. Senegal
15. South Africa
16. South Sudan
17. Syria
18. Tanzania
19. Venezuela
20. Vietnam
21. Yemen

Source: Jurisdictions under Increased Monitoring – June 2024 (fatf-gafi.org)

Our timely and accurate AML consulting services

For your smooth journey towards your goals

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Unlocking Essential Insights on Screening: The key for safeguarding Business!

Want to explore the screening requirements in the UAE?

Want your business to stay safe in today’s challenging business environment and compliant with Anti-Money Laundering (AML), Counter Financing of Terrorism (CFT) regulations, and Targeted Financial Sanctions (TFS) Compliance?

Then, you should watch our recent webinar video on YouTube!

The webinar endeavoured to dive deep into the concepts such as:

How to screen the customers?
When to screen the customers?
What is Targeted Financial Sanctions (TFS)?
What are sanction screening requirements in UAE?
How to manage the TFS risk?
What is PEP (Politically Exposed Person) Screening?
What is Adverse and Social Media Screening?

The webinar also addressed the critical role played by the screening process for carrying out Sanctions Screening, Adverse Media Checks, and PEPs (Politically Exposed Persons) Screening to safeguard against the ML/FT and PF risks.

Check out the recorded session of the webinar, in case you missed the live session or you simply want to revisit any concept that grabbed your interest, using the on YouTube link given below.

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AML Compliance Requirements for Jewellers in UAE​

AML Compliance Requirements for Jewellers in UAE

UAE’s AML Legislative Landscape for the Dealers in Precious Metals & Stones

Understanding the DPMS subject to AML Compliance

AML Compliance Obligations of a Dealer in Precious Metals and Stones

Tailoring the AML/CFT Policies, Procedures, and Controls

How can AML UAE assist Dealers in Precious Metals & Stones with AML Compliance?

FAQs: AML Compliance for Dealers in Precious Metals and Stones in the UAE

Aligning Your Business with Global Sanctions Lists - Don't Get Caught Short

Aligning Your Business with Global Sanctions Lists - Don't Get Caught Short

Conclusion

Related Posts

Role-Specific AML/CFT/CPF Compliance Training

Role-Specific AML/CFT/CPF Compliance Training

About AML UAE

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The Inter-Relationship of Money Laundering and Terrorist Financing

Definition of Money Laundering

Background of Money Laundering

Process of Money Laundering

Definition of Terrorist Financing

Process of Terrorism Financing

Importance of Understanding the Inter-Relationship between Money Laundering and Terrorist Financing

Similarities between ML/TF

Difference between ML/TF

Inter-relationship of Money Laundering and Terrorist Financing

Challenges in Combatting Money Laundering and Terrorism Financing

Global Efforts in Fighting ML/TF

AML Compliance eBook for DPMS

AML Compliance eBook for DPMS

Switching Sanctions Screening Software: Pain or Gain?

Switching Sanctions Screening Software: Pain or Gain?

Pain Points in Sanctions Screening Software Switches

Gain Points in Sanctions Screening Software Switches

Conclusion

Related Posts

The significance of cash thresholds in fighting money laundering and terrorist financing

Definition of cash thresholds

Overview of how cash thresholds function in AML/CFT framework

Overview of money laundering and terrorist financing

Importance of fighting ML/TF for global stability and security

How can cash transactions be used for money laundering and terrorist financing?

Why do criminals prefer cash transactions?

Cash thresholds and AML/CFT regulatory requirements

Other AML/CFT Regulatory thresholds

Why is it important to identify UBOs in cash transactions?

Significance of cash thresholds in fighting ML/TF

Helps identify suspicious activities

Helps fight ML/TF effectively

Ensures regulatory compliance

Ongoing monitoring

Discourages illicit activities

Helps take a risk-based approach

Facilitates international cooperation

Challenges in establishing and enforcing cash transaction thresholds

Best practices in enforcing cash transaction thresholds to fight ML/TF

Role of technology in enforcing cash transaction thresholds

Conclusion

Assessing AML Control Effectiveness for an Audit Firm

Assessing AML Control Effectiveness for an Audit Firm

FATF Grey List June 2024 - Jamaica and Türkiye removed, Monaco and Venezuela added

FATF Grey List June 2024 - Jamaica and Türkiye removed, Monaco and Venezuela added

Changes in Financial Action Task Force (FATF) Grey List

FATF Grey List as of 28th June 2024

Unlocking Essential Insights on Screening: The key for safeguarding Business!

Unlocking Essential Insights on Screening: The key for safeguarding Business!

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AML Compliance Requirements for Jewellers in UAE