Adequate Due Diligence when dealing with Non-Profit Organization

Adequate Customer Due Diligence when Dealing with Non-Profit Organizations

The Financial Action Task Force has observed that Non-Profit Organizations (NPO) are increasingly exploited by terrorist organizations for terrorism financing or propagating their agendas. Funds raised by NPOs for charitable purposes are redirected toward terrorist activities (diversion of funds). Considering the FATF recommendation in this context, even UAE AML regulations provide for adopting the Risk-Based Approach and applying adequate customer due diligence measures when dealing with NPOs.

UAE AML regulations mandate the reporting entities – Financial Institutions, Virtual Asset Service Providers (VASPs), and Designated Non-Financial Businesses and Professions (DNFBPs) to assess the ML/FT risks associated with the NPO and apply necessary due diligence measures to identify and mitigate these risks. The regulated entities must check whether the NPOs are adequately registered and licensed. Information about NPO’s jurisdiction and donor base must be obtained.

Apply adequate due diligence measures when dealing with NPOs to prevent the risk related to the diversion of NPO funds toward terrorist organizations.

AML UAE is a leading AML consulting firm providing end-to-end AML support to regulated entities. We support clients in designing robust AML/CFT policies and procedures to mitigate business risks, including developing an adequate process to identify and manage the risk arising from business relationships with NPO.

How to ensure effective Suspicious Activity Reporting?

Employee training on effective suspicious activity reporting

Pathik Shah

Protect your business with reliable and effective AML strategies with AML UAE.

How to ensure effective Suspicious Activity Reporting?

In UAE, Anti-Money Laundering and Combating of Financing of Terrorism (AML/CFT) measures and regulations are critical to identifying potential risks and timely reporting these suspicious activities to ensure the financial stability and security of the economy.

When regulated organizations – whether Financial Institutions, Virtual Asset Service Providers (VASPs), or Designated Non-Financial Businesses and Professions (DNFBPs) – fail to implement the policies and procedures around suspicious activity reporting, the consequences are severe for the organization and the country. The employees must be trained on ML/FT risk indicators, identifying suspicious activities, and appropriately reporting to the Financial Intelligence Unit (FIU).

How to identify Suspicious Activity under AML regulations?

Employees engaging with customers and managing the business relationship are vital in identifying suspicious activity. For effective suspicious activity reporting, the employees must understand the red flags and the actions to be taken when such risk indicators are observed.

Once any ML/FT red flags are observed, the employees must collate adequate information about the suspicion and immediately report such suspicious activity to the AML Compliance Officer.

What are the common risk indicators suggesting Suspicious Activity?

Some common indicators of suspicious activity that the employees of the regulated organization must be aware of are:

Customer suddenly starts making large value transactions, contrary to the transaction history or not matching with the customer’s financial position
Customer coming from or is closely connected with the high-risk jurisdictions,
Customer having adverse media or criminal records for being involved in financial crime in past
Customer refusing to share the identity documents or reluctant to disclose the identity of the beneficial owners
Customer has no active connection with UAE, or the purpose of the transaction is not clear
Customer’s legal structure is excessively complex, without any business rationale
Customer hesitates in sharing information about the beneficial ownership
Customer engaging in multiple transactions with values exactly below the AML threshold
Identity document furnished by the customer is found to be fake or forged
Payment towards the transaction is being initiated from a third-party account not related to the business transaction
Unnecessary involvement of third-party agents or intermediaries, without any business sense, to conceal the identity of the customer.

The employees must be informed of the red flags suggesting a potential association with money laundering or terrorism financing. Further, employees should be aware of the list of high-risk countries.

Employees must be well-trained to look for unusual patterns of transactions, recognize these risk indicators, and immediately report such suspicious observations to the AML Compliance Officer.

What is the Role of Employees in detecting ML/FT-related Suspicious Activity?

Under the AML Compliance program, employees are considered the first line of defense against money laundering and terrorism financing. Employees play a pivotal role in identifying suspicious activity related to financial crime. Therefore, creating awareness around AML measures and identifying suspicious activities amongst employees is essential.

In addition to identifying suspicious activity, employees should be trained on adequate reporting procedures to ensure accuracy and completeness in internal reporting. This includes knowing when reporting will be done, to whom, and what details will be captured in the report.

Employees should be encouraged to ask relevant questions to determine the nature of the suspicion, including escalating the observed red flags to the departmental head.

Training shall be conducted for the employees covering real-life scenarios and case studies around money laundering or terrorism financing indicators observed by the internal staff and what actions were taken by that employee.

How to establish a robust Suspicious Activity Reporting System?

A strong system must be implemented within the regulated organization for internal reporting of suspicious activities to ensure that suspicions are reported on time and adequately addressed.

Establishing Clear Reporting Procedure

For timely reporting of suspicious activity, timely identification of the potential risk indicators is essential. To assist the employees with immediate detection of the ML/FT red flags and evaluate the possibility of suspicion, the organization must include a business-specific list of risk indicators in its policy. These red flags must be well communicated amongst the team, including imparting specific training to create better awareness.

Documenting Red flags and risk indicators

Clear reporting procedures should be designed and communicated with the relevant employees. This includes policies around who is responsible for reporting, the internal reporting shall be done to whom, how the reporting would be done (through email, physical internal Suspicious Transaction Report (STR) or Suspicious Activity Report (SAR) format, etc.), who should be included in the communication trail, etc.

The details of the AML Compliance Officer, including their contact information, must be available to every employee of the regulated organization.

Ensuring Confidentiality and Employee Protection

Employees must feel comfortable reporting suspicious activity without any fear of retaliation. The information of the employee reporting the suspicious activity must be kept confidential. The regulated organization must develop adequate policies to protect employees from retaliation.

No “Tipping off”

The employees must be aware of the requirement not to disclose any information about the identified suspicion to the subject party or any third party, directly or indirectly. The employees should understand that “tipping off” is a criminal offense under UAE AML regulations and attract hefty penal penalties, including imprisonment for such contravention.

Imparting training to the employees

The employees – whether serving clients or managing client relationships – are the first to observe the potential suspicion in transactions or customer behaviour. Also, the back-office teams play a significant role in detecting the red flags while clearing the payments or generating account statements. Thus, all employees of the organization must be imparted adequate training and equipped with the necessary resources to identify the ML/FT suspicion and exercise sound judgment around the necessity to report the same to the Compliance Officer.

Imparting adequate employee training on identifying and reporting suspicious activity is very important to promote a compliance culture in the organization and receive the required contribution from the employee to prevent financial crime.

Periodically Reviewing and Updating the Suspicious Activity Reporting System

The regulated organization should regularly review the internal suspicious activity reporting procedures and system to check its effectiveness and update, if necessary, to stay compliant with UAE AML regulations.

What are suspicious activity reporting requirements under UAE AML Regulations?

The AML regulations mandate the regulated organizations to identify and report suspicious activities related to money laundering, terrorist financing, or financing of the proliferation of weapons for mass destruction.

The entire AML compliance framework revolves around effective suspicious activity reporting, including designing the AML policies and AML training the employees to identify and undertake timely reporting.

A regulated organization that fails to identify and report suspicious activities in accordance with UAE AML regulations faces severe consequences, including damage to its reputation and non-compliance penalties.

What are suspicious activity reporting requirements under UAE AML Regulations?

To stay AML compliant and safeguard the business against the exploitation of financial crimes, adequate systems and procedures to identify and report suspicious activities effectively are a must.

AML UAE is a leading AML consultancy service provider, assisting clients in developing a robust AML compliance framework, including establishing internal and external suspicious activity reporting policies. With a team of experienced professionals, AML UAE imparts comprehensive AML training to the employees, covering basic concepts of ML/FT, AML measures, the organization’s internal policies and procedures, and best practices for suspicious activity reporting.

Timely identify and report suspicious activities to complete your AML Compliance circle!

Make significant progress in your fight against
financial crimes

With the best consulting support from AML UAE.

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About the Author

Jyoti Maheshwari

CAMS, ACA

Jyoti has over 11 years of hands-on experience in regulatory compliance, policymaking, risk management, technology consultancy, and implementation. She holds vast experience with Anti-Money Laundering rules and regulations and helps companies deploy adequate mitigation measures and comply with legal requirements. Jyoti has been instrumental in optimizing business processes, documenting business requirements, preparing FRD, BRD, and SRS, and implementing IT solutions.

Reach Out to Jyoti

Shining the business conduct with LBMA’s Global Precious Metals Code, 2022

Pathik Shah

Protect your business with reliable and effective AML strategies with AML UAE.

Shining the business conduct with LBMA’s Global Precious Metals Code, 2022

London Bullion Market Association (LBMA) has issued LBMA’s Global Precious Metals Code, 2022, laying down the highest standards for business conduct expected from market participants engaged in the global Over-The-Counter (OTC) wholesale trade of precious metals.

Who is subject to LBMA’s Global Precious Metals Code?

Various participants are engaged in the Precious Metals Market, with different activities around precious metals –extraction, refining, storage, financing, transportation, storage, financing, trading, and marketing. The LBMA’s Global Precious Metals Code applies to all Precious Metals Market participants involved in global OTC wholesale trade, which include:

LBMA Members
Precious metals Refineries & Mining entities
Precious metals Logistics firms
Precious metals Fabricators
Jewellery entities
Financial institutions like Banks, Asset management companies, Exchange Traded Funds, Firms engaged in high-frequency trading strategies, Brokers, investment advisers, aggregators, etc.
Trading houses and Affirmation & settlement platforms
Sovereign wealth funds
Benchmark Administrators

All these market participants are required to implement this Code commensurate with the size and nature of the business activities.

What precious metals are governed under LBMA’s Global Precious Metals Code?

The Code sets out the standards for ensuring the highest quality conduct of the market participant engaged in activities related to the following precious metals:

Gold
Silver
Platinum
Palladium

What are the four (4) principles discussed in the LBMA's Global Precious Metals Code?

The following four principles are emphasized in the Code to ensure the global best practices in the Precious Metals Market:

A. Ethics:

All the precious metals organizations subject to this Code are expected to act professionally and ethically to maintain the integrity of the global precious metals market. It must deal with all its customers, suppliers, employees, and all other business associates in the utmost fair manner.

The companies are expected to implement appropriate internal policies to identify and address the conflict of interest that may comprise its code of ethics or professional standards.

The companies are expected to promote equality and avoid discrimination amongst customers, employees, etc.

The market participants are expected to impart adequate training to their employees to ensure that market obligations are discharged ethically and professionally.

B. Governance, Compliance, and Risk Management:

Market Participants are expected to identify the risks associated with their precious metals activities and implement appropriate governance and risk management frameworks to manage these risks, including a comprehensive compliance management program.

The companies are expected to evaluate the risk arising out of the following factors concerning their precious metals operations:

Market and credit-related risks
Operational and Settlement-related risk
Risks related to Technology & Cyber Security
Compliance and Legal risk
Business Continuity risk
Conduct and Reputational risk
Economic and Trade risk

As part of an adequate governance structure, the senior management is responsible for designing the business strategies and overseeing the business operations to ensure the company’s financial security.

Precious metals companies must comply with all the applicable rules and regulations, including the anti-money laundering framework. The internal policies must be well documented, highlighting the regulatory obligations, procedures & controls to ensure adequate compliance.

Further, the companies are expected to have well-defined lines of reporting, with clear roles and responsibilities for managing the precious metals operations. There shall be smart systems for the accurate and timely generation of MIS reports, which is necessary as part of the governance and risk management framework.

Through a well-designed whistle-blowing policy, employees must be encouraged to escalate any observed instances of inappropriate business practices or unethical behaviour of any market participants – internally and externally.

A periodic review of the governance, compliance, and risk management framework is suggested in the Code to ensure that the companies’ set operations mechanism is aligned with the highest professional standards and the applicable laws, including this LBMA’s Code. Any gaps identified by the independent reviewer must be highlighted to the senior management for their immediate action to rectify these breaches.

C. Information Sharing:

Precious metals market participants must communicate effectively and transparently within the business community. Market Participants are also expected to manage the confidentiality of critical market Information.

The companies shall not divulge confidential information that hampers standard market practices.

The communication must be fair and open, with clear language and with no or minimal use of technical jargon. Further, appropriate communication channels must be used to ensure the market’s integrity and maintain the required audit trails.

Companies are strictly prohibited from initiating or spreading rumours or circulating any misleading information which affects the best business practices of the precious metals market.

D. Business Conduct:

Precious metals companies are expected to effectively manage their pre-trade and post-trade business activities fairly and transparently.

As part of pre-trade business conduct, the market participants are expected to sign an agreement or similar document with the customers, suppliers, etc., with a clear scope of a business deal, terms of trade, and price points. Appropriate Know Your Customer and Customer Due Diligence measures must be applied before establishing any business relationship with other market participants. The companies must identify any risk associated with the customers and suppliers, including the supply-chain risk.

The precious metals trades must be executed fairly, with clear disclosure of the markups and the methods used for arriving at the markup. The markups must be determined professionally without misrepresenting any cost factors. The companies are prohibited from executing any trade against the LBMA’s precious metals benchmark (i.e., the prices determined by LBMA).

For post-trade business conduct, the company must initiate confirmation communication with the customer about the executed trade or deals that are amended or cancelled. Further, the market participants are expected to perform ongoing reviews and monitoring of the transactions, including periodic reconciliation of the customer’s accounts to identify gaps or delinquent payments.

The market participants are expected to design internal policies to ensure no trade payments are expected from unrelated third parties or cash payments exceeding a certain threshold.

How can AML UAE assist you with developing your Code of Business Practices aligned with the LBMA’s requirements?

The Dealers in Precious Metals in UAE, engaged in the wholesale trade of gold, silver, platinum, and palladium, are expected to adopt this Global Precious Metals Code, 2022, to promote transparency and integrity of the global precious metals market.

AML UAE is an AML consultancy firm supporting Dealers in Precious Metals and Stones to implement the AML framework and stay AML compliant. We help the DMPS develop tailor-made AML/CFT policies, procedures, and controls to identify and mitigate financial crime risks.

With our experience of dealing closely with dealers in precious metals, we understand the business operations and compliance requirements of the precious metals sector, such as the Responsible Gold Sourcing Code and the LBMA’s Global Precious Metals Code. With this, you design a comprehensive compliance framework to manage your business operations with highest of the ethical practice and professional standards while staying compliant with local and international regulatory frameworks (FATF, OECD, LBMA, etc.).

Make significant progress in your fight
against financial crimes,

With the best consulting support from AML UAE.

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About the Author

Jyoti Maheshwari

CAMS, ACA

Jyoti has over 11 years of hands-on experience in regulatory compliance, policymaking, risk management, technology consultancy, and implementation. She holds vast experience with Anti-Money Laundering rules and regulations and helps companies deploy adequate mitigation measures and comply with legal requirements. Jyoti has been instrumental in optimizing business processes, documenting business requirements, preparing FRD, BRD, and SRS, and implementing IT solutions.

Reach Out to Jyoti

Virtual Assets AML Compliance eBook: Understanding the AML Landscape for VASPs in UAE

The Virtual Asset network is booming across the globe. This calls for robust regulations to manage the inherent risks associated with virtual asset transactions – such as anonymity, quick transfer across boundaries, etc.

For this, UAE authorities have set up regulations around licensing the Virtual Assets Service Providers (VASPs) and introduced the framework governing the compliance and supervision of VASP activities in the country. Here is a comprehensive guide on VASP’s AML Compliance obligations in the UAE.

Understand the concept of Virtual Assets and what all activities involving virtual assets shall qualify the person/entity as the VASP. In UAE, the supervisory authorities governing the virtual asset activities are different depending on the jurisdiction of the operations – such as FSRA for VASP licensed and operating from ADGM, while it is Virtual Assets Regulatory Authority (VARA) for VASP based out in the Emirate of Dubai (except DIFC zone).

The VASP eBook captures the primary AML obligations imposed upon the VASP licensed and operating in UAE. These compliance obligations are aligned with the FATF recommendations around identifying and managing the ML/FT risks associated with virtual asset transactions, which include:

Appropriate Registration & Licensing
Appointing a competent AML Compliance Officer of MLRO
Conducting Enterprise-Wide Risk Assessment to identify and evaluate the ML/FT risks associated with VA transactions
Developing and implementing AML/CFT Policies, Procedures, Systems, and Controls
Customer Due Diligence process – Know Your Customer, Know Your Transaction and Enhanced Due Diligence
Know Your Corresponding VASP measures
Compliance with Targeted Financial Sanctions
Real-time Transaction monitoring
Identifying and reporting suspicious transactions
AML/CFT Documentation requirements
Compliance with FATF Travel Rule
Staff training and independent AML audits

Get more insights into the AML compliance obligations imposed upon your virtual assets activities as VASP licensed and operating in or from UAE.

Our timely and accurate AML consulting services

For your smooth journey towards your goals

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Navigating CDD and FATF Travel Rule: VASPs to identify Originator

Given the anonymity involved and the lightning pace with which the virtual asset transfers are concluded, the FATF has issued a recommendation requiring the Virtual Asset Service Provider (VASP) to identify the virtual asset transaction’s originator and beneficiary. The originating Virtual Asset Service Provider must obtain information about the originator of the transaction and the beneficiary and accompany the virtual asset transfer with these details. This recommendation by FATF is considered a Travel Rule.

FATF Travel Rule emphasises obtaining the information about the parties and making the same available to the Beneficiary VASP, who shall verify the beneficiary details before concluding the transfer.

Here is an infographic navigating through the Travel Rule requirement that VASPs must follow and the information to be obtained and verified about the originator and the beneficiary.

AML UAE is an AML consultancy firm assisting AML-regulated entities in the UAE, including VASPs licensed with VARA, ADGM or DIFC. AML UAE understands the AML regulations and the virtual asset network, which helps VASPs to effectively identify the risk, design and implement robust AML/CFT framework, and identify the right technology to manage AML compliance, including customer due diligence process to identify and verify the identity of originator and the beneficiary.

Navigating the concept of Virtual Asset and VASP (Virtual Asset Service Provider)

With crypto and virtual assets being the recent terminologies in the global economy’s dictionary, it is pertinent to understand the term Virtual Assets and VASP (Virtual Assets Service Provider).

Virtual Assets are the digital representation of the value, which can be easily traded over a digital platform. However, the digital representation of fiat currencies or shares and securities would not be considered a virtual asset, though represented in virtual or digital form.

Organizations providing services concerning virtual assets to another person in the course of their routine business activities would be considered Virtual Asset Service Providers (VASP).

With this simple-to-understand graphic, understand what the term “virtual assets” signify, what is expressly excluded from qualifying as a virtual asset and who would be treated as Virtual Asset Service Provider.

AML UAE is one of the leading AML consultancy service providers in UAE, offering a wide range of AML support to regulated organizations, including VASPs. AML UAE assists VASPs in assessing the business level risk and adopting a risk-based approach by designing adequate policies and controls to mitigate the identified risks. We also help identify the right AML solution to manage your customer onboarding process and monitor the virtual assets transfer in real-time.

Choosing an apt AML Software for DPMS

Pathik Shah

Protect your business with reliable and effective AML strategies with AML UAE.

Choosing an apt AML Software for DPMS

Dealers in precious metals and stones are one of the Designated Non-Financial Businesses and Professions (DNFBPs) required to comply with anti-money laundering and combating financing of terrorism (AML/CFT) regulations in the UAE. Non-compliance with AML requirements has severe consequences, including monetary fines, administrative penalties, and reputational damage. The importance of choosing an apt AML software for the DPMS sector cannot be overstated. Adopting an appropriate AML compliance software for Dealers in Precious Metals and Stones is very important to ensure compliance with the AML requirements and safeguard your precious metals and stones business against exploitation by financial criminals.

This article discusses the critical consideration for selecting the right AML software for your AML compliance needs.

Understanding the AML Compliance requirements for Dealers in Precious Metals and Stones in the UAE

Before selecting an AML screening solution, we must understand the AML compliance requirements in the UAE and why a dealer in precious metals and stones must comply with these AML requirements.

Money laundering is concealing the source of the illegally obtained funds and disguising the same as proceeds from legitimate business activities. Financial criminals often use precious metals and stones to launder their dirty and illicit money without attracting the attention of the regulatory authorities. Precious metals and stones are commonly used for laundering funds, given their inherent characteristics – high in value, compact in size and easy to transport across borders.

What are “Precious Metals and Stones” in UAE under the AML regulations?

Under UAE AML regulations, the following are considered “Precious Metals and Stones”:

– Precious Metals

Gold (minimum purity of 500 parts per 1,000)
Silver (minimum purity of 800 parts per 1,000)
Platinum (minimum purity of 850 parts per 1,000)
Palladium (minimum purity of 500 parts per 1,000)

– Precious Stones

Rough diamonds of any weight in carats
Polished diamonds (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)
Coloured Gemstones like Emeralds, Rubies, and Sapphires (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 (minimum diameter of 3 millimetres per bead)
Strung or mounted in a setting (minimum diameter of 10 millimeters per any single bead)

– Other

Any object with a minimum 50% value of the object is comprised of precious metals and stones.

Who is Dealer in Precious Metals and Stones in UAE?

A person engaged in any of the following activities related to precious metals and stones would be treated as a dealer in precious metals and stones (DPMS) in UAE:

Extraction, refining, cutting, polishing or fabrication
Import or export
Purchase, sale, re-purchase or re-sale, including scrap sale of precious metals and stones
Barter, or exchange of precious metals and stones
Loan or lease arrangements
Possession of precious metals and stones, e.g., as a fiduciary, warehousing, or safekeeping arrangement
Job work arrangement, e.g., cutting, polishing, refining, casting or fabrication services related to precious metals and stones.

What is AML Compliance in UAE?

Anti-money laundering (AML) compliance is a set of regulations and governing frameworks focused on detecting and preventing the process of laundering illegal money from entering into a legitimate financial system. In UAE, the primary AML/CFT regulations are the Federal Decree-Law No. 20/2018, and its implementing guidelines in Cabinet Decision No. 10/2019.

AML compliance is essential to safeguard the business from being vulnerable in the hands of money launderers. By developing a comprehensive AML compliance framework, businesses can detect and prevent suspicious activities on time without getting their business impacted by financial criminals for money laundering activities.

The AML regulations in the UAE mandate that Financial Institutions, Virtual Assets Service Providers (VASP) and certain Designated Non-Financial Businesses and Professions (DNFBPs) comply with these regulations. Dealers in precious metals and stones are one of the DNFBPs, required to design and implement AML/CFT policies, procedures, and controls to identify, prevent, and report suspicious transactions and activities related to money laundering and terrorism financing.

An AML Compliance Software helps meet KYC, Screening, and Reporting requirements and saves time and costs.

Why is AML Compliance necessary for Dealers in Precious Metals and Stones in the UAE?

As precious metals and stones are considered as closely associated with money laundering typologies, the dealers in precious metals and stones are entrusted with the responsibility of iden

tifying any red flags intended towards using precious metals and stones for conducting the money laundering process.

Following are a few ML/FT red flags for dealers in precious metals and stones:

Customer requests reshaping of gold into ordinary-looking items to hide the nature of precious metals
Customer frequently trades diamonds and gold jewellery for cash in small incremental amounts
Transaction involving precious metals with unusual characteristics, not matching market standards
Charitable organization requesting to buy gold worth AED 1 million, not aligned with the customer’s activities, etc.

Complying with AML regulations helps the business from non-compliance penalties and protects the business from reputational damage. With your commitment towards complying with AML compliance requirements, you gain trust and respect from your customers, suppliers, and other stakeholders, achieving customer loyalty and long-term commercial benefits.

AML compliance is a necessary part of the routine business operations of a dealer in precious metals and stones, ensuring the business does not aid any financial criminal in laundering the illegal proceeds of crime.

An AML Screening Software will help you meet legal obligations and counter money laundering and terrorism financing.

Key Features and Functionalities of an Ideal AML Software

AML compliance is integral to any business operation to maintain integrity and avoid non-compliance penalties. With increasing importance and awareness about AML compliances, new technological solutions are designed to detect, prevent, and report money laundering activities. To ensure the completeness and accuracy of the AML compliance requirements, the selection of the right AML software is necessary. While finalizing the AML software, the following key features must be emphasized.

Customer Identification and Verification

The AML software must support the performance of customer due diligence, including Customer identification and identity verification of the customers and their beneficial owners. The customer identification process should be accurate and reliable to determine whether the customer is the one he claims to be. The software should also be able to verify the customer’s address, nationality, and date of birth.

The software should support identifying the designated person or entity mentioned in the sanctions list, specifically in the UAE Local Terrorist and UNSC Consolidated lists. Further, the AML software should also allow screening of the customers and the ultimate beneficial owners against the global list of Politically Exposed Persons (PEP) and adverse media searches.

Risk Assessment and Management

The AML software should allow the Dealers in Precious Metals and Stones to assess the ML/FT risk for each of the customers and, thus, overall enterprise-wide risk assessment. The risk assessment process should be robust and accurate, considering all the relevant risk parameters such as the customer’s business activities, geographies involved, the transactional elements like mode of payment and the frequency of transactions, beneficial ownership, association with PEP, etc.

The risk scoring methodology of the AML compliance software must be simple to understand but comprehensive, assisting the AML Compliance Officer in taking necessary due diligence measures depending on the risk rating to manage the money laundering risk.

Ongoing Monitoring

The AML Compliance software should allow for maintaining and monitoring the customer’s profile and transactions executed with the customer. The transactions should be monitored against the customer’s information file to detect suspicious or unusual activity. Any unusual pattern or mismatch between the customer’s profile and the activities must be highlighted for further investigation by generating an alert. The flagging of the ML/FT red flags would ensure timely actions to prevent or mitigate the impact of the risks.

Regulatory Reporting and Record-Keeping

The AML screening software should support the generation of intelligent and analytic reports to monitor the organisation’s compliance status.

The retention of the necessary AML records and documents must be enabled in the AML software, as required under the UAE AML regulations. The software should maintain a complete audit trail and history of the compliance activities, including the customer screened, transactions monitored, alerts generated, etc. This AML recording-keeping functionality of the AML software should serve as documentary evidence to be furnished to the regulatory authorities as proof of AML compliance.

Integration with Existing Operational Systems

The AML software should integrate easily with the business’s existing systems, processes and databases to ensure efficient AML compliance management without hampering any routine business operations. The precious metals and stones dealers can easily integrate their CRM solution with the AML software and streamline the customer due diligence process.

With comprehensive data around AML compliance available in one place, the AML Compliance Officer can review the organisation’s compliance level and ensure the quality of the AML compliance framework implemented across the organization.

Selecting the right AML compliance software is of utmost importance to ensure that dealers in precious metals and stones comply with relevant AML compliance obligations and safeguard themselves from being used for money laundering activities. Right AML Software will equip you with the resources to effectively manage your 100% AML compliance requirements.

Evaluating AML Software Providers

Selection of the right AML software vendor is equally important. You may have the best of the AML software, but you may not optimally use the features if the software provider is not professional and does not provide handholding support. Partnering with the wrong AML software provider can cost you non-compliance fines and reputational damage. Here are a few key factors to consider when evaluating AML software vendors:

Reputation and Industry Experience

The AML software provider’s reputation and industry experience are among the most important factors. Look for an AML screening software provider with experience in the precious metals and stones industry. With the vendor’s understanding of the business operations and the industry, you will get customized AML software mapped with the AML compliance requirements of the dealers in the precious metals and stones sector.

You can check the Name Screening Software vendor’s reputation and experience by referring to online reviews, customer feedback and testimonials from other dealers in precious metals and stones. It helps you make decisions, providing information about the vendor’s strengths and weaknesses and their commitment to customer satisfaction.

Customer Support and Training

Another key factor to consider is the level of post-implementation customer support and training the AML compliance software vendor provides. Implementing AML software is a different task from buying one. The implementation requires support from the vendor in configuring the features as per business needs, training the employees to use the AML screening solution and extending post-implementation ongoing support to manage any issues while using the AML software, which may arise in future once the software is live.

Pricing and Contract Terms

The budget and cost of the AML software are other crucial factors while the software providers. Look out for any additional hidden charges or costs, such as implementation or annual maintenance costs. The contractual arrangement with the vendor must be clear and transparent, laying down the scope of AML software.

Scalability and Customization Options

One-size-fits-all is not a practical principle in business. The AML software must support customization, allowing the businesses to tailor-make the AML compliance software per the business needs and compliance obligations of the dealers in precious metals and stones. Further, the solution must be scalable, supporting the organisation’s growing business. The AML software, which allows scalability and customization, is always preferred over other AML software.

Selection of the right AML software, supported by the right software vendor, is necessary for the long-term success of the investment in AML technology and for ensuring 100% AML compliance in your precious metals and stones business.

Rightfully implementing the AML Software in the Jewellery Business

Managing AML compliance is necessary to keep financial criminals away from the precious metals and stones business and avoid regulatory fines for non-compliance and reputational damage. With effective implementation of the software, you can manage your AML compliance. Take care of the following aspects while going live with the AML software, and half of your AML compliance job is done:

Configuration of the AML Software

The AML software must be aligned with local and international regulatory developments and the latest data sources to ensure accurate and correct AML compliance by dealers in precious metals and stones.

Preparing the Team

The compliance team must be well-trained in the AML software’s features and functionalities to use the AML software efficiently. The training should discuss the AML compliance obligations and how the software will help achieve each AML compliance requirement.

While deciding on the AML software, AML Compliance Officer, IT professionals and senior management must be involved. This will ensure that the Compliance Officer is satisfied with the solution’s functionalities, the IT team approves the technical configuration and data security, the management signs off the investment in AML software, and shows commitment towards compliance.

How can AML UAE assist you in selecting the right AML Software for your precious metals and stones business?

The quality and effectiveness of AML compliance depend on the resources deployed, including AML Software. Appropriate AML compliance software will help your business achieve 100% compliance with AML regulations prevalent in the UAE.

AML UAE is one of the leading AML consultancy service providers in the UAE, assisting clients in setting up and implementing the AML compliance framework. Our domain experts and AML professionals understand your business requirements and help you identify the most appropriate AML solution, including discussing the solution’s functionalities and negotiating prices with vendors.

Stay Safe, Stay AML-Compliant!

Make significant progress in your fight
against financial crimes,

With the best consulting support from AML UAE.

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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

The Vital Role of an AML Compliance Officer in Safeguarding VASPs in the UAE

Pathik Shah

Protect your business with reliable and effective AML strategies with AML UAE.

The Vital Role of an AML Compliance Officer in Safeguarding VASPs in the UAE

With the increasing acceptance of virtual assets, Virtual Asset Service Providers (VASPs) also continue to grow around the globe, including in the UAE. However, given the nature of the virtual assets – anonymity involved and easy transferability – criminals misuse them for money laundering and terrorism financing activities.

To manage the exploitation of virtual assets, the countries have implemented stringent regulations and have entrusted VASPs with compliance obligations to identify and prevent the ML/FT risk. To effectively implement the AML compliance program and adhere to the regulatory requirements, the role of the anti-money laundering (AML) Compliance Officer is important for VASP.

In this article, we will discuss the role of AML Compliance Officers in ensuring AML Compliance for VASPs in the UAE.

Introduction to AML Compliance in the UAE

The UAE government intends to develop the country as an international virtual assets centre. To promote this, robust AML compliance regulations around mitigating the risk of money laundering and terrorism financing have been introduced.

To manage the activities of the virtual asset in Dubai, the government has formed a supervisory authority – the Virtual Assets Regulatory Authority (VARA) of Dubai. At the same time, there are other authorities designated to supervise the activities of the virtual asset across the UAE, such as the Financial Services Regulatory Authority for VASPs registered in Abu Dhabi Global Market (ADGM), Dubai Financial Services Authority for VASPs operating from Dubai International Financial Centre (DIFC) and Securities and Commodities Authority of UAE for rest of the 6 Emirates and free zones.

These authorities have developed and implemented comprehensive AML regulatory guidelines and rulebooks for VASPs, mandating VASPs to design solid AML frameworks and ensure compliance with international best practices and FATF recommendations around managing ML/FT risks associated with virtual assets.

The Importance of AML Compliance

Compliance with AML regulations is mandatory for various regulated organizations, including Virtual Assets Services Providers in the UAE. A robust AML compliance program will safeguard virtual asset activities against being exploited for money laundering or terrorism financing activities. Further, non-compliance with any AML obligation will lead to severe adverse consequences for the VASP, such as substantial administrative fines, reputational damage and even termination of the license to conduct virtual asset activities.

Adequate AML compliance will help VASP create customer loyalty and seek respect from various stakeholders and market players worldwide, looking at its efforts towards combating money laundering and financing terrorism.

UAE's Regulatory Framework for AML Compliance

The UAE has established a comprehensive AML regulatory framework for financial institutions, VASPs and other Designated Non-Financial Businesses and Professions (DNFBPs). The legislative framework includes the Federal Decree-Law and the implementing Cabinet Decision, specific guidance issued by the relevant supervisory authorities like the Central Bank of UAE, Securities and Commodities Authority of UAE, Ministry of Economy, Ministry of Law, etc.

These AML regulations lay down comprehensive AML requirements for regulated entities operating in the UAE, including customer due diligence measures that must be adopted before establishing a business relationship, ongoing transaction monitoring requirements, procedures for identifying and reporting suspicious transactions, etc.

The UAE government is committed to fighting financial crimes and developing UAE as a safe and secure internal financial centre. Violating the UAE’s AML regulations requires heavy penalties and a long-term impact on the reputation.

Defining Virtual Asset Service Providers (VASPs) in UAE

In simple language, the business organization providing virtual assets-related services to its customer is a Virtual Asset Service Provider. For instance, the company operating a cryptocurrency exchange or services of converting eth fiat currency into virtual assets or vice versa.

Virtual assets are digital representations of value that can be transferred or traded using distributed ledger technology. The virtual assets include cryptocurrencies like Bitcoin and Ethereum, Non-Fungible Tokens (NFTs) and other digital assets like stablecoins. VASPs are essential in facilitating virtual asset trade, transfer and use.

Types of VASP in UAE

The different types of virtual assets-related services that qualify as VASP include:

an exchange between virtual assets and fiat currencies or between one or more forms of virtual assets,
transfer of virtual assets between wallets by way of virtual asset transactions on behalf of another person,
safekeeping and administration of virtual assets owned by other persons or instruments, enabling control over virtual assets,
Facilitating and providing financial services related to virtual assets issuer’s offer or sale of a virtual asset into the primary or secondary market.

VASP Regulation in the UAE

To safeguard virtual assets from financial crime, the UAE has developed a robust AML regulatory framework for VASPs, including stringent licensing requirements and ongoing regulatory oversight of virtual asset activities. Along with Federal Decree-Law and the implementing guidelines, the regulatory authorities have also issued guidance and AML rulebooks for monitoring the VASP in their respective jurisdictions, such as ADGM’s FSRA, VARA, DIFC’s Dubai Financial Services Authority, etc.

The UAE’s AML regulations for VASPs are based on international best practices and the FATF recommendations around virtual assets and VASPs. The regulatory framework mandates that VASPs in the UAE comply with customer due diligence processes and sanctions screening requirements, implement transaction monitoring systems and procedures, ensure timely reporting of suspicious transactions to the Financial Intelligence Unit (FIU) and the regulatory authority, etc.

The Role of an AML Compliance Officer in VASP

To ensure effective compliance with AML obligations, the VASP must appoint a competent AML Compliance Officer or a Money Laundering Reporting Officer (MLRO). The AML compliance officer’s role is pivotal in ensuring 100% AML compliance by VASPs, including safeguarding the VASP against the evil of money laundering and terrorism financing and preventing these financial crimes.

The overall responsibility of implementing and overseeing the effectiveness of the AML compliance framework lies with the AML Compliance Officer.

Key roles and responsibilities of AML Compliance Officer

The AML compliance officer in VASP is entrusted with several key responsibilities around AML compliance, such as:

1. Conducting overall business risk assessments or enterprise-wide risk assessments of the VASP, considering all the relevant risk factors posing a risk to the business

2. Designing and implementing a robust AML compliance framework aligned with the overall business risks and regulatory requirements, including policies, procedures, and controls.

3. Developing and implementing a comprehensive customer onboarding process, including Know Your Customer, Know Your Transactions, and sanctions screening.

4. Implementing the systems and procedures for assessing customer risk and applying adequate customer due diligence measures, including enhanced due diligence.

5. Defining the rules for ensuring ongoing monitoring of transactions to identify unusual patterns or suspicious activity and ensure relevance and effectiveness.

6. Identifying the potential red flags and making them part of the AML policies. A few red flags related to virtual assets activities are:

Structuring virtual asset transactions in small amounts,
Making multiple high-value transactions within 24 hours,
Transferring virtual assets immediately to multiple VASPs in another country where there are no AML/CFT regulations,
Depositing virtual assets at an exchange and then immediately withdrawing the same without any further activity,
Conducting a large deposit to open a new wallet with a VASP, which is inconsistent with the customer’s economic profile,
Conducting VA-fiat currency exchange at a potential loss,
The use of decentralized/un-hosted wallets.

7. Receiving internal reports on observed suspicion, investigating the same and filing the Suspicious Transaction Reports (STR) or Suspicious Activity Reports (SARs) with FIU and regulatory authorities.

8. Designing and conducting AML training programs for the employees, including senior management.

9. Conducting a periodic review of the AML program and submitting a report to the senior management.

10. Ensuring AML-related records are adequately maintained and secured from unauthorized access.

Required Skills and Qualifications

Given the importance of the AML compliance officer’s role in VASP, the designated person must have a strong understanding of AML regulations and industry knowledge and experience.

Moreover, the AML compliance officer must possess excellent communication skills supported by problem-solving approaches. Officers must be competent and independent enough to effectively manage the AML compliance requirements and prevent misuse of virtual assets for money laundering or terrorism financing activities.

Key Challenges Faced by AML Compliance Officers

AML compliance officers in VASP face various challenges in ensuring compliance with AML regulatory requirements. One of the significant challenges is keeping pace with the evolving ML/FT typologies related to virtual assets and amending AML regulations. The Compliance Officer must stay up-to-date with AML compliance obligations to avoid non-compliance penalties and safeguard the business from being exploited by criminals using new money laundering techniques.

Another challenge the AML compliance officers faces is managing the large volume of data about customers and transactions. Such a colossal database makes monitoring and identifying suspicious activity difficult without sophisticated AML software.

The role of the AML Compliance Officer in VASP must be independent of regular business operations and client relationship management. The Compliance Officer must balance the business and AML Compliance without comprising the AML regulatory obligations.

Implementing AML Compliance Programs in VASP

The AML compliance program in VASP must be comprehensive, aligned with the VASP’s overall ML/FT risk and capable of identifying and mitigating the money laundering and terrorist financing risks effectively. The AML compliance framework should include the methodology of conducting enterprise-wide risk assessment, customer due diligence process, ongoing transaction monitoring, compliance with FATF travel rule, AML record keeping, and procedures for identifying and reporting suspicious transactions.

Business Risk Assessment

The risk assessment process involves identifying and evaluating the money laundering and terrorist financing risks the VASP is exposed to. The Compliance Officer should consider various risk factors such as customer base, geographies, products and services, etc.

Risk Mitigation Policies, Procedures and Controls (AML Framework)

Once the overall risk has been identified, it is the role of the AML Compliance Officer to design and implement adequate risk mitigation policies, procedures, and controls. The AML framework must be aligned with the size, nature and complexity of the business activities and must be approved by the management of the VASP.

Customer Due Diligence (CDD), Know Your Customer (KYC) and Know Your Transaction (KYT) Procedures

KYC and KYT procedures are essential to identify and verify the customer’s identity and understand the transactional elements associated with the virtual asset transfer. Further, the framework should include adequate customer risk profiling procedures and implementing the Targeted Financial Sanctions (TFS) and screening requirements.

Effective customer due diligence will ensure that VASPs deal with genuine customers and do not unintentionally aid in money laundering activities by onboarding financial criminals as their customers.

Identifying and Reporting of Suspicious Activities

Adequate procedures and systems must be implemented to monitor the transactions and customer profiles to detect and report suspicion. The Compliance Officer shall ensure that potential suspicious transactions are investigated internally and only reported to the FIU and the supervisory authority if the internal examination confirms the ML/FT suspicion warranting the external reporting.

One of the important roles of the AML Compliance Officer is to ensure the timely filing of the Suspicious Transaction Report (STR) or Suspicious Activity Report on the goAML Portal.

AML Governance

The Compliance Officer must assess the AML training needs of the employees and design a comprehensive AML training program. The AML training program must be included in the AML framework, highlighting the timing, course, and employees involved in this training.

Further, periodic reviews must be conducted of implemented AML program, and a report must be submitted to the senior management of the VASP by the AML Compliance Officer, highlighting the AML compliance gaps and mitigation measures additionally required.

Record Keeping

AML-related records must be maintained adequately for the specified period and in an organised manner.

Collaboration with Regulatory Authorities

AML Compliance Officer, or Money Laundering Reporting Officer (MLRO), is the key contact between the VASP and the regulatory authorities. One of the key roles of the AML Compliance Officer in VASP is to ensure effective correspondence with the authorities, including the following:

Reporting of Suspicious Transactions and Activities

Identifying and reporting suspicious transactions is a crucial responsibility of AML Compliance Officers in VASP. If suspicious activities are observed, the front-line team must immediately intimate to the Compliance Officer, who would investigate the matter and, if reporting is required, should immediately file a SAR or STR with the FIU.

Ongoing Training and Education

The AML Compliance Officer must attend AML training sessions and workshops conducted by the authorities to be updated with evolving AML regulations and practices.

Ensuring Compliance with Evolving AML Regulations

AML Compliance Officer must ensure that VASP’s AML/CFT framework, including policies, procedures, and controls, are up-to-date with the amended regulatory requirements.

How can AML UAE assist AML Compliance Officers in fulfilling their roles in VASPs?

AML Compliance Officer must ensure that its Virtual Asset Service Provider (VASP) complies with UAE local AML regulations and the FATF recommendations around virtual assets transactions. The role of the AML Compliance Officer in VASP is critical to identify and mitigate the financial crimes risks by developing a robust AML compliance framework.

AML UAE is a leading AML consultancy firm, assisting VASPs in assessing the overall risk, designing and implementing an AML compliance program, establishing a competent AML compliance department and imparting adequate AML training to ensure regulatory compliance and avoid administrative fines for AML violations.

Make significant progress in your fight against financial crimes,

With the best consulting support from AML UAE.

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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

AML Compliance Journey for VASPs in UAE

With the UAE’s focus on developing the country as a virtual asset hub, the Government has introduced various regulations to supervise the crypto segment. This includes anti-money laundering and combating of terrorism financing (AML/CFT) regulatory framework governing the Virtual Assets Services Providers (VASPs).

The AML/CFT regulations mandate the VASPs to implement robust internal policies and procedures to identify and report ML/FT suspicious activities involving virtual assets. The VASPs must ensure adequate customer due diligence processes, including KYC and Know Your Transactions measures. To detect the unusual pattern of virtual asset transfers, the VASP must implement a strong transaction monitoring system and controls. Further, VASP must comply with FATF Travel Rule requirements, ensuring a smooth and real-time exchange of information between the VASP about the originator and beneficiary of the virtual asset transaction.

Here is an insightful roadmap showcasing the AML compliance obligations of the Virtual Assets Service Provider in the UAE, starting from goAML registration to the STR/SAR reporting and AML documentation requirements.

AML UAE is one of the leading AML consultancy service providers in UAE, assisting clients across different business segments, including VASPs, to streamline their AML compliance framework. AML UAE helps the VASP design and implement a comprehensive set of AML policies, procedures and controls to timely identify the exploitation of the virtual assets for financial crime activities and immediately report to the FIU through goAML Portal. AML UAE also frames a robust AML training program for the VASP’s employees and imparts the comprehensive training necessary for AML compliance by VASP.

Anti-Money Laundering For Dealers in Precious Metals and Stones (DPMS)

Protect your business with reliable and effective AML strategies with AML UAE.

Anti-Money Laundering For Dealers in Precious Metals and Stones (DPMS)

Money laundering is a serious crime, and its scope is not merely restricted to financial institutions, small or medium-scale businesses. However, it has expanded its wings for Anti-Money Laundering For Dealers in Precious Metals and Stones (DPMS). Compliance related to Anti-Money Laundering for Dealers in Precious Metals and Stones (DPMS) requires thorough knowledge of AML regulations in the UAE.

The smuggling, stealing, and trading of precious metals, stones, or gems are pretty frequent and regular. The proceedings from such unlawful activities are later on used for Anti-Money Laundering For Dealers in Precious Metals and Stones.

Dealers of precious metals, stones, or gems can undoubtedly be drawn into money laundering schemes. For instance, criminals or money launderers use dirty money in order to buy gold, diamond, and other precious metals or stones. The money launderers or criminals then resell the precious metals or stones to bring the money into the financial markets again and tag it as legitimate or authentic.

It must be challenging to identify and understand Anti-Money Laundering For Dealers in Precious Metals and Stones and what are the ways in which you can avoid it. Here are a few indicators that might alarm you that the transaction (buying or selling of precious stones, metals, gems) might be a money laundering attempt.

Money Laundering for Dealers in Precious Metals and Stones - Key Indicators:

Payments are made in cash. Usually, in a transaction of precious stones or metals, massive amounts are involved. But if the payments are bifurcated in cash, multiple money orders, cashier’s cheque, or traveler’s cheque, or are being paid through a third-party account. Then you might suspect the probability of money laundering.
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, like normal business records should not be maintained
Sales or purchases don’t conform to industry standards.
Sales or purchases are unusual for a particular supplier, customer, or a type of supplier or a customer

Dealers in precious metals and stones are expected to have a well-designed compliance program tailored as per their jewellery business. Anti-Money Laundering For Dealers in Precious Metals and Stones starts with the assessment of the overall risks involved, and as it progresses, it should include four-pillar requirements, which are as follows.

Written policies, procedures, and internal controls
Appointment of an anti-money laundering compliance officer
Provision of ongoing anti-money laundering training for appropriate personnel.
Independent testing at regular intervals.

Compliance. Trust. Transparancy

Customised and cost-effective AML compliance services to
support your business always

What Are The Various Problems Associated With Anti-Money Laundering For Dealers in Precious Metals and Stones?

Compliance for Anti-Money Laundering for Dealers in Precious Metals and Stones (DPMS) is quite challenging:

It is often challenging to understand and monitor Anti-Money Laundering For Dealers in Precious Metals and Stones. It is vital to have a completed risk assessment to keep up with anti-money laundering regulations and company or customer activities changes. A risk- based approach should always be built upon sound foundations. Developing a risk-based approach will facilitate the foundation for designing the compliance program.
Dealers of precious metals, stones, and jewels often face some kind of challenges in order to keep up with the regulatory changes. Designating an efficient anti-money laundering compliance officer who is familiar with all the regulatory requirements will leave no stone unturned in protecting you from regulatory risks.
The anti-money laundering programs fail to offer adequate training. An effective AML compliance program should have well-defined procedures, policies, internal controls, designation of an AML officer, training, and independent testing. Training is the key in order to find any kind of unusual activity.
Dealers in precious metals, gems, and jewellery might be confused as to whether they are subject to regulations.

Key Trends: Anti-Money Laundering For Dealers in Precious Metals and Stones (DPMS)

Here we discuss key trends related to Anti-Money Laundering for Dealers in Precious Metals and Stones (DPMS):

Technological advancements and innovations have increased the size and sophistication of criminal enterprises. If you are conducting business using advanced payment systems, you have to make sure that these processes are reflected in your risk assessment.
AML Compliance manual, which incorporates policies, procedures, and internal controls, designation of the compliance officer is the essential requirement.
Anti-money laundering training program materials and proof of training for the respective individuals must be kept for a period of 5 years.
Reports prepared from conducting independent audits and performed testing shall be maintained for a period of 5 years.
Reporting requirements as to DPMSR and STR should be fully taken care of.
Customer Due Diligence (CDD) and Enhanced Customer Due Diligence (EDD) should be carried out in the case of all customers.
Record keeping and any other type of documentation as required.
Transactions happening between the dealers are considered low-risk ones. It is simply because each dealer in precious metals and stones is required to have a reasonably designed anti-money laundering compliance program.

Compliance. Trust. Transparancy

Customised and cost-effective AML compliance services to
support your business always

AML Risks for Jewellers

Here are the risks and opportunities involved with AML policies for dealers in precious metals and jewels.

Risks

Here are a few risks:

Reputational and financial risks to the institution
Civil and criminal penalties for the individuals as well as institutions

Opportunities

Here are the opportunities that you can leverage if you are a dealer in precious metals and gems.

Protecting and maintaining the integrity of the financial system.
Protecting your clients from falling prey to any kind of criminal activities or assaults.
Aiding to protect your company from financial losses and reputational exposure.
Harnessing efficiencies combining resources and IT systems to monitor for any kind of anti-money laundering and anti-fraud activities.

Skills

Here are a few skills that you require in order to meet all the requirements to abide by your AML compliance policies.

Regulatory experience
Valid certification from an authorized anti-money laundering association
Experience working in the compliance department of any financial institution.

FAQs - AML For Dealers in Precious Metals and Stones

Here are a few frequently asked questions about the Anti-Money Laundering For Dealers in Precious Metals and Stones (DPMS).

A legal or natural person involved in buying and selling precious metals, gems, jewellery, precious stones, etc., as a business is a dealer in precious metals.

Yes, gold is used in money laundering because it is challenging to trace gold. Also, its value is universal in nature and can be readily determined. Also, most of the transactions happen in cash, which can be brought from any source, leading to chances of financial crime.

Here are a few situations in which the AML/CFT obligations apply to DPMS.

Under the AML/CFT decisions and AML/CFT laws, DPMS is obliged to apply the required AML measures when they qualify as DNFBPs.

This occurs whenever they carry out either a single transaction or a series of multiple transactions that are related to each other and the total value of these transactions is equals to or exceeds more than AED 55,000,

Here is the process that you must follow in order to comply with your AML/CFT obligations for DPMS.

Define processes, policies, and internal controls

Carry out know your customer (KYC)

Screening

Risk profiling

Carry out enhanced due diligence (EDD), if required

Submit STR

Independent Audit

Record Maintenance for a period of 5 years

Repeat the process

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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

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