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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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Importance of AML Training

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Illegally obtained money when transferred to the legal system is known as money laundering. It involves processing criminal proceeds and hiding the illegal origin by disguising it with investments in foreign banks or legitimate businesses. Often the money is used to fund criminal and terrorist activities. It is important to note that authorities face a huge challenge while detecting money laundering; as per recent UN statistics, the government cannot detect 90% of the laundered money. The statistics reveal the magnitude of the government’s problem and the challenges it has to face while preventing financial manipulation, which is further used for serious crimes like financial terrorism. It has been estimated that the approximate amount of money laundered ranges between $800 and $2 trillion! That’s an incredibly huge amount.

Every country has its own AML/ CFT rules, which businesses must diligently follow. These rules are amended regularly to keep businesses ahead of the criminals who are always looking for new ways to launder money.

Businesses can take several steps to prevent money laundering. One crucial step towards it is to create massive awareness about the anti-money laundering laws and provide proper training. AML training is vital to understand to detect financial frauds and nab criminals. The Financial Action Task Force- FATF, established in 1989, has provided 40 guidelines to prevent money laundering. The 15th recommendation of FATF40 includes creating internal policies, procedures, and measures that involve regular AML training of the employees.

Noteworthy Points To Consider Before Training

AML training includes information that helps employees become aware of the importance of training and the anti-money laundering laws for their organisation. Choosing the best AML training module is essential for a business. With the proper training, employees can immediately identify any suspicious transactions and unearth evidence of money laundering. They will become familiar with the correct customer verification process, identify the risks associated with their businesses, and correctly implement the rules and regulations.

The company offering AML training should consider some critical points for the best training.

The messages to be conveyed with the training.
The industry to which the company belongs.
The challenges the company is facing with AML compliance
The information that needs to be dispensed to the employees.
High-risk areas that the business should target with AML training.
Identify the proper balance between classroom training and new technologies training.
Onsite training requirement.
Duration of training sets for AML Training.

Importance of AML Training

Criminals devise new ways to find easy ways for money laundering. They keep track of the legal loopholes and try to swindle money. The AML training acquaints the participants with the legal shortcomings and how to deal with them. The training also provides the latest information on the AML rules and regulations. These steps help keep the employees ahead of the money launderers and prevent financial crimes.

This training should be mandatory for people who communicate directly and contact people at high risk of laundering. It includes Banks’ Compliance officers, Exchange Officers, Audit, Foreign Trade, and Investment Banks Employees. The training should also be provided for Fund Managers, Precious Metals Exporters, and Foreign Exchange Traders.

AML Training should be exhaustive and includes rules and regulations for CDD- Customer Due Diligence, KYC- Know Your Customer, Know Your Employee, and Identifying PEP- Politically Exposed Persons. It also includes the Rating scale of Suspicious Transactions, Rating Scale of Risky Customer, AML/OFAC risk assessments, measures for PEP, and current regulations. During the AML training, the participants will know how AML laws and regulations work. They will get acquainted with the AML framework and be better equipped with updated knowledge to deal with financial crimes.

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Conclusion

AML training has become an absolute necessity to keep employees updated about the latest AML laws and regulations. AML UAE provides AML training services at competitive prices. The company is a forerunner in offering AML compliance training services and customised training sessions that align with a particular type of business with a risk-based approach. With in-house compliance training for your employees, you can keep your employees updated about the AML / CFT rules and regulations and contribute towards preventing money laundering at all levels. We have an expert team of regulators, AML experts, and compliance professionals. For more information on our company, feel free to visit AML UAE.

FAQs

Training of employees is important in AML because it helps employees and management better understand the rules and regulations in the country. They know how to assess customer risks, detect suspicious transactions, and implement relevant policies to save transactions from money laundering.

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Impact of FATF Grey List Update on UAE DNFBPs: AML/CFT Compliance Imperatives

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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

Automated AML Compliance Software: Cost-Efficient Solution to Stay AML Compliant

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The financial institutions and designated non-financial businesses and professions in UAE have to employ a proactive approach to keep pace with the fast-evolving business landscape. Compliance with AML has become even more necessary, with the regulations becoming more stringent. Also, the penalties have been increased so that an automated AML Compliance Software will be the best choice. AML compliance automation with AML software helps a business be compliant with the AML regulations. By automating the AML practices, companies can focus on the mission-critical task and limit AML compliance worries.

There are several benefits of automated AML Compliance Software

Businesses want to offer a better customer experience while complying with the AML rules and regulations. The compliance requirements start with the customer onboarding process. It is because customer risk scoring is considered a business risk management policy. In addition, sanction and PEP are critical processes in KYC. So, businesses have to be vigilant during the process. CDD-Customer Due Diligence is an essential aspect of customer verification and forms the crux of modern verification procedures. Companies must exercise caution during PEPs and UBOs to ensure a correct and rapid screening process.

Moreover, a close check is required to report any suspicious activities and monitor the transactions regularly. But the sorting will require a massive effort that needs the business to go through huge global databases in real-time. Every country has its specific AML / CTF regulations that encompass unique rules which companies should follow to be AML compliant.

Needless to say, it’s a time-consuming task that requires herculean effort. The perfect solution to this problem is an automated AML which ensures compliance quickly at a fraction of cost. PEP is considered a potential compliance risk and a critical part of the risk assessment. UBO-Ultimate Beneficial Owner disclosure is also necessary to prevent people from hiding in the garb of a legal entity with malicious intentions such as money laundering and terrorism financing.

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How Does an automated AML Compliance Software help?

Maximises operational efficiency

By automating the compliance process, the operational efficiency can be increased rapidly- during onboarding, CDD, or EDD- helping help organisations to make an informed decision. A large volume of data is reviewed effortlessly, with automation relieving the workforce from the tedious task of manual review of data. They can focus on the critical functions and achieve maximise proficiency.

Faster decision-making

Automated AML helps in the faster investigation of fraudulent practices in real-times. It speeds up the process of decision-making and allows the agency to take preventive measures.

Streamlined Screening process

The sanction process is becoming complex, with regular updates and compliance requirements. The AML compliance solution helps in being compliant across different regimes. It helps to screen entities in an elaborate manner irrespective of the country’s origin. Organisations can quickly check various parameters, such as determining if the customer is a PEP or regulated entity. The software gives them a 360-degree view of the customers making the screening process faster and compliant with the AML regulations.

Access to global databases

Successful risk management depends on the quality of data and the regular inflow of the latest and updated information. With AML compliance software solutions, businesses can access high-quality data from various systems and global databases.

Scalability

Automated AML systems are a scalable solution that helps to maximise the returns on IT infrastructure. Cost-effectiveness does not strain the company’s resources while being AML compliant.

AML compliance software solutions procured on SaaS

One of the key benefits of the automated AML software is the ease of integration with the existing systems. Businesses can make the process more efficient by integrating the solution with in-house systems and third-party systems. Real-time collaboration between the company and the compliance workforce helps develop an effective compliance strategy. Getting the solution as a web service enables seamless API integration and deployment. Get excellent support & maintenance services from global partners while getting the AML solution in the SaaS model. Combat the risk challenges and streamline the risk management process with automated AML solutions.

Automated AML Systems: A smart way to remain compliant

Agencies can strengthen the fights against money laundering with an advanced AML software platform. They can check all the parameters for screening and stay compliant by meeting all the compliance requirements. The software considers different factors such as the type of customer, country of operations, industry, etc. The software helps to detect the suspicious elements in the database immediately and also be warned against false alarms. The Automated AML systems prove to be the complete go-to risk management tool that helps the stay AML compliant and helps organisations to continue with their business operations and promote business growth.

We help you prepare and implement

a robust Anti-Money Laundering Program.

Conclusion

AML UAE is working towards providing professional assistance for AML compliance. With the right compliance partners, it helps combat the challenges of budget constraints and compliance issues. With automated AML Compliance Software, businesses get a scalable and cost-effective solution that effectively addresses the unique AML compliance requirements. With the use of emerging technologies such as AI, companies can look forward to getting better AML compliance while mitigating risks.

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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

How money laundering is messing up the world of cryptocurrency

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How money laundering is messing up the world of cryptocurrency

Virtual assets. Cryptocurrency. Bitcoin. Litecoin. Ethereum. These concepts or words are in trend nowadays across the world. People are using these digital assets as investment vehicles or for the exchange of value. There is a sudden rise in its adoption. Parallelly, there is a rise in innovations in financial infrastructure for securing cryptocurrencies.

But, money launderers and financial criminals are not far behind. They have found ways to exploit this supposedly safer currency for money laundering activities. Though the volume of crypto laundering is low, it is the newest and trendiest venue for hiding illicit funds.

Crypto supporters believe that money laundering will not affect the cryptocurrency market much. This is because there is more transparency and accountability in the transactions. Also, laundering money in cryptocurrency is a more complex and riskier process than in other currencies.

But, we are witnessing the reality of cryptocurrency money laundering in the world. And, global regulators, countries, and the financial world need to do something about it. They need to understand the reasons, identify the red flags, and develop mechanisms to counter them. In this article let’s look at the cryptocurrency money laundering risks and ways and means to mitigate them.

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Reasons for money laundering in cryptocurrency

People love cryptocurrencies because they make transactions faster, easier, and safer. But, certain demerits of it make them vulnerable to attacks by money launderers. The major reasons why cryptocurrencies are an easy target for financial crime are:

Total online nature of cryptocurrency

Technology developments are happening at a faster rate across the world. But, at a higher rate, criminals are exploiting the shortcomings of technology for the wrong use. The full online nature of cryptocurrencies makes them an easier target for laundering money.

These virtual assets are stored, transacted, and conducted online. Full online nature with the anonymity of the owner creates the possibility of laundering activities. Whether placing illicit funds or layering money with structured transactions or putting it back in the legal system, crypto is at high risk.

Lack of regulation or government control

Generally, the financial infrastructure and systems of any country are highly regulated. Such a regulated environment ensures safe and secure transactions across the globe. But, that is not the case with the world of virtual assets.

There are little to no regulations in place for the cryptocurrency market. Some of the governments do not even encourage the use of cryptocurrency, let alone framing any legal protection rules. The absence of regulations is the key attraction for financial criminals to use it for layering of illicit funds.

Basic characteristics of cryptocurrencies

The best feature of cryptocurrencies is they are global and accepted everywhere. You can use these virtual assets for cross-border transactions. Also, these are more autonomous because no intermediaries are involved.

These features of cryptocurrencies make them more attractive to financial criminals. It is easier, faster, and convenient to process these virtual assets across borders. Also, the crypto transfer transaction from one owner to another is not centralized, leading to higher risks.

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Ways in which crypto laundering happens

Placement of illegal money

Money launderers buy one cryptocurrency through one of the online cryptocurrency exchange houses. This exchange is the one with lesser or no compliance with AML regulations. The cash or cryptocurrency used for buying is the illegal money that enters the ecosystem. This is the first stage of money laundering – placement.

The layering of illegal money

The second stage of money laundering is layering. Financial criminals use a structured transaction to layer the illegal money. They enter into buying and selling transactions of cryptocurrency on crypto exchanges. They also transfer their virtual assets to other countries to move them away from the actual source.

Entry of illegal money as clean in the financial system

The third stage is integration where illegal funds enter the financial system as legal money. Herein, money launderers sell cryptocurrencies to other buyers through over-the-counter brokers.

Online gambling transactions

Generally, gambling sites accept cryptocurrencies as the mode of payment. They buy chips for gambling using illegal cryptocurrency. Then, they encash it using clean money.

Decentralized fund transfer networks

The cryptocurrency transfer network is decentralized. Generally, people transfer cryptos to other people in countries that have no or weak AML regulations. Next, they buy other goods or services with those illegal virtual assets to convert them into clean money.

Cryptocurrency tumbler

There exists cryptocurrency mixing services or tumbler that pools cryptocurrencies from many users. Then, the tumbler is split and distributed to each owner as per the proportion received. This is how crypto launderers put illegal money into the system, which may go to any participant of the tumbler.

Abuse of crypto ATMs

Many private companies have installed cryptocurrency ATMs in many countries. On these ATMs, you can buy cryptocurrency using cash, or debit/credit cards. But, these ATMs have no regulatory structure or legislation controlling them.

Because of all these red flags, AML watchdogs must keep a focused eye on the world of cryptocurrency. They must identify the various money laundering risks and how they affect these virtual assets. And, most importantly, they need to find ways to eliminate or lessen these risks.

Global regulations for the cryptocurrency world

The time has come for financial watchdogs to frame regulations to stop the misuse. Financial criminals are exploiting the high technology used in cryptocurrency to launder money. Similarly, the regulators must use technology to detect these activities as well. They must find out technological innovations that can prevent the occurrence of money laundering.

Many countries have implemented regulations for KYC and reporting suspicious activities. They have also come up with laws for conducting cryptocurrency transactions through key channels. Some countries are even considering digital versions of their national currency. All these ways will help economies to reduce the risks of money laundering.

FATF, the global AML agency, released updated guidance for virtual asset service providers (VASPs) in October 2021. The guidance was originally released in 2019. The updated version subjects VASPs to similar AML regulations as applicable to financial institutions. It covers areas such as peer-to-peer transactions, decentralized finance, stablecoins, and non-fungible tokens.

AML regulations for cryptocurrency in the UAE

The UAE market is quite active in regulating the money laundering activities in cryptocurrency. The country does not ban crypto assets. But, it has implemented measures to protect them from financial criminals.

It has introduced the following regulations:

DIFC in October 2021

The Dubai International Financial Centre (DIFC) introduced a new regulatory framework for virtual assets in October 2021. These regulations, implemented by Dubai Financial Services Authority (DFSA), apply to investment tokens. Investment tokens may take the role of a security or derivative depending on the rights and duties of their holders.

These regulations allow individuals to carry out activities related to investment tokens in or from DIFC. But, such individuals must take approval from DFSA before carrying out these activities. DFSA also plans to introduce more laws for cryptocurrencies and utility tokens.

UAE in September 2021

In September 2021, UAE adopted a regulatory framework for the protection of cryptocurrencies from ML risks. The law was adopted in the meeting of the National Committee for Combating Money Laundering and Financing of Terrorism and Illegal Organizations (NAMLCFTC).

The framework is in regards to Recommendation No. 15 of FATF on AML/CFT. This recommendation talks about having strict regulations for virtual assets and VASPs. It requires a country to have rules for licensing, registration, monitoring, and compliance of VASPs.

The regulation developed initiatives to protect the infrastructure of virtual assets against ML risks. It also intends to adopt guidelines for the implementation of financial sanctions against criminals. The implementation responsibility lies on the Securities and Commodities Authority (SCA) and the Central Bank of UAE.

Onshore UAE in November 2020

In November 2020, the SCA released Decision No. 23 of 2020 concerning Crypto Assets Activities Regulation. This law governs the listing, offering, trading, and issuing of digital assets in or from onshore UAE. The law defines the types of virtual assets included and excluded in this definition.

The regulation applies to marketplaces, ICOs, custodian services, exchanges, and crowdfunding platforms. It also includes the financial services related to these crypto assets. It differentiates between commodity tokens and security tokens. It also makes provisions for approval requirements for both.

SCA must license these crypto assets providers. For obtaining a license, they must follow the country’s AML/CFT, data protection, and cyber security compliance requirements and laws. Relevant regulators must incorporate these providers only in onshore UAE, DIFC, or ADGM.

Besides, there are provisions on cloud computing, data residency, and employees for these crypto-assets providers. Crypto assets can be offered to qualified investors who must file documents with SCA for approval. In the case of non-qualified investors, they must take approval from SCA before being offered crypto assets.

SCA also stresses the point that it considers all potential investors highly risky. This means conducting enhanced due diligence for all customers becomes essential. This includes checking ultimate beneficial ownership, geographical risks, sanctions, and political exposures.

ADGM in 2018

The Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM) provided regulations for crypto assets. It amended the Financial Services and Markets Regulations (FSMRs) to factor in the regulation on operations of crypto-asset businesses. Under this legislation, FSRA regards crypto assets as commodities.

Accordingly, operators in the market of virtual assets (intermediaries or custodians) must take approval from FSRA. Once they get the approval, they will operate as a financial service permission holder. So, anyone operating in these virtual assets must comply with the same regulations as applicable to securities, derivatives, and funds in ADGM.

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Conclusion

Thus, we see that the UAE government has made many provisions for protecting crypto assets from money laundering. But, money launderers are at a higher pace of exploiting technology for illegal activities. This surpasses even the pace at which technological innovations are happening in the crypto space.

Nonetheless, the global and national regulators are making good progress with relevant protection laws. The key lies in identifying the red flags at the right time. It is also crucial to hire AML consultants who can help you with achieving AML compliance in the UAE.

About AML UAE

We are an AML compliance services provider for AML and CFT in the UAE. We offer our clients our deep knowledge, industry experience, and expertise in AML/CFT. Our breadth of services includes the following:

Documentation of AML/CFT policies
Setup of the in-house compliance department and team
AML training
Support in selection of right AML software
AML/CFT health checks
Annual AML/CFT risk assessment report

Our AML/CFT services are available for different industry sectors including banks, auditors, financial companies, insurers, jewelers, legal professionals, and others. We ensure personalized services based on your business requirements. We guarantee 100% compliance with AML/CFT laws within deadlines and budget.

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Impact of FATF Grey List Update on UAE DNFBPs: AML/CFT Compliance Imperatives

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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

To curb illegitimate trade, UAE to audit all gold refineries

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Synopsis

UAE is one of the world's largest gold trade centers
Refiners would be subject to responsible sourcing standards
Industry figures think the move should limit illicit gold trading
The UAE is under pressure to tighten its laws and implement them more strictly.

To prevent illegal trafficking, the United Arab Emirates will compel all gold refineries to undergo yearly audits to guarantee their suppliers are accountable. According to industry sources, annual inspections should improve standards in the UAE which is one of the world’s largest bullion trade hubs. Still, it might also move gold flows tied to crime or human rights violations to other countries, such as Africa, where the number of gold refineries is fast increasing.

According to one of the investigations published in 2019, the UAE imported gold worth billions of dollars smuggled from Africa. Some of it mined in deplorable and polluted conditions in conflict-torn countries.

The Financial Action Task Force (FATF), also referred to as an intergovernmental anti-money laundering watchdog, urges the country to enhance laws and enforcement. The UAE has stated that this is a national priority.

According to the UAE’s Economy Ministry, a UAE Good Delivery Standard would require refiners to thoroughly examine suppliers and demonstrate their compliance to outside auditors. It stated that “all gold refiners will be expected to comply with the responsible sourcing obligations.” “Annual compliance audits will be required under the UAE Good Delivery Standard.”

The purpose of the Ministry, according to the Ministry, is to bring the entire industry into compliance with responsible sourcing criteria. It declined to comment further until later this month when it announced a precious metals industry convention in Dubai.

Economy's Base

Millions of people work as small-scale gold miners, which can be dangerous and release poisonous chemicals. The metal is frequently used to fund criminal activity, disputes, and terrorism.

Due to “severe supervision concerns” in Turkey’s gold trade, the FATF placed Turkey on its “grey list” last month, possibly damaging foreign investment.

The London Bullion Market Association (LBMA), which supervises the world’s largest responsible sourcing accreditation scheme for refineries, warned last year that it might bar refiners who certify from buying gold from nations with insufficient regulations.

The United Arab Emirates claimed it had taken several steps to combat unlawful trading, including requiring businesses to register with anti-money laundering authorities and state substantial cash transactions.

Thani Al Zeyoudi, UAE Minister of State for Foreign Trade, who chairs a commission supervising the gold trade, also said: “The gold and precious metals industry is vital to our economy.” The good delivery standard “would reinforce the UAE’s AML/CFT (anti-money laundering and counter-terrorist financing) framework, which is a crucial national objective and a central focus of the UAE leadership,” according to Al Zeyoudi.

Balloon Squeezing

According to the UAE, the Dubai Good Delivery Standard is a voluntary accreditation scheme sponsored by the Dubai Multi Commodities Centre (DMCC), which is also a UAE free-trade region.

Two of the UAE’s more than ten refineries have been accredited by DMCC, which requires responsible sourcing procedures and audits. Most gold refiners and merchants in the UAE are unaccredited and have no way of knowing where their gold comes from.

“This is the most substantial thing the UAE government has done (to discourage unethical commerce),” said Tyler Gillard of the Organization for Economic Cooperation and Development, who advises governments and firms on responsible sourcing (OECD).

Prohibited trading, on the other hand, will not go away, he claims. “It’s like squeezing a balloon… there are still enough spaces and chances for gold to penetrate the market in other countries.”

Sourcing audits are not required in most countries. In Sub-Saharan Africa, dozens of refineries are in operation or under construction, and India, a major importer of gold from small-scale mines, has a large number of refineries that are not subject to inspection.

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Related Blogs

Impact of FATF Grey List Update on UAE DNFBPs: AML/CFT Compliance Imperatives

Financial Watchdogs: The Role of Gatekeepers in Combatting Financial Crimes

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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 and CFT requirements for trusts and company service providers in the UAE

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AML and CFT requirements for trusts and company service providers in the UAE

Corporate service providers and trusts engage in certain activities that are vulnerable to money laundering and terrorism financing. Generally, they carry out these activities on behalf of their customers. Performance of these activities requires access to financial services sector companies, and this is how the risk of ML and FT arises.

The activities include:

Acting as an agent in the creation or establishment of legal persons
Acting as a director or secretary of a company, or as a partner in a legal person or arranging for another person to act as the above
Providing a registered office, work address, residence, correspondence address, or administrative address for a legal person or legal arrangement
Performing work (or equipping another person to act) as a trustee for a direct trust or performing a similar function in favor of another form of legal arrangement
Acting or arranging for another person to act as a nominee shareholder in favor of another person

During the performance of these activities, trusts and corporate service providers (TCSPs) use corporate vehicles. This is when money launderers and financers of terrorism activities facilitate the misuse of money. If TCSPs do not conduct proper due diligence of their clients, their ML/FT risk increases.

The risks may also increase when TCSPs in UAE collaborate with TCSPs in other countries where AML/CFT regulations are absent or less stringent. So, TCSPs must be careful of such suspicious transactions and associations. We will cover such suspicious transactions and relevant AML requirements for TCSPs in this article.

Suspicious transactions that raise a concern of ML/FT in TCSPs

ML/FT risks occur for TCSPs at both enterprise and customer levels. These risks may occur in the business relationships they have with their clients. Risks may also arise in the form of nature and type of customer or type of arrangement involved.
Some of the possible red flag indicators are as follows:

Business relationships with complex and opaque legal entities and arrangements
Clients hide their beneficial ownership details from TCSPs using nominee agreements
Clients who want to setup a business in UAE hide their business identities from TCSPs by giving wrong addresses or fake identity documents
Clients may bribe TCSPs to conduct unauthorized or illegal transactions through their accounts
Clients use the services of TCSPs to form complex company structures that are used for layering money laundering of illicit funds or hiding their criminal transactions
Clients with a base in tax havens or countries with a high number of terrorist organizations, high levels of corruption, subject to Sanctions, or weak AML/CFT regime
Clients that do not make or take direct payments to you but via a third party whose identity is unknown or the payment method is unusual of the client
Clients that have either a high number of cash transactions, a significant debt amount, are PEPs or have association with PEPs, unusually high level of assets, have funds that are disproportionate to their status or have frequently changed their organizational structure
Accounting of transactions that are not true to their actual nature, such as over or under-invoicing, multiple invoicing, false entries of goods and services, multiple trading, etc.

These are the possible transaction, client, and country risks that make TCSPs in UAE vulnerable to ML and FT. You, as a trust or company service provider, must be aware of these risks. Also, you must abide by the regulations of AML/CFT that we list down below.

AML regulation for trusts and company service providers in UAE

Federal Decree by Law No. (10) of 2025 Regarding Anti-Money Laundering, and Combating the Financing of Terrorism and Proliferation Financing is the primary law for AML in UAE. The Cabinet Resolution No. (134) of 2025 concerning the Implementing Regulation of this Decree-Law applies this AML law UAE to trusts and company service providers as well. This means that the TCSPs in UAE must comply with every provision of this law and its related guidelines.

They must fulfill the obligations stated in these regulations to ensure an effective AML/CFT program internally. These measures will ensure their protection from exploitation by money launderers or financial criminals. These guidelines help TCSPs identify business relationships, transactions, and clients that make them vulnerable to ML and FT risks.

These regulations provide the guidelines for identifying suspicious transactions and reporting them. They provide the measures for customer due diligence and internal policies and procedures to keep TCSPs safe from ML/FT risks. We also get to know the governance framework that TCSPs must implement for AML compliance.

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AML/CFT compliance requirements for trusts and company service providers in UAE

Trusts and company service providers must comply with the following requirements under the AML regulations of UAE:

Understand possible ML/FT risk exposure

It is highly crucial to understand your business’ exposure to ML/FT risks. For this, you must:

Adopt a risk-based approach to identify the risks and take relevant AML/CFT measures to manage them. Identification of these risks is also dependent on the role TCSPs play in the business relationship. They may act either as a representative, advisory and consulting role, or service providers to entities.
You must be careful of the client risks that include their nature of business, level of complexity, country of origin, or the country of operations in case of a foreign client.
You must identify any possibility of channel risk of the client. Specifically, this risk refers to the channel by which the customer is introduced and the preferred mode of communication in the relationship.
You must be vigilant of any unusual nature of financial arrangements or payments with the client, specifically if they are different from the standard practice in the market. Also, investigate the type, complexity, size, geographical sources, and transparency of financial transactions.
Identification of these different types of risks associated with a client must be documented. You can use it to allocate a risk rating to the client and develop AML/CFT measures accordingly.

Implement customer due diligence measures

Once you identify the risks, the next step is to implement relevant customer due diligence measures. CDD is essential for TCSPs since their clients are the most significant ML and FT risks source. You need to be doubly sure of your clients’ identities and activities to save yourself from money laundering.

You must have the following CDD measures implemented in your firm:

You must implement a regular process of screening existing and prospective customers against Sanction lists. You must check their background information to identify any association with PEPs or financial crimes. You must dig information about your client’s customers and third-party intermediaries facilitating the relationship between you two.
You must pay full attention to deriving any information about the beneficial owner of the client. It is also essential to verify this information through established independent sources. Money launderers conceal beneficial ownership by using third-party intermediaries, proxies, or some kind of legal arrangement.
You must ask pertinent questions to all your clients to determine their beneficial ownership. Then, you should confirm this information for consistency and reasonableness through reliable, independent sources. If questions persist, you can scrutinize them further to know their identity.

You must check the compatibility of the client’s profile with the kind of activities or transactions they engage in.
You must be alert to clients’ usage of opaque or complex legal arrangements to hide their identity or business activities.
You must assess any kind of influence of the client on how you carry out your duties and transactions.
It is also essential to check the authenticity of documents submitted by the client. These documents may relate to acquisition, transfer, financing, or any other transaction involving financial instruments.

Put in place internal policies, controls, and procedures

The trusts and company service providers must implement necessary measures to manage and mitigate the ML/FT risks. One of the key measures is the implementation of strong and effective internal policies, controls, and procedures. You must assess these policies for effectiveness and update them accordingly as and when the need arises.

These policies must relate to customer due diligence and suspicious transaction reporting. It must also include requirements for governance and record-keeping. Overall, such procedures must ensure management and mitigation of risks.

Report suspicious transactions to Financial Intelligence Unit (FIU)

You must report any kind of suspicious transactions to the Financial Intelligence Unit as and when you suspect it. You must add all the relevant information for the alleged transaction and keep it updated. You must be extra vigilant to identify any suspicion in any transaction or customer.

Some of the indicators for suspicious transactions include:

Unnecessary complex transactions whose purpose or beneficial owner is not known
Transactions that are inconsistent with the customer’s risk profiling
Large transactions (relatively large to a customer’s income or turnover)
Unexplained changes in the ownership of entities or unnecessary involvement of a third party
Transactions involving high-risk countries or third parties with no relationship with customers
Unclear or dubious sourcing of funds for a transaction
Refusal of customers to provide relevant information or proofs required for due diligence measures

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Ongoing monitoring

Continuous monitoring of business relationships and client’s activities is a crucial part of AML and CFT measures. TCSPs must make efforts not to become victims of money laundering and any other financial crimes by their clients. Specifically when their clients are from high-risk countries or have a history of financial crimes or PEPs.

For this, you must periodically check information about your clients in public or commercial registries. This will help you detect any changes, transfers, or additional information that may add to their identity. You will also be able to notice any inconsistencies or unusual patterns in their information or activities.
You must monitor the transactions with clients until their closure or for the entire account life cycle. You need to be alert to any change in frequency, size, or amount of transaction that is unusual to the client.
Another critical point of consideration is checking the source of your payments from the clients. You must ensure that these payments are not from third-party accounts, foreign accounts, or unknown sources. Also, the method of payment must be consistent with the client’s history of payments and profile.

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Conclusion

Thus, the TCSPs must understand the importance of these AML/CFT measures to fight against money laundering and terrorism financing. When forming new business relationships, you must be extra careful to implement due diligence measures to identify and manage risks. All these measures will ensure compliance with UAE’s AML/CFT measures and similar global regulations.

These measures will enable you to save yourself and your business from any fraudulent transaction or business relationship. This, in turn, helps you to minimize your exposure to money laundering and terrorism financing risks. These measures also help you to be in congruence with international AML/CFT regulations and best practices.

To plan and implement any of these measures, you can also take the support of AML consultants in the UAE. A professional AML consultant will be better equipped to help trusts and company service providers with suitable, relevant measures against money laundering. The consultant will ensure that industry-specific steps are taken in the fight against money laundering and terrorism financing.

Role of AML UAE

AML UAE is a leading AML compliance services provider in UAE. We help you with fulfilling all the requirements for AML and CFT in UAE. Our spectrum of AML compliance services is not restricted to national boundaries, but we also make sure that you comply with the global regulations of AML.

We can help you with:

Creating firm-specific AML policies, procedures, internal controls, best practices, and guidelines for your smooth business operations
Setting up an expert AML compliance department for your firm that can handle all AML-related activities
Selecting the most effective and appropriate AML software for your business needs to ensure AML compliance
Helping you in filing and submitting annual AML/CFT risk assessment reports with the UAE government
Conducting training for your employees in handling KYC, screening, risk profiling, CDD, EDD, and filing of STRs

Frequently Asked Questions (FAQs)

Here are a few frequently asked questions when it comes to the need and importance of sanction and PEP screening in the customer onboarding process.

The compliance officer will ensure the compliance of every business function and activity with AML/CFT regulations. The officer will carry out frequent audits and reviews of internal policies, controls, and procedures. He/she will assess their effectiveness and suggest any improvements required. He/she must also evaluate the proficiency of the compliance staff to carry out their duties diligently.

Trusts act as agents of other legal persons and, therefore, are exposed to high risks of money laundering. Specifically in the case of complex legal structures of companies or high-risk customers. Trusts and Company Service Providers (TCSPs) are at higher risk because customers are not transparent about their work, carry out unusual transactions, or refuse to meet in person.

Criminals may misuse client accounts of TCSPs in the wrong ways. They may use it for:

Converting proceeds from criminal activities in cash form into less suspicious assets
Formation, capitalization, and/or acquisition of legal entities or legal arrangements
Disguising the ownership of illicit funds or assets
Obtaining access to the financial system

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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

A detailed guide of AML compliance requirements for auditors and accountants in the UAE

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A detailed guide of AML compliance requirements for auditors and accountants in the UAE

The profession of auditors and accountants is not an easy thing. They have access to the financial records and activities of their clients. This accessibility to financial records increases their vulnerability to money laundering. The involvement of their clients in money laundering activities also increases their exposure.

So, they must be extra vigilant to the risks of money laundering and terrorism financing. In this article, we list down the red flags of money laundering that auditors and accountants must be aware of. We also mention the important AML requirements that they must fulfil to remain in compliance with UAE’s AML regulations.

Key aspects that make auditors and accountants vulnerable to money laundering and financial crime

Some of aspects of the profession of auditors and accountants make them vulnerable to financial crimes. They must be aware of these factors to save themselves from becoming a victim of money laundering and terrorism financing. These factors include:

Payments from clients are the proceeds from a money laundering or financial crime incident.
The financials of a client are unusual in terms of source, complexity level, type of business activity, geographical origins, etc.
The client hides the identity details of the ultimate beneficial owner (UBO), senior managers, signatories, legal representatives, etc. to launder the proceeds of criminal activities.
The client may use shell companies or complex legal structures to layer the laundered money from illicit sources and bring the money back into the legal financial system of the country.
The client conceals the sourcing of funds of the company and the auditor and/or accountant, being responsible for the financial management of this company, becomes a part of money laundering crime.
An accountant or auditor may unknowingly be involved in laundering the proceeds of a fraud activity of a client through shell companies.
The client hides any kind of association with Politically Exposed Persons (PEPs) concerning some kind of controlling stake
The client tries to influence the accuracy or transparency of the auditor’s or accountant’s work through bribery or any other ways.

AML regulation for auditors and accountants in UAE

Decree-Law No. 20 of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Illegal Organizations is the primary law for AML in UAE. The Cabinet Decision No. 10 of 2019 concerning the Implementing Regulation of this Decree-Law makes accountants and auditors subject to the AML law. This means that the AML law applies to all auditors and accountants in UAE.

The Cabinet Decision provides a list of Designated Non-Financial Businesses and Professions (DNFBPs). AML regulations apply to these DNFBPs that include auditors and accountants. Given the nature of their profession and the content of their duties, accountants and auditors must comply with AML requirements as stated in the regulations for DNFBPs.

Their exposure to money laundering and financial crime activities is high because of the nature of their profession. They are responsible for financial management, examination of financial records and accounts, and assessment of governance structure and control procedures. These activities are the reason why illicit organizations or individuals exploit or bribe auditors and accountants to launder money.

The Ministry of Economy of UAE provides a Supplemental Guidance for auditors and accountants. It mentions in detail the AML/CFT obligations for both of these professions. These obligations include risk identification, customer due diligence, identification and reporting of suspicious transactions, and internal control and governance frameworks.

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AML/CFT compliance requirements for auditors and accountants in UAE

Auditors and accountants must comply with the following requirements under the AML regulations of UAE:

Understand possible ML/FT risk exposure

You must have a detailed understanding of how your accounting and auditing business can be exposed to ML and FT risks. This requires an assessment at both the enterprise level and customer level. For this:

You must adopt a risk-based approach to identify risks in your business transactions. These risks may be of different types based on business nature, type of service, the operational environment, and other factors. Accordingly, you must adopt risk mitigation measures.
You must be aware of the source of ML/FT risks and the phase in which the money laundering risk is high. You must know the client who is exposing you to such money laundering risks.
You must know the transactions of clients that are making you vulnerable to financial crimes – valuation of certain types of assets or liabilities, approval of changes in a company’s capital structure, approval of company restructuring option, use of reserve account, approval of write-off of uncollected debt, payments from clients that are proceeds of financial crimes, or any other.
You must consider different types of risks to your business due to money laundering. These risks include customer risk, geographic risk, transaction risk, channel risk, or any other. You must be able to identify each type and strategize for their elimination.
You must conduct a risk assessment to understand the impact of these risks on your business. You must also analyze it in depth, document it, and update it as and when the changes occur.

You must conduct a similar assessment of ML/FT risks on your client’s business. You must identify potential risks, adopt a risk-based approach, and document the methodologies adopted. Also, based on the client’s type and nature of business, you must appoint Compliance Officer and relevant team members to facilitate compliance with AML regulations.

Put in place internal policies, controls, and procedures

Auditors and accountants must implement necessary measures to manage and mitigate the ML/FT risks. One of the key measures is the implementation of strong and effective internal policies, controls, and procedures. You must assess these policies for effectiveness and update them accordingly as and when the need arises.

These policies must relate to customer due diligence and suspicious transaction reporting. It must also include requirements for governance and record-keeping. Overall, such procedures must ensure management and mitigation of risks.

Auditors and accountants must apply the same for their client’s businesses as well. They must check whether the client has implemented relevant internal policies and control measures related to AML/CFT. They must ensure that these policies and procedures are in alignment with the risk appetite of the client.

Implement customer due diligence measures

Auditors and accountants must apply the necessary customer due diligence (CDD) measures based on the category and profiling of the ML/FT risk. If there is any change in the risk category, they must be ready to update the due diligence measures as well. You must apply these measures during or before the transaction happens or the business relationship starts.

You need to apply similar CDD measures for your clients as well. These due diligence measures include the following:

You must screen all your existing and prospective clients against Sanctions Lists. You must check information about beneficial owners, management control, or any associations with financial criminals or PEPs.
You must conduct a risk-based identification and verification of the true beneficial owner of your clients. For this, you must test your clients’ CDD measures to check the authenticity of their business relationships and counterparties.
After obtaining all this information from the clients, you must check its consistency and authenticity through reliable independent sources. You can use sources such as bank references, public registries, tax identification numbers, and any other relevant registries for information on assets.
You must check for use of any fraudulent or forged documents in transactions with clients. While working as an auditor or accountant, you must check the legitimacy of the client’s corporate documents.

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Report suspicious transactions to Financial Intelligence Unit (FIU)

Auditors and accountants must report any kind of suspicious transactions to the Financial Intelligence Unit as and when they suspect it. You must add all the relevant information for the suspected transaction and keep it updated. You must be extra vigilant to identify any suspicion in any transaction or customer.

Some of the indicators for suspicious transactions in their own business or client’s business include:

Unnecessary complex transactions whose purpose or beneficial owner is not known
Transactions that are inconsistent with the customer’s risk profiling
Large transactions (relatively large to a customer’s income or turnover) that are unusual for that client
Large deposits or withdrawals inconsistent with customer’s business nature
Unexplained changes in the ownership of entities or unnecessary involvement of a third party
Transactions involving high-risk countries or third parties with no relationship with customers
Unclear or dubious sourcing of funds for a transaction
Refusal of customers to provide relevant information or proofs required for due diligence measures

Ongoing monitoring of their and clients’ activities

Auditors and accountants must be vigilant of their clients’ activities and transactions. They must protect their business transactions and their clients’ from possible misuse by terrorists or criminals. So, you must check the client’s business and transactions often to be sure of no involvement of financial crime.

You must do continuous monitoring of the following activities of your client’s business:

You must check for any unexpected changes, amendments, or transfers that are unusual to your client’s routine transactions.
You must keep a check on any changes in ownership, capital contributions, dividend payments, powers of attorney, or any other transaction that changes the control of the client’s business.
You must monitor any unusual transaction, which does not align with the client’s expected business activity. This may include funds transfers or financial transactions, or any other transaction that does not give the correct source of financing.
An important consideration for auditors and accountants must be to check the source of the payments received from clients. You must ensure that the payments come from known sources and not from any unknown foreign accounts or third parties. The mode of payment must be such that it does not hide the origin of funds and must be the usual mode used by the client.

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Conclusion

Auditors must understand the vulnerability of their professional activities to money laundering risks. With that understanding, they must implement the above measures to comply with UAE’s AML/CFT regulations. These measures ensure that they themselves and their clients are not exposed to money laundering or terrorism financing activities.

To plan and implement any of these measures, you can also take the support of AML consultants in the UAE. A professional, AML consultant will be better equipped to help accountants and auditors with the right, relevant measures against money laundering. The consultant will ensure that industry-specific steps are taken in the fight against money laundering and terrorism financing.

Role of AML UAE

AML UAE is a leading AML compliance services provider in UAE. We help you with fulfilling all the requirements for AML and CFT in UAE. Our spectrum of AML compliance services is not restricted to national boundaries, but we also make sure that you comply with the global regulations of AML.

We can help you with:

Creating firm-specific AML policies, procedures, internal controls, best practices, and guidelines for your smooth business operations
Setting up an expert AML compliance department for your firm that can handle all AML-related activities
Selecting the most effective and appropriate AML software for your business needs to ensure AML compliance
Helping you in filing and submitting annual AML/CFT risk assessment reports with the UAE government
Conducting training for your employees in handling KYC, screening, risk profiling, CDD, EDD, and filing of STRs

Frequently Asked Questions (FAQs)

Here are a few frequently asked questions when it comes to the need and importance of sanction and PEP screening in the customer onboarding process.

Yes, the means of payment used by the client to pay to the auditor or accountant can be an indicator of ML/FT risks. Some of the possible red flags are:

If the payment is divided into several, small parts
If the relevant documents submitted for the transaction are not trustworthy
If the payment is done via an unrelated third party with no connection to the client or no legal explanation for the same
If the mode of payment used is such that it hides the true payer of the money.

The auditor and accountant must have the following information about the beneficial owner of the company:

Identification details
Source of wealth
Corporate history and business activities
Business relationships
Business transactions with third parties in foreign jurisdictions
Any connections with criminals or past allegations of criminal activities

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Related Blogs

Impact of FATF Grey List Update on UAE DNFBPs: AML/CFT Compliance Imperatives

Financial Watchdogs: The Role of Gatekeepers in Combatting Financial Crimes