Crafting Tailor-Made AML/CFT Program for a Corporate Service Provider
Crafting Tailor-Made AML/CFT Program for a Corporate Service Provider
AML UAE helped a corporate service provider operating in the UAE craft tailor-made Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) program. AML/CFT program consists of policies, procedures, and control measures that outline an entity’s approach to preventing, detecting, and mitigating money laundering (ML), financing terrorism (FT), and proliferation financing (PF) risks.
Our client, a leading corporate service provider in the UAE, was on a journey to enhance its AML/CFT program. While crafting the AML/CFT program, the client faced challenges in identifying and classifying covered and non-covered activities under the AML/CFT Law and assessing ML/TF/PF risks, which impacted their ability to implement an effective AML program.
Customer Goals:
Our clients aimed for seamless AML/CFT compliance, mitigating ML/FT/PF risks, and safeguarding their reputation. The client wanted to implement an effective AML/CFT Program that included robust AML/CFT strategies that were aligned with their business objectives and regulatory obligations.
Challenges:
The client, due to the AML regulatory requirement required to implement effective AML/CFT programs, however, they faced the following challenges:
- Understanding AML/CFT Regulations: The client struggled with comprehending the complexities of AML/CFT regulations and translating them into effective programs tailored to their specific needs.
- Tailoring AML/CFT Programs: Each industry has unique red flags and compliance requirements. The client found it challenging to customise their AML/CFT programs to address these specific needs.
- Adapting to Evolving Risks: The constantly changing landscape of financial crimes and compliance requirements made it difficult for the client to assess ML/TF/PF risks and establish an effective AML/CFT program.
- Assessing Program Effectiveness: The client was unsure if their current AML program was adequately addressing the risks and vulnerabilities associated with their industry.
Legal Background:
The corporate service provider is governed by the below-mentioned regulations:
- Federal Decree Law No (20) of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Illegal Organisations
- Federal Decree Law No (26) of 2021 to amend certain provisions of Federal Decree Law No (20) of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Illegal Organisations
- Cabinet Decision No (10) of 2019 concerning the Executive Regulations of Federal Decree Law No (20) of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Illegal Organisations
- Guidelines for Designated Non-Financial Businesses and Professions (DNFBPs)
- Ministry of Economy’s Supplemental Guidance for Trust & Company Service Providers
The regulatory framework lists corporate service providers among the Designated Non-Financial Businesses and Professions (DNFBPs). Therefore, compliance with the regulatory framework governing AML/CFT is mandatory for all corporate service providers in the UAE.
As part of the AML regulatory framework, DNFBPS needs to implement AML measures to combat ML, FT, and PF risks. Thus, as a regulated entity, corporate service providers must implement effective AML programs and align their AML/CFT Policies and Procedures with them.
Solutions Provided by AML UAE:
Effective AML programs are key to combating ML, FT, and PF risks. To ensure that AML programs are effective and well-suited to a business’s specific needs, the client needs to tailor AML programs to the unique characteristics of the industry in which they operate.
AML UAE supported the corporate service provider in developing a customised AML program by carefully assessing the nature of their business and documenting the findings.
AML UAE helped the client in the following manner:
- Existing AML/CFT Program Review: The foremost step in creating an AML/CFT program designed for the Client was evaluating the effectiveness of the existing AML program and conducting a gap analysis to identify areas for implementation.
- Conducting Risk Assessments: Undertook risk assessment processes to evaluate the ML, FT, and PF risks associated with different types of transactions, customers, and geographic locations to focus resources where they are needed most.
- Establishing Clear AML Policies: Based on gap analysis and in-depth risk assessment, we aided in establishing clear AML policies outlining the steps and processes for identifying, managing, and reporting suspicious activities.
- Adopting a Risk-Based Approach: Helped the client adopt the risk-based approach to conducting AML measures such as CDD, ongoing monitoring, and compliance with AML requirements as detailed in regulations.
- Supporting AML Oversight: Assisted the AML compliance officer in overseeing the program and ensuring that all aspects were properly implemented and maintained.
- Advanced Monitoring Processes: Helped choose and implement advanced monitoring processes to track transactions for unusual or suspicious activity that may indicate ML, FT, and PF activities or any other financial crime in real time.
- AML Training: Organised and conducted training sessions to enhance the client’s staff on AML/CFT requirements and best practices.
- Technology Integration: Recommended AML software solutions that were to support the AML processes, such as software for customer risk assessment, ongoing monitoring, and record-keeping.
End Result:
Key results:
- Cost Reduction: The tailored AML programs led to a 35% reduction in compliance-related costs by streamlining processes.
- Efficiency Gains: The adoption of a risk-based approach resulted in significant time and cost savings, ensured regulatory compliance, and established a robust framework to address ML, FT, and PF activities.
- Risk Mitigation: Enhanced AML procedures and measures reduced the client’s exposure to ML, FT, and PF risks by 65%.
- Regulatory Compliance: Achieved 100% compliance with AML regulatory requirements, helping the client maintain a strong reputation with regulatory authorities.
Through our collaborative efforts, we strengthened the client’s AML regulatory compliance with tailored programs that effectively addressed their specific needs and risks.
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