EWRA and its alignment with the AML/CFT Policy for a TCSP
EWRA and its alignment with the AML/CFT Policy for a TCSP
AML UAE carried out an Enterprise-Wide Risk Assessment of a Trust and Company Service Provider that operates in Dubai, UAE.
The client was into providing various corporate services and some other services related to the processing of individual tourist visas and document translation. The challenge was to identify and classify covered activities and non-covered activities under the AML/CFT Law.
Customer Goals:
The existing EWRA treated covered and non-covered activities alike, and the client had to spend a lot of time performing KYC and doing due diligence for non-covered activities as well. The TCSP wanted to apply stringent AML/CFT controls for covered activities and simplify due diligence for various low-risk uncovered activities. Central to this issue was that the regulatory requirements must be given due consideration, and the new EWRA must not result in a situation where the legal requirements are not met.
Challenges Faced by Customer:
The main challenge was to understand the customer types, the exact nature of covered and uncovered activities, their delivery channels, client geographies, and transactions. The compliance department wasn’t adequately staffed to provide all the information, and a lot of deep digging was required to get the information required to perform the EWRA.
Legal Background:
The TCSP was governed by:
- 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
As a regulated entity, corporate service providers must adopt a risk-based approach, conduct Enterprise-Wide Risk Assessment and align their AML/CFT Policies and Procedures with it.
Solution Provided by AML UAE Team:
AML UAE provided a thorough AML/CFT consultant who performed the following tasks:
- Documenting the services provided by the company
- Mapping of the services with covered activities and non-covered activities under the UAE AML/CFT laws
- Identification of client geographies
- Identification of delivery channels
- Identification of the nature and size of transactions
- Identification of ML/TF risk factors
- Assessment of ML/TF risk factors
- Study of past data
- Likelihood of ML/TF risks materialising
- Identification of Gross Risk
- Identification and assessment of the nature and extent of AML/CFT controls put in place
- Identification of the effectiveness of the control environment
- Identification of the residual risk
- Risk Appetite
- Aligning AML/CFT policies and procedures with the revised EWRA
- Changing customer onboarding processes for non-covered activities
- Simplified due diligence for non-covered activities
This alignment aimed to strengthen the TCSP’s control environment and tailor it to the specific risks inherent in its operations, thereby reducing the likelihood of regulatory non-compliance and safeguarding itself from financial crimes.
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End Result:
Following the thorough EWRA conducted by AML UAE, TCSP achieved significant improvements in efficiency and compliance and successfully navigated the complexities of the regulatory landscape while optimising its business processes.
The company enhanced its overall ability to identify, assess, and mitigate ML/FT risks by 35% by aligning AML/CFT policies and procedures with the revised EWRA.
Achieved 40% saving in time in customer onboarding for non-covered activities, faster turnaround and increased efficiency.
The collaborative efforts between the TCSP and AML UAE resulted in enhanced risk management capabilities and improved compliance with UAE AML/CFT regulations.
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