Know about AML Compliance

Money Laundering is a global concern as it weakens the economy and targets its socio-economic structure. Criminals use modern technologies and ways to launder money, and therefore governments create stringent AML laws and regulations. The AML laws provide guidelines to regulated entities which help them target criminal activities such as corruption, trade of illegal goods and prevent illicit money from entering the legal system. Criminals try to launder the illegally obtained money and transfer it to the legal entities that they own. Another method of storing the cash is an investment in foreign countries in which the laws are not as stringent that they would be asked to declare the source of the money invested.

UAE has passed several AML laws which have to be followed by the regulated entities to stop the criminal activity of money laundering. The Central Bank of the UAE – CBUAE has established a department -AMLD- Anti-Money Laundering and Combatting the Financing of Terrorism Supervision Department to manage Anti-Money Laundering and Combatting the Financing of Terrorism matters. The main three objectives of the department are to examine the LFIs- Licensed Financial Institutions, ensuring that the AML/ CFT rules are followed, and the institutions work within the legal and regulatory framework of the AML/ CFT laws. Finally, the AMLD has to identify the threats, the weak areas, and new challenges which the UAE’s financial sector is facing.

The Central bank of UAE collaborates with the UAE’s National AML/ CFT committee, which helps implement the National Action Plan in the desired manner.

UAE Decree Federal Law and Executive Regulation

The foundation of the UAE AML/ CFT regulations is the Federal Decree No. (20) of 2018. The decree has established a committee to ensure that the AML/ CFT objectives are achieved. The Governor of the CBUAE chairs the committee.

Further, it stipulated the establishment of the FIU- Financial Information Unit, which receives all the reports for suspicious financial activities by the financial institutions and other regulated entities. It investigates transactions and economic activities involved in money laundering, financing of terrorism, and other criminal activities. The report must be submitted within 35 calendar days. Within the 20 calendar days, a case investigator should analyse the alert, take the necessary action, make an internal recommendation to the MLRO, and decide on submitting the SAR/ STR filing. The MLRO should file the report within 15 calendar days with the FIU if anything is suspicious.

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The Central Bank of UAE has recently provided new guidelines that require all financial institutions to file SaRs Suspicious Activity Reports or STRs – Suspicious Transactions Reports with the FIU on the goAML portal. The goAML app has been developed by UNODOC- United Nations Office on Drugs and Crime to prevent money laundering and funding of criminal and terrorist activities. The FIU receives Suspicious Transaction reports on this portal. It is noteworthy that UAE is the first Gulf country to apply this integrated platform.

CDD

CDD (Customer Due Diligence) is an integral part of the AML/ CFT program, which alerts and prevents organizations from associating with a wrong business entity. All the financial institutions and designated non-financial businesses and professions, DNFBP (precious metal dealers, corporate service providers’ auditors, etc.) follow the CDD- Customer Due Diligence process. The CDD process is a mandatory AML/ CFT element that identifies any suspicious financial transaction. It gives complete information about the customers’ details required for the onboarding process. The customer data is collected and verified, and then a risk profile is created. The customer data includes the name, address, contact numbers, alternative contact number, legit email addresses, place of birth, date of birth, nationality, etc. These details are necessary for the individual customer and business entities. Data needed for CDD includes name and type of the business entity, nature of business, date and place of establishment, certificate of incorporation, information about the board of directors, information about shareholders, UBO’s, annual report, location of the business, etc.

AML Compliance

The financial industry is highly competitive, and therefore compliance issues must be prioritized. It is crucial to be updated with the new rules and regulations to avoid the risk of non-compliance. Outsourcing AML compliance services are being looked at as a great option to be AML compliant. AML services providers, with their comprehensive range of services, help businesses to stay AML compliant. AML compliance services include AML/ CFT Policy, Controls, and Procedures Documentation, in-house compliance department set up, AML Training, AML software selection, Annual AML/ CFT Risk Assessment Report, and AML/ CFT Health Check. Get high-quality AML consulting services and personalized services to stay AML compliant.

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FAQs

AML compliance is the process of complying with the country’s rules, regulations, and policies specific to AML to eliminate any chances of money laundering. This includes conducting KYC, risk assessments, identifying suspicious transactions, implementing internal processes, and setting up a compliance team.  

About the Author

Pathik Shah

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

Pathik is a multi-disciplinary professional with more than 22 years of experience in compliance, risk management, accounting, system audits, IT consultancy, and digital marketing. He has extensive knowledge of Anti-Money Laundering rules and regulations, and he helps companies comply with legal requirements. Pathik also helps companies generate value from their IT investments.