Money Laundering Fines and Penalties in UAE
Money Laundering Fines and Penalties in UAE
AML compliance is mandatory for financial institutions, Designated Non-Financial Businesses and Professions (DNFBP), and other regulated entities. The UAE Ministry of Economy announced different Money Laundering Fines and Penalties in UAE. The Ministry has listed 26 categories of fines for violating the money laundering and terrorism financing laws.
The UAE government monitors the AML compliance and has set up a specialised unit to investigate the control of DNFBPs, dealers in precious metals and stones, auditors, real estate agents and brokers, etc., as such businesses and professionals are prone to money laundering and corruption.
Let’s know the different fines and penalties applicable in the UAE for violating AML rules and regulations.
1. Money Laudering Fine of Dirhams 1 million or more
When organizations fail to take appropriate actions for customers included in the international or local sanction lists– they must follow the due diligence process before starting a business relationship. If there is a dealing with unauthorized banks, AED 1 million or more fine is also applicable. The penalty is also applicable if bank accounts are opened or maintained using fake names, not the actual holders’ names.
2. Money Laundering Fines and Pentalties of Dirhams 200,000 or more
- If the Enhanced Due Diligence process is not followed to identify the high-risk customers. If the FIU- Financial Information Unit is not informed of the STR- Suspicious Transaction Report in cases where the institutions cannot follow the customer verification process- due diligence process before creating or maintaining a business relationship or carrying out a transaction for the benefit of the client or in his name.
- If the FIU has asked for additional information for the reported suspicious transactions and organisations fail to comply, then a fine is also levied in such cases.
- Suppose, due to suspicions about the nature of the business relations- its process or intentions are disclosed directly or indirectly to the customer or a third party. In that case, such actions attract a penalty of AED 200,000 or more.
- If the measures identified by the National Committee for Combating Money Laundering regarding customers from high-risk countries are not implemented, the fines are levied.
3. AML Violations and Fine of Dirhams 100,000 or more
- If the requisite measures are not adopted for identifying risk and evaluating the same when the services are provided or undertaken with new professional activities.
- If the requisite due diligence measures are not taken for clients before establishing or continuing a business relationship or making a transaction that benefits the customer.
- If the customer identity and that of the UBO or their deputy is not verified before or while establishing a business relationship or before with a client with whom there’s no previous business relationship.
- If there’s a delay of information about the STR to the FIU in events where there’s a suspicion that the customer is related to crime wholly or partly- if there’s reasonable ground to suspect that the client money is involved in establishing the business relationship has been obtained from criminal activities.
- If the due diligence measures are not followed for PEPs-Politically exposed Persons before establishing or maintaining a business relationship.
- If proper records are not maintained on the financial transactions with the customers.
4. Money Laundering Fine of Dirhams 50,000 or more
- If proper AML training is not provided to the staff to help them be aware of the procedure of abiding by the AML laws. Preventing competent authorities’ access upon their request and the results obtained from due diligence and continued monitoring are not provided. Access is granted to analyse the results- the records, files, documents, correspondence, and forms on both sides.
– If financial transactions records are not maintained for:
- five years from the date of transaction completion,
- expiry of the customer relationship,
- completion of inspection of their facility.
- The fine is applicable as maintenance of such records is mandatory.
- If irregular records for financial transactions have been maintained and do not help in analysing data and tracking the financial activities, a fine is imposed.
- It is mandatory to appoint an AML compliance officer (MLRO), and failure of such an appointment attracts a penalty.
- If due diligence measures for continuous customer monitoring are not taken, and the required procedure is not followed to understand the type and nature of the client’s business, the ownership structure, and control (UBO) –then the fine is levied.
- If the institution has not taken the required measures to understand the purpose and nature of the business relationship and has not obtained information for the same, it also attracts a penalty of AED 50,000 or more.
- If the institution has not followed the simplified due diligence processes to manage low risk.
- Internal AML policies, procedures, and controls are required to be established to identify suspicious transactions, prevent money laundering and identify customer risk- failure to do so attracts a penalty.
- If necessary, measures and procedures are not adopted to mitigate the identified risks, which come to light after a national risk assessment and self-assessment.
AML Fines and Penalties in UAE
The UAE government has neatly classified each non-violation of AML rules and regulations and clearly defined the fines for them. So it’s essential to follow the AML laws and keep the business AML compliant at all times to avoid penalties. It is necessary to conduct AML/ CFT Health Check, create the Annual AML/ CFT Assessment Report and follow the AML / CFT Policy Controls and Procedures Documentation. AML Training helps to sync with the latest AML guidelines and train the employees about the diligence process and identifying suspicious transactions and financial activities.
The AML software selection will help choose the best software that will assist in AML compliance. It would be best to contact a reliable AML consultant to access a wide range of AML compliance services and avoid the risk of non-compliance. AML UAE is one of the best AML consultants working diligently in the compliance field and serving thousands of businesses in the UAE to be AML compliant.
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About the Author
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.