Patterns of Abusing Financial Institutions in Drug Trafficking and Laundering its Proceeds – UAE FIU Strategic Analysis Report

The UAE’s Financial Intelligence Unit (UAEFIU) published the Strategic Analysis Report: Patterns of Abusing Financial Institutions in Drug Trafficking and Laundering its Proceeds with an aim to help financial institutions and businesses operating in the UAE to gain insights on trends, typologies, techniques, and patterns through which drug traffickers misuse legal entities, banks, financial institutions, and legal arrangements to funnel their ill-gotten gains into the legitimate financial system, with the help of case examples and identified typologies and developed risk indicators

The UAE government considers the production, import, purchase, sale, transport, promotion, possession and storage of narcotic and psychotropic substances (often known as drugs) as criminal offence through its Federal Law by Decree No. (30) of 2021 On Combating Narcotics and Psychotropic Substances, and its amendment by Federal Decree Law No. (53) of 2022.

Drug trafficking is directly linked with money laundering as individuals, syndicates, or entities engaged in drug trafficking earn illicit proceeds out of the drug business, which ultimately needs laundering to wash away the traces of the illicit origin of such an income.

According to the provisions prescribed in Federal-Decree Law No. (20) of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Financing of Illegal Organisations, the act of money laundering and engaging or supporting anyone engaging in activities or predicate offences associated with or resulting in money laundering are punishable offences.

The UAEFIU published this Strategic Analysis Report with the help of the Research and Strategic Analysis Section (RSAS) team, which along with the help of various law enforcement agencies through the Integrated Enquiry Management System(IEMS) analyzed relevant data in the form of:

• Suspicious Activity Reports (SARs), Suspicious Transaction Reports (STRs), and other relevant data derived from the UAEFIU’s goAML portal
• Data made available through IEMS
• Information made available through international cooperation through counterpart FIU’s

The RSAS has taken into consideration the publications issued by the United Nations Office on Drugs and Crime (UNODC) and Financial Action Task Force (FATF) reports on how drug trafficking and laundering the proceeds of illicit drugs are conducted, to ensure that UAE policies and laws remain compliant with the risk-based approach.