AML Periodic inspection: What to expect when authorities come for a Periodic AML Inspection
AML Periodic inspection: What to expect when authorities come for a Periodic AML inspection
The team representing the Ministry of Economy UAE has started visiting companies to conduct periodic AML inspections regarding the implementation of AML/CFT procedures. As a part of their AML periodic inspection, the team checks whether the company has implemented suitable procedures for anti-money laundering and combating terrorism financing.
The Ministry’s notification directs the companies to cooperate with the inspection team during the visit. This notification is in regards to the Federal Decree No. 20 of 2018 and Cabinet Decision No. 10 of 2019 for the implementation of Federal Decree law No. (20) of 2018 on anti-money laundering. The financial institutions and DNFBPs are required to fill in the checklist with accurate details and submit a signed copy to the inspection team during their visit.
DNFBPS must fill in the following information in different sections as asked in the checklist:
- Legal name
- DNFBP category
- Licensing Authority, Number, and Date
- Inspection Date
- The name and signature of the authorized signatory, which can be a Compliance Officer or Manager
- Ownership structure including details on ultimate beneficial owner (UBO)
- Description of the products and services you offer and types of customers
General policies and procedures
In this section, you have to mention whether you have prepared and documented AML/CFT policies and procedures. If you have those, you have to share your AML Policy via email. The Ministry also intends to know whether you have circulated these procedures and policies to all your employees.
Internal risk assessment
In this section, the Ministry requires you to mention whether you carry out and document an internal risk assessment to identify the money laundering risks to your business. In the document, you need to provide details on the risk categories included in the risk assessment, such as:
- Country risk
- Customer risk – Check our infographic on customer risk assessment
- Delivery channels risk
- Products, services, and transaction risk
- Results of the National Risk Assessment of the UAE’s money laundering and terrorist financing risks
Check our blog: The risk-based approach in anti-money laundering compliance
In this section, the Ministry intends to know whether the Board of Directors and/or senior management demonstrate overall responsibility and awareness of AML/CFT matters within the entity. The companies must also mention whether the Board and/or senior management receive regular AML/CFT reports from the Compliance Officer.
Check out our guide on establishing an effective AML/CFT Framework in your business.
This section requires information on the Compliance Officer. The first point you have to mention is whether you have appointed a compliance officer. If the answer to it is yes, the Ministry requires the name and email address of the Officer.
The Ministry also intends to know whether the company has provided all the relevant details and documents to the Compliance Officer, including financials. Also, you must talk about the reporting manager of the Compliance Officer.
Check out our article on the roles and responsibilities of AML Compliance Officer
Customer acceptance and onboarding
This section requires companies to talk about their customer onboarding process and policies. The Ministry intends to know whether you have:
- A Know Your Customer (KYC) form, including details such as name, address, contact details, profession, and copy of identity proofs. Check out what is know your customer (KYC) and best practices for KYC compliance. Also, check out our article highlighting the importance of identity verification.
- Implemented procedure to identify whether the potential customers are /related to Politically-Exposed Persons (PEPs). Check out our guide to Sanction and PEP screening
- Established mechanisms to categorise your customers as high risk, low risk, and medium risk. Check out our infographic on the customer risk assessment program
- Whether the policy is in place for Identification of the true beneficiary of your customer. Read our complete guide to the Ultimate Beneficial Owner verification
In this section, the Ministry wants to know whether you allow cash transactions in your business. You must mention the details of specific controls and procedures implemented in your company for cash transactions.
The Ministry intends to know from you details on:
- Percentage of cash transactions of the company’s total transactions
- Cases of cash transactions of more than AED55,000.0 during the last 24 months
Suspicious transaction reporting
In this section, the company must answer the following:
- If they have signed up to the Financial Intelligence Unit’s goAML platform. Check out our goAML pre-registration guide and goAML registration guide
- If they have submitted any suspicious transaction reports via the platform; if yes, how many
- If they have a documented list of red flags or indicators for suspicious transactions; if yes, share it in email
Check out our goAML Web Submission Guide
The Ministry intends to know if you keep all records, documents, materials, and data of all local or international financial, commercial, and cash transactions for a period of no less than five years from the date of completing the process or the end of the relationship with the customer. Check out our infographic on AML Compliance Requirements in UAE
Training and awareness
You must provide information on the regular and appropriate training programmes you conduct for your employees in line with the nature and degree of risks of its activities to train employees on AML/CFT procedures. You must describe the training and its format in detail. Check our article emphasising the importance of AML training.
Targeted financial sanctions
This section allows the Ministry to know if your customers are subject to targeted financial sanctions by the UAE government, the UN Security Council, or any other relevant body. You must also inform any screening tool that you use to check the same in this form.
You must mention if you have ever identified exposure to targeted financial sanctions designated persons. If yes, what were the actions the company took, including but not limited to asset freezing, reporting to the competent authority, etc.
In this section of the checklist, you must list all your bank accounts and related details such as name, location, IBAN, etc. The Ministry wants to know if you faced any issues with any banking institution, along with the relevant details.
All these details will help the inspecting team know about the procedures in place on your premises related to AML/CFT. This proves your commitment to abiding by the AML law and dedication to reducing money laundering activities.
About AML UAE
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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.