Given the anonymity involved and the lightning pace with which the virtual asset transfers are concluded, the FATF has issued a recommendation requiring the Virtual Asset Service Provider (VASP) to identify the virtual asset transaction’s originator and beneficiary. The originating Virtual Asset Service Provider must obtain information about the originator of the transaction and the beneficiary and accompany the virtual asset transfer with these details. This recommendation by FATF is considered a Travel Rule.

FATF Travel Rule emphasises obtaining the information about the parties and making the same available to the Beneficiary VASP, who shall verify the beneficiary details before concluding the transfer.

Here is an infographic navigating through the Travel Rule requirement that VASPs must follow and the information to be obtained and verified about the originator and the beneficiary.

AML UAE is an AML consultancy firm assisting AML-regulated entities in the UAE, including VASPs licensed with VARA, ADGM or DIFC. AML UAE understands the AML regulations and the virtual asset network, which helps VASPs to effectively identify the risk, design and implement robust AML/CFT framework, and identify the right technology to manage AML compliance, including customer due diligence process to identify and verify the identity of originator and the beneficiary.

With crypto and virtual assets being the recent terminologies in the global economy’s dictionary, it is pertinent to understand the term Virtual Assets and VASP (Virtual Assets Service Provider).

Virtual Assets are the digital representation of the value, which can be easily traded over a digital platform. However, the digital representation of fiat currencies or shares and securities would not be considered a virtual asset, though represented in virtual or digital form.

Organizations providing services concerning virtual assets to another person in the course of their routine business activities would be considered Virtual Asset Service Providers (VASP).

With this simple-to-understand graphic, understand what the term “virtual assets” signify, what is expressly excluded from qualifying as a virtual asset and who would be treated as Virtual Asset Service Provider.

AML UAE is one of the leading AML consultancy service providers in UAE, offering a wide range of AML support to regulated organizations, including VASPs. AML UAE assists VASPs in assessing the business level risk and adopting a risk-based approach by designing adequate policies and controls to mitigate the identified risks. We also help identify the right AML solution to manage your customer onboarding process and monitor the virtual assets transfer in real-time.

With the UAE’s focus on developing the country as a virtual asset hub, the Government has introduced various regulations to supervise the crypto segment. This includes anti-money laundering and combating of terrorism financing (AML/CFT) regulatory framework governing the Virtual Assets Services Providers (VASPs).

The AML/CFT regulations mandate the VASPs to implement robust internal policies and procedures to identify and report ML/FT suspicious activities involving virtual assets. The VASPs must ensure adequate customer due diligence processes, including KYC and Know Your Transactions measures. To detect the unusual pattern of virtual asset transfers, the VASP must implement a strong transaction monitoring system and controls. Further, VASP must comply with FATF Travel Rule requirements, ensuring a smooth and real-time exchange of information between the VASP about the originator and beneficiary of the virtual asset transaction.

Here is an insightful roadmap showcasing the AML compliance obligations of the Virtual Assets Service Provider in the UAE, starting from goAML registration to the STR/SAR reporting and AML documentation requirements.

AML UAE is one of the leading AML consultancy service providers in UAE, assisting clients across different business segments, including VASPs, to streamline their AML compliance framework. AML UAE helps the VASP design and implement a comprehensive set of AML policies, procedures and controls to timely identify the exploitation of the virtual assets for financial crime activities and immediately report to the FIU through goAML Portal. AML UAE also frames a robust AML training program for the VASP’s employees and imparts the comprehensive training necessary for AML compliance by VASP.

The UAE AML regulations provide for the application of a risk-based approach, i.e., the higher the money laundering or terrorism financing risk, the increased and more stringent AML/CFT checks to be applied. In line with this, if a particular customer’s ML/FT risk is assessed as HIGH, the regulated organizations must apply Enhanced Due Diligence Measures comprising additional risk mitigation measures. While adopting simplified or standard due diligence measures are sufficient in other cases (for customers identified as Low or Medium risk).

Thus, it is pertinent to understand the types of Customer Due Diligence (CDD) measures to adequately apply the same, depending on the nature of the customer’s risk profile. Here, an infographic presents the three types of CDD processes, the circumstances when a particular CDD process is to be followed, measures to be applied and its relationship with ongoing customer monitoring. Also, a few examples have been captured for each CDD type for better understanding.

AML UAE is AML Consultancy firm, assisting regulated organizations in designing and implementing a robust AML Compliance framework and imparting AML training. AML UAE also helps the clients develop the customer onboarding process, with clear AML policies and procedures around Customer Due Diligence to be followed.

Along with the Know Your Customer (KYC) process, the AML regulations in UAE require the Virtual Asset Service Providers (VASPs)  to implement the “Know Your Transactions” (KYT) measures to understand the transactional parameters involved while conducting a virtual asset transfer.

Similarly, the regulations mandate VASPs to identify and verify the identity of the corresponding VASP involved in the virtual asset transaction – whether as the originating VASP initiating the VA transfer or the beneficiary VASP – “Know Your Corresponding VASP” (KYV).

These KYT and the KYV requirements are aligned with the FATF recommendations for Virtual Asset transactions.

Here is an infographic discussing the “Know Your Transaction” and “Know Your Corresponding VASP” elements.

AML UAE offers end-to-end AML consultancy support to all the regulated entities, including VASPs operating in UAE, supporting designing and implementing the AML compliance framework, KYC, KYT and KYV process.

The UAE AML regulations mandate that the designated organizations – Financial Institutions, Virtual Asset Service Providers (VASPs) and Designated Non-Financial Businesses and Professions (DNFBPs) – get their AML compliance program tested by an independent AML auditor.

The independent AML audit program must focus on checking the quality, adequacy, and effectiveness of the implemented AML framework.

Know more about the independent AML audit required under the UAE AML laws, why it is significant, and who can be the independent AML auditor.

AML UAE offers comprehensive AML consultancy support to the regulated entities, ensuring that the AML policies, procedures, and controls align with the regulatory requirements and adequately mitigate the organization’s ML/FT risk exposure.

The Central Bank of UAE, vide Notice No. CBUAE/BIS/2023/1532 has announced the implementation of the Annual Skilled Persons Reviews program as part of CBUAE’s supervisory strategy. The Annual Skilled Persons Review covers the review of Financial Crime Compliance programs implemented by Licensed Financial Institutions in the UAE, i.e., their anti-money laundering, combating the financing of terrorism (AML/CFT) frameworks, including policy for combating proliferation financing and implementing Targeted Financial Sanctions.

The Notice mandates all the LFIs operating in UAE to appoint a professional services firm for this review. This appointment of the professional services firm to conduct the Annual Skilled Person Review must be notified to the CBUAE by 10th May 2023.

Here is an infographic highlighting the critical element of this Annual Skilled Persons Review – who shall get their AML program reviewed, who can be appointed as a Reviewer and what shall be the scope of the review.

AML UAE is a leading AML Compliance Service Provider, offering comprehensive AML support – from designing the AML/CFT policies and procedures, assisting in implementing the same, imparting AML Training to the team, etc.

When dealing with corporate entities, it is pertinent to identify the Ultimate Beneficial Owner (UBO) to understand the real natural person controlling the entity’s operations. Identifying the beneficial ownership and verifying the identity of the UBOs is integral to the AML Compliance framework, specifically the Customer Due Diligence process, while establishing a business relationship with a legal or juridical person.

Here is an infographic discussing the unfolding of ownership or control structure to determine the true owner of the entity or the UBO.

AML UAE, with its diverse experience, assists the clients in laying down the AML policies and procedures, including the customer onboarding process and identifying beneficial ownership.