The Financial Institutions, Designated Non-Financial Businesses and Professions (DNFBPs) and Virtual Asset Service Providers (VASPs) must comply with AML regulations and develop a robust AML compliance framework dedicated to identifying and preventing money laundering, terrorism financing and other financial crimes. In this course of AML compliance and safeguarding the business, the entities must understand the ML/FT vulnerabilities associated with the nature of customers and products/services it deals with and stay alert to spot and curb these threats.

Some common ML/FT Typologies are:

• Trade-based money laundering: A money laundering technique used to transfer illicit money, disguising it in the name of commercial transactions. It includes over or under-invoicing, over or under-shipment, bogus shipping documents without actual delivery, etc.
• Underground banking/unlicensed remittance services: Illegal and informal mechanisms (generally based on networks of trust) used to remit funds without actually moving the funds. This is also known as “Hawala service provider”.
• Use of shell/shelf companies: A technique where legal structures are developed on paper, without any physical structure, employees or intent to carry out actual business activities. These entities are used to obscure the identity of the beneficial owners and move the criminal proceeds between the source and the shell structure, creating a complex web of transactions during the layering stage of money laundering.
• Smurfing: Smurfing is a structuring technique where a large cash amount is split into numerous smaller denominations – deposited in various accounts opened under different names to avoid any AML/CFT inquiries or reporting.
• Exploiting NPO: As per FATF evaluation, it is observed that NPOs are increasingly being misused to raise donations and transfer funds to terrorist organizations.
• Nominee arrangements: Here, some third parties (generally professionals like lawyers and company service providers) are named as the beneficial owners of the controlling parties on legal documentation to conceal the actual beneficial owners.
• Mingling Funds (Business Investment): During the integration stage of the money laundering process, the illicit funds are intentionally mingled with the legal business ventures to make separating legit and illegal funds difficult.
• Commodity Exchanges (Barter): Bartering the commodities is a standard ML/FT technique used to carry out transactions without touching the financial systems and, thus, apparently dodging the application of AML/CFT measures. For example, buying real estate property in exchange for diamonds and precious metals.

Here is an infographic discussing some of the widespread money laundering and terrorism financing-related typologies, which the regulated entities must consider and factor in while devising their AML compliance program.

AML UAE is here to help you understand these typologies and personalise the AML policies and procedures. We craft a comprehensive AML program for your business to ensure that you timely identify any ML/FT instances attempted through your business and take appropriate action to prevent and report the same.

Travellers entering or leaving UAE carrying currencies, negotiable bearer financial instruments, precious metals, or precious stones of value exceeding AED 60,000 have to submit the declaration form.

Exception:

• When such PMS is for commercial purposes
• When a traveller is engaged in PMS trading activities
• When PMS is transported as a profession by a person frequently visiting the Customs Ports

Note: For a traveller below the age of 18 years, the value of such precious metals and stones shall be counted towards the threshold value of the parent or guardian.

The regulated entities in the UAE must implement adequate measures to comply with the Targeted Financial Sanctions (TFS) regime.

The following are the five core components of a robust TFS implementation program:

The ADGM’s Financial Service Regulatory Authority (FSRA) provides for a class of businesses, professions, and entities that must comply with the AML Rulebook or AML Module issued by FSRA to combat money laundering and terrorism financing, while protecting the integrity of the business and of the financial free zone.

Here is an infographic discussing the entities that are to be considered “Relevant Persons” subject to AML compliance in ADGM, which includes:

Authorised Person (including the Representative Office)

An entity engaged in Regulated Activities as specified under Financial Service Market Regulations 2015, such as Investment (Financial instrument and virtual assets) related activities, acceptance of deposits, providing credit, providing money services, etc. It also covers persons conducting insurance-related activities, managing Assets or Investment Funds on behalf of clients, or providing Trust Services or any other Shari’a-compliant Regulated Activities.

The list of Regulated Activities is captured as a separate infographic.

Recognized Body

A person operating a recognized Investment Exchange or a recognized Clearing House.

Designated Non-Financial Businesses and Professions (DNFBP)

The ADGM AML Rulebook considers the following persons or entities as DNFBPs:

• Real estate agents
• Dealer in precious metals or stones
• Dealer in any saleable item of a price equal to or greater than US$ 15,000
• A law firm, notary, or other independent legal professionals
• An accounting firm, audit firm, insolvency firm, or taxation consulting group
• A company service provider

Non-Profit Organization

NPOs are also subject to AML compliance, which is engaged in raising or disbursing funds for charitable, religious, cultural, educational, social, or fraternal purposes.

ADGM entities must comply with the FSRA-issued AML Rulebook and Federal AML/CFT laws and regulations and design a robust AML framework to identify and manage financial crime risks.

Let AML UAE assist you in navigating ADGM’s AML regulations and implementing the necessary AML policies and procedures to safeguard the business and stay compliant.

The ADGM’s Financial Service Regulatory Authority (FSRA) mandates the Authorized Person conducting the Regulated Activities in or from the Abu Dhabi Global Market must comply with the AML regulations.

Here is an infographic discussing the Regulated Activities as defined under Financial Service Market Regulations 2015, qualifying the entity to be treated as AML-regulated entity or a “Relevant Person” as per the FSRA AML Rulebook.

Authorized Persons having Financial Service Permission to conduct regulated activities shall comply with the FSRA-issued AML Rulebook and Federal AML/CFT laws.

AML UAE, as a leading AML consultancy firm, can assist you in exploring the applicability of AML and help you implement a comprehensive AML framework compliant with ADGM’s FSRA AML regulations.

The UAE AML regulations mandate that the regulated entities – DNFBPs, VASPs, and Financial Institutions – assess the money laundering and terrorism financing risk each customer poses to the business and adopt a risk-based approach to mitigate the same. Here, the AML law provides for applying Enhanced Due Diligence (EDD) measures when the customer is identified as exposing high ML/FT risk.

Here is an infographic discussing the key merits that the EDD process has to offer to regulated businesses:

1. One of the EDD measures is to make detailed inquiries about the customer’s identity. Thus, EDD helps in understanding the customer’s structure, and if the legal structure of the customer appears to be complex, EDD allows decoding whether the complexity of the structure is legitimate or deliberately created to obscure the identity of the Ultimate Beneficial Owners (UBOs).
2. The EDD process involves identifying the customer’s source of funds and source of wealth and establishing the legitimacy of the same based on reliable sources. Here, EDD helps the entity determine whether the funds involved in the transaction and its associated wealth are legitimate or are proceeds of some criminal activities.
3. Further inquiry around the customer’s identity and the nature of the business relationship helps the entity assess whether the customer is just carrying higher risk or is actually suspected of being involved in some money laundering or terrorism financing activities.
4. Applying appropriate EDD measures ensures that the business does not engage with any criminal or a person charged with some financial crime (adverse media sources), safeguarding the business’s reputation.
5. AML regulations require that the regulated entity seek senior management approval when establishing business relationships with high-risk customers. This measure will ensure that management is aware of the increased risk and make an informed decision to deal with such customers.
6. One more measure to be applied during EDD is obtaining payment towards the transaction from the customer’s bank account, subject to similar CDD measures. This will help the regulated entities ensure that no third party exploits their business under another name.
7. When applying EDD measures, the regulated entity must consider filing a Suspicious Activity Report (SAR) and a Suspicious Transaction Report (STR) if any red flags are detected. This will ensure that the regulated entities safeguard their business against potential threats and timely report the matter to FIU, complying with the regulatory reporting requirements.

Adopt adequate increased controls and risk mitigation measures when high-risk is encountered.

As a leading AML consultancy service provider, AML UAE can assist you in designing customized AML/CFT policies, procedures, and controls in line with the outcome of the Enterprise-Wide Risk Assessment. This will include defining the circumstances when the customer shall be classified as high-risk and what EDD measures shall be applied. Let’s come together to fight the financial crime.

Under UAE AML regulations, the Dealers in Precious Metals and Stones (DPMS) are one of the Designated Non-Financial Businesses and Professions (DNFBPs) subject to AML compliance. One of the compliance obligations imposed upon DPMS or jewellers in UAE is to report certain designated transactions on the goAML portal by filing a Dealers in Precious Metals and Stones Report (DPMSR).

The DPMSR is to be filed by the dealers in precious metals/stones when the transactions are either in cash or wire transfer. In the case of the natural person, whether resident or non-resident of UAE, the cash transactions of AED 55,000 or more would be treated as designated transactions requiring reporting on the goAML Portal. For corporate customers, transactions of value AED 55,000 or more involving cash or international wire transfers are to be reported.

DPMSR is to be filed within two (2) weeks from the event triggering the reporting, i.e., from the date of receipt or payment of funds of the specified amount in cash or wire transfer, as mentioned above.

Moreover, when filing the DPMSR on the goAML Portal, the dealers in precious metals/stones must submit the necessary identification documents of the customer. It would be a copy of a valid Emirates ID or Passport or any other government-issued ID bearing photograph for a natural person or an individual customer. The regulated entity must furnish the valid trade license copy of the corporate customer and the identity document (Emirates ID/Passport) of the authorized representative of the corporate customer.

Here is an infographic discussing the salient aspects a dealer in precious metals and stones must understand regarding one of its essential AML reporting obligations – DPMSR.

AML UAE, with its varied experience across the countries and thorough understanding of the UAE regulations, can assist you in setting up the required processes and systems to identify the transactions warranting the filing of DPMSR and implement best practices to file these reports on the goAML Portal.

With the virtual asset sector booming in the UAE, including the acceptance of digital securities and payment tokens, various authorities have been designated to oversee and supervise the licensing and operations of the Virtual Asset Service Providers (VASP). This bifurcation of the authorities for managing VASP activities is mainly based on the location of the VASP and the nature of the activities.

VASPs based in Dubai, except those operating in or from Dubai International Financial Centre (DIFC), are subject to supervision by Dubai’s Virtual Assets Regulatory Authority (VARA). For DIFC-based VASPs, the governing authority is the Dubai Financial Service Authority. Similarly, for VASPs operating from the financial free zone of the Abu Dhabi Global Market (ADGM), the concerned supervisory authority is the Financial Service Regulatory Authority (FSRA).

For other VASPs (not operating from Dubai or the DIFC/ADGM financial free zones), the governing AML supervisory authority is the UAE’s Securities and Commodities Authority (SCA).

Monitoring of the payment tokens is under the purview of the Central Bank of UAE, while digital securities and commodities are under SCA.

Here is an infographic discussing the AML Supervisory Authorities in UAE to oversee the level and nature of the AML compliance program implemented by the VASPs operating within their jurisdictions.

With AML UAE‘s years of experience and subject knowledge (on AML as well as virtual asset space), we have been assisting the VASP in UAE in assessing the financial crime risks and customizing the AML/CFT program in line with local regulations and FATF best practices recommended to protect the exploitation of the virtual assets by financial criminals.

Precious metals (like gold, platinum, silver) and precious stones (such as diamonds, ruby, pearls, etc.) have been associated with money laundering, being exploited by financial criminals owing to their inherent characteristics like small in size, easy portability, global acceptance as a medium of exchange, etc.

Understanding the red flags connected with these precious metals and stones to spot the potential risks and prevent the same promptly. The Dealers in Precious Metals and Stones must watch out for the risk indicators while onboarding a customer or in the course of the ongoing business relationship and identify unusual trends or inconsistent customer behaviour suggesting suspicion.

Here is an infographic capturing some key ML/FT red flags that a Dealer in Precious Metals and Stones must be aware of and cautious about.

AML UAE is an AML consultancy service provider, offering end-to-end AML support to regulated entities, including Dealers in Precious Metals and Stones, in assessing the overall business risk, customizing the AML/CFT Program to identify and mitigate the risk and stay AML compliant.

The Transaction Monitoring program is one of the critical aspects of a practical AML Compliance framework, focused on continuous review of the financial transactions and the customer’s profile to identify any suspicious or unusual activities or customer behaviour. To enhance the efficiency of the transaction monitoring program, it is essential that the regulated organization design and implement the relevant monitoring rules aligned with the organization’s overall ML/FT business risk.

Transaction monitoring is essential to ensure that the transactions the customers are executing are normal and reasonable to the customer’s profile and the nature of business activities they are involved in, including the legitimacy of the transactions.

Monitoring rules must be defined considering the regulated organization’s customer base, the jurisdictions in which it operates, and its customers are hailing from, the peculiarities of the transactions, etc.

Here is an infographic highlighting the significance of the transaction monitoring program and some primary methods for developing the monitoring rules.

AML UAE is an AML consultancy firm providing a comprehensive range of AML services to clients in the UAE – whether Financial Institutions, VASPs, or DNFBPs. We assist the regulated entities in developing robust AML/CFT policies, procedures, and controls, including identifying the right AML Transaction Monitoring system and customizing the monitoring rules and logics to detect suspicious transactions and customer behaviours.