Identity verification is a crucial aspect of the Customer Due Diligence Process to ensure the authenticity of the identity presented. Identity Verification is the process of confirming the prospect’s claimed identity by cross-referencing the given information with official government-issued documents such as an Emirates ID in the UAE.

Various methods of identity verification:

• Document verification
• Biometric verification
• Credit Bureau-Based Authentication
• Database Identification Methods
• Knowledge-Based Authentication
• Online Verification
• Two-Factor Authentication (2FA)
• Device Verification

The regulated entities must identify the suspicions related to money laundering or terrorism financing and report the same to FIU. It is very important to determine when the report is to be filed on the goAML Portal.

A Suspicious Activity Report (SAR) is to be filed when the regulated entities have reasonable grounds to believe any activity or transaction of the customer is related to any financial crime or money laundering/terrorist activities.

It is very important to understand the source of funds and the source of wealth of a customer to bring transparency to the transactions, as businesses deal with high-risk customers regularly, posing an increased risk of financial crimes. It is important to determine the financial position of the customer to identify the origin of the customer’s funds and get information about the possible connection with financial crime or any other criminal activities.

When the means of funds and wealth, as disclosed by the customer, do not align with the customer’s declared wealth, it indicates suspicious activity. It helps you identify whether the transaction proposed is aligned with the customer’s source of funds and wealth.

Using the appropriate technology to support AML operations is becoming important as a result of evolving financial crime typologies and shifting AML requirements.  All regulated entities need to consider utilising the capabilities of cutting-edge technologies and solutions to improve the accuracy and efficiency of their AML compliance programmes.

The AML compliance obligations placed on the company must be comprehended and assessed by the regulated entities. The entity’s compliance tasks must take into account the relevant regulatory environment as well as the findings of the Enterprise-Wide Risk Assessment.

The senior management of a regulated entity must know the status of its AML compliance. Further, regulated entities are required by law to take a risk-based approach to counter ML/TF. It is the senior management that will decide if the ML/TF risks are acceptable, considering their risk appetite. It is imperative for the compliance officers to prepare periodic reports for the senior management to comply with regulatory requirements and ensure that the proper risk management practices are in place.

An overview of the changes made to the AML rules during the period must be included in this periodic report. Reference to how these modifications impact the business operations of regulated entities is also required.

Customer Due Diligence becomes inevitable at the time of entering a business relationship with a customer by the Financial Institutions, DNFBPs, and VASPs. It is a very crucial process and needs to be performed with caution and utmost efficiency.

This video explains three types of Customer Due Diligence measures:

• Simplified Due Diligence: When the risk posed by a particular customer is classified as low, then Simplified Due Diligence must be applied.
• Standard Due Diligence: When risk posed is classified as medium or when the simplified Due Diligence outcome is not satisfactory.
• Enhanced Due Diligence: When, after conducting a customer risk assessment, the customer is classified as high-risk, then Enhanced Due Diligence must be carried out.

Registering on the go-AML portal of the UAE FIU is the main prerequisite under the AML framework. It is imperative for the regulated entity to verify that the business facts and information accessible on the go-AML site are up to date.

Having an AML Compliance Officer capable of framing and implementing AML rules and procedures is the second critical component required to drive the AML program.

To determine the appropriate controls needed to reduce the detected risk and evaluate the possible exposure to financial crime risks, regulated entities must conduct an enterprise-wide risk assessment.

It is crucial to apply Customer Due Diligence measures to identify potential risks associated with an individual customer before establishing a business relationship.

If the individual is listed as designated by the UNSC Consolidated List’s UAE Local Terrorist List, the regulated organization is required to refuse their onboarding or, in the case of any current clients, to end the business relationship.

The regulated entity should not onboard the individual if they refuse to provide the information needed to complete the CDD measures or if they act in an evasive or uncooperative manner.

The Remedial Action Plan (RAP) is issued by the supervisory authorities when they come across deficiencies in a regulated entity’s AML/CFT framework and its implementation. It enumerates the actions to address identified deficiencies. It mentions the applicable provision, area of concern, and required remediation.

By implementing RAP, you are performing three essential things: preventing money laundering and terrorism financing, committing to regulations, and identifying weaknesses in your program.

In this video you will learn various steps involved in RAP such as thoroughly understanding the plan, prioritizing task, establishing a dedicated team to oversee implementation, and executing actions diligently.