Anti Money Laundering (AML) in the United Arab Emirates (UAE)
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Money laundering is a problem for the UAE, despite the steps the country has taken to combat financial, organized, and terrorist crimes. The UAE maintains a strong Anti-Money Laundering (AML) system in an effort to protect against the possibility of money laundering and terrorist financing.
Since 2001, the UAE Government (UAEG) has taken steps to better monitor cash flows through the UAE financial system and to cooperate with international efforts to combat terrorist financing. The UAE has enacted two laws that serve as the foundation for the country’s Anti Money Laundering (AML) and counterterrorist financing (CTF) efforts: Law No 4/2002, the Anti Money Laundering law, and Law No. 1/2004, the counterterrorism law.
Although the Anti-Money Laundering law criminalizes money laundering, it is administrative Regulation No. 24/2000 that provides guidelines for how financial institutions are to monitor for money laundering activity.
This regulation requires banks, money exchange houses, finance companies, and any other financial institutions operating in the UAE to follow strict Know Your Customer (KYC) guidelines. Additionally, financial institutions must verify the customer’s identity and maintain transaction details (including name and address of originator and beneficiary) for all exchange house transactions over $545, and for all non-account holder bank transactions over $10,900. The regulation delineates the procedures to be followed for the identification of natural and juridical persons, the types of documents to be presented, and rules on what customer records must be maintained on file at the institution. Other provisions of Regulation 24/2000 call for customer records to be maintained for a minimum of five years and further require that they be periodically updated as long as the account is open.
On July 29, 2004, the UAE strengthened its legal authority to combat terrorism and terrorist financing, by passing Law No. 1/2004. The law sets stiff penalties for the crimes covered, including life imprisonment and the death penalty. It also provides for asset seizure or forfeiture. Under the law, founders of terrorist organizations face up to life imprisonment. The law also penalizes the illegal manufacture, import, or transport of "non-conventional weapons" or their components, with the intent to use them in a terrorist activity.
In July 2013, the Dubai Financial Services Authority (DFSA) AML Module was revised to be the Anti-Money Laundering, Counter Terrorist Financing and Sanctions Module (AML Rules).
AML Training in the UAE
The Regulation Concerning Procedures for Anti-Money Laundering requires financial institutions within the UAE to create and implement Anti-Money Laundering/Counter Terrorist Financing (AML/CTF) training programs to combat criminal activity within the country.
The regulator for AML controls in the UAE is the Central Bank (CBUAE); in the Dubai International Financial Centre (DIFC) free-zone, it is the DFSA. The CBUAE regulates all banks, moneychangers, finance companies, and other financial institutions operating in the United Arab Emirates while the DFSA regulates Authorised Firms, which include banks, insurance companies, investment banks, asset managers, and fund administrators, providing financial services in the DIFC. Both regulators require financial institutions to have extensive customer due diligence (CDD) policies as part of their AML/CTF programs.
The Economy of the UAE
Since the discovery of oil in the UAE more than 30 years ago, the UAE has undergone a huge transformation from an impoverished region of small principalities to a modern state with a high standard of living. The government has increased spending on job creation and is opening up utilities to a greater private sector involvement.
Banking in the UAE
The Central Bank of the UAE is the Central Bank of the UAE.
The supervision of the UAE banking and financial sector (including banks, exchange houses, and investment companies) falls under the authority of the Central Bank. The Central Bank issues licenses to financial institutions under its supervision and can impose administrative sanctions for compliance violations. The Central Bank issues instructions and recommendations as it deems appropriate and is permitted to take any necessary measures to ensure the integrity of the UAE’s financial system. The central bank has issued a number of circulars outlining the requirements for customer identification and providing for a basic suspicious transaction-reporting obligation.
In 1973 the United Arab Emirates Dirham (AED) was introduced, replacing the Qatar and Dubai Riyal.
Dirham is issued in denominations of 5, 10, 20, 50, 100, 200, 500 and 1,000. Coins are issued in denominations of AED 1 and coins (fils) of 5, 10, 25 and 50.
Other Key Statistic of the UAE
Time Zone: GST(UTC+4).
Location: Middle East, bordering the Gulf of Oman and the Persian Gulf, between Oman and Saudi Arabia.
Population: 9,346,129 (2013 estimate.)
Capital: Abu Dhabi.
Languages Spoken: Arabic (official), Persian, English, Hindi, Urdu.