December 12, 2019 at 10:28 am #firstname.lastname@example.orgParticipant
1. The Crime of Money Laundering and Criminal Enforcement
1.1 What is the legal authority to prosecute money laundering at national level?
The legal authority that prosecutes any person is the General Public Persecutor.
1.2 What must be proven by the government to establish money laundering as a criminal offence? What money laundering predicate offences are included? Is tax evasion a predicate offence for money laundering?
The law criminalises as money laundering any of the following acts carried out in the knowledge that the funds are derived from a crime:
the conversion, transfer, deposit, safekeeping, investment, exchange or management of any proceeds of crime, with intent to conceal or disguise the illicit origin thereof;
the concealment or disguise of the true nature, origin, location, way of disposition, movement or rights related to any proceeds or the ownership thereof; or
the acquisition, possession or use of such proceeds.
These acts are only considered money laundering when the perpetrator is aware that the funds in question are derived from illicit sources. Therefore money laundering is always an intentional act and may not be committed by negligence.
Money laundering is independent of the predicate crime and the punishment of the person who has committed a predicate offence shall not prevent him or her from being punished for money laundering.
Tax evasion is not included as an offence for money laundering in the UAE laws.
1.3 Is there extraterritorial jurisdiction for the crime of money laundering? Is money laundering of the proceeds of foreign crimes punishable?
The general rule is that any monies that have been laundered in the UAE which originated from a crime committed in a foreign jurisdiction are punishable; however, the UAE law provides for exceptions to this rule. One of the important exceptions is that the same crime must be punishable in the UAE as well. There are also other rules in this respect and these are circumstantial.
1.4 Which government authorities are responsible for investigating and prosecuting money laundering criminal offences?
The following government entities are involved in the enforcement and regulation of the UAE’s AML regime:
the UAE Central Bank;
the National Anti-Money Laundering Committee (NAMLC);
the UAE’s Anti-Money Laundering and Suspicious Cases Unit (AMLSCU);
the Emirates Securities and Commodities Authority (SCA);
the Insurance Authority (IA);
the Dubai Financial Services Authority (DFSA) of the Dubai International Financial Centre Free Zone (DIFC); and
the Financial Services Regulatory Authority (FSRA) of the Abu Dhabi Global Market Free Zone (ADGM).
The various governing rules of the above-listed regulatory bodies provide them with powers to conduct periodic and ad hoc assessments of regulated persons.
On a local level, Dubai Law No. 4 of 2016 established the Dubai Economic Security Centre (DESC), which is empowered to regulate the economic and financial activity of entities based both onshore and in Dubai’s free zones in order to combat financial crimes including money laundering.
As to the prosecution of money laundering criminal offences, this remains under the authority of the General Public Persecutor.
1.5 Is there corporate criminal liability or only liability for natural persons?
The AML laws and regulations issued by the UAE authorities impose various restrictions on financial and other institutions. Any non-compliance with a set of duties imposed may constitute a breach of the AML laws or regulations. The AML Law explicitly denotes three separate instances where individuals or companies would be considered to have violated AML duties. These instances are as follows:
There is an obligation on employees of any institution in the UAE to report money laundering, terrorism and terrorist funding activities to the AMLSCU; the financial intelligence unit of the Central Bank. Failure to disclose knowledge of such activities to the relevant authorities can lead to penalties including imprisonment, fines or both.
Furthermore, some articles criminalise ‘tipping-off’ entities to ongoing investigations and provide for penalties of imprisonment or a fine.
Other articles criminalise intentional failure to report or disclose information that is requested by the authorities during AML investigations.
There are additional relevant regulations that apply to declarations by travellers entering or leaving the UAE carrying cash or monetary financial bearer instruments.
1.6 What are the maximum penalties applicable to individuals and legal entities convicted of money laundering?
If convicted of a money laundering offence, the AML Law provides punitive measures including fines ranging from 10,000 to 1 million dirhams and imprisonment for up to 10 years.
1.7 What is the statute of limitations for money laundering crimes?
The general statute of limitations for criminal offences is five years, however, such limitation starts from the time that the authorities discover any money laundering activities and not from the date of the money laundering activities.
1.8 Is enforcement only at the national level? Are there parallel state or provincial criminal offences?
The enforcement is at a national level and there are no state criminal offences other than what is mentioned above where in specific emirates they carry their own criminal offences for similar acts or acts connected to the AML Law.
1.9 Are there related forfeiture/confiscation authorities? What property is subject to confiscation? Under what circumstances can there be confiscation against funds or property if there has been no criminal conviction, i.e., non-criminal confiscation or civil forfeiture?
The AML Law provides for the forfeiture of the proceeds of money laundering offences, as well as the property, equipment and tools used or intended to be used in the commission of the offence. Additionally, some articles mandate that the court must confiscate any items connected with any criminal offence and, in cases where no items are seized, the court must order a fine of the equivalent value.
As mentioned above, in the case of an accusation, the public prosecutor must issue a freezing order against any property or assets connected to an offence of money laundering.
Any civil forfeiture will not be made through the AML Law, rather a civil claimant must claim and prove his claim to receive any of his funds. In the case of other nations, they may request that the UAE freeze and transfer any seized property that has been found as a result of the money laundering.
1.10 Have banks or other regulated financial institutions or their directors, officers or employees been convicted of money laundering?
Answer not available at time of going to press.
1.11 How are criminal actions resolved or settled if not through the judicial process? Are records of the fact and terms of such settlements public?
The AML Law does not provide a method by which to settle a money laundering offence and therefore such facts and terms may not be public. However, if the crime from which the monies were laundered for any reason was to be settled and therefore the monies would cease to be derived from a crime, then in such a circumstance there can be a reason for the AML articles not to apply.
2. Anti-Money Laundering Regulatory/ Administrative Requirements and Enforcement
2.1 What are the legal or administrative authorities for imposing anti-money laundering requirements on financial institutions and other businesses? Please provide the details of such anti-money laundering requirements.
In cases where compliance standards have not been met, administrative sanctions are available to ensure proper application of the law. Such measures include: warnings; fines; restriction or suspension, or both, of business activity; cancellation of licence; and restricting the power of the board and senior management, facilitated by the appointment of a temporary observer.
If convicted of a money laundering offence, the AML Law provides punitive measures including fines ranging from 10,000 to 1 million dirhams and imprisonment for up to 10 years.
2.2 Are there any anti-money laundering requirements imposed by self-regulatory organisations or professional associations?
No, there are not.
2.3 Are self-regulatory organisations or professional associations responsible for anti-money laundering compliance and enforcement against their members?
No, other than to ensure that their members are not convicted of any Anti-Money Laundering crimes.
2.4 Are there requirements only at national level?
No, they are not.
2.5 Which government agencies/competent authorities are responsible for examination for compliance and enforcement of anti-money laundering requirements? If so, are the criteria for examination publicly available?
These agencies are the same agencies mentioned above in question 1.1.
2.6 Is there a government Financial Intelligence Unit (“FIU”) responsible for analysing information reported by financial institutions and businesses subject to anti-money laundering requirements? If so, are the criteria for examination publicly available?
Yes, the UAE’s Central Bank FIU is the government’s Financial Intelligence Unit.
The criteria for examination are included in the following details:
The AML Law is supported by implementing resolutions and other regulations and guidance issued by relevant supervisory bodies that encourage the use of a risk-based approach when on-boarding customers and conducting periodic AML assessments during the course of the business relationship.
The UAE’s AML/CTF framework has adopted international best practices laid out by the Financial Action Task Force (FATF) and follows FATF guidance on high-risk areas. For instance, the UAE Central Bank Circular No. 3701/2012 refers to FATF documents that analyse jurisdictions according to their AML/CTF deficiencies and advise financial institutions to apply relevant countermeasures suitable to the jurisdiction’s AML/CTF competency.
Other high-risk areas include identifying the beneficial owners and forming a business relationship with an FPEP. Opening bank accounts for FPEPs generally requires prior written approval by the Central Bank.
Dealers in precious metals, real estate and other luxury goods, non-resident account holders and other cash-intensive businesses are also considered high risk and require stringent due diligence procedures.
AML regulations and guidance emphasise the necessity of continuous AML/CTF risk appraisal. Enhanced due diligence is required in cases where there is cause for suspicion, such as changed business relationships, one-off or complex transactions, transactions with no apparent economic justification or the observance of other red flags. Where relevant, reporting is an essential part of law enforcement.
Compliance with AML regulations is mandatory and must be accompanied by thorough supporting documentation.
2.7 What is the applicable statute of limitations for competent authorities to bring enforcement actions?
The statute of limitations is five years, as mentioned above.
2.8 What are the maximum penalties for failure to comply with the regulatory/administrative anti-money laundering requirements and what failures are subject to the penalty provisions?
As mentioned above in question 2.1, the AML Law carries penalties including fines and a high possibility of imprisonment. The regulatory authorities (as applicable) may stop the institutions from working or other possible measures in case of money laundering.
2.9 What other types of sanction can be imposed on individuals and legal entities besides monetary fines and penalties?
The legal entities and individuals can be stopped from continuing their current activities by the authorities.
2.10 Are the penalties only administrative/civil? Are violations of anti-money laundering obligations also subject to criminal sanctions?
Yes, anti-money laundering obligations are subject to criminal sanctions.
2.11 What is the process for assessment and collection of sanctions and appeal of administrative decisions? a) Are all resolutions of penalty actions by competent authorities public? b) Have financial institutions challenged penalty assessments in judicial or administrative proceedings?
The process varies from one authority to another and the penalty actions are seldom public. Financial institutions and persons can challenge administrative penalties with the authority and such a challenge varies from one department to another. Any persons convicted of an AML crime at the judiciary can challenge the judgment by way of an appeal to the Supreme/Cassation courts.
3. Anti-Money Laundering Requirements for Financial Institutions and Other Designated Businesses
3.1 What financial institutions and other businesses are subject to anti-money laundering requirements? Describe which professional activities are subject to such requirements and the obligations of the financial institutions and other businesses.
Financial institutions regulated by the UAE Central Bank are required to carry out AML measures in accordance with Central Bank circulars. Circulars also provide detailed guidance on other critical issues, such as foreign politically exposed persons (FPEP) and customer accounts. These are issued from time to time to reflect global AML activity.
Markets, companies and institutions licensed by the SCA are required to comply with SCA Decision (17/R) of 2010 concerning ‘Anti-money laundering and terrorism finance combating procedures’.
Regulated entities in the UAE free zones are also required to comply with rules provided by relevant regulatory bodies. For regulated persons in the DIFC, this relates to the Anti-Money Laundering, Counter-Terrorist Financing and Sanctions Module of the DFSA Rulebook (the AML Module) and the Anti-Money Laundering and Sanctions Rules and Guidance of the FSRA (the AML Rulebook) for those in the ADGM.
Designated Non-Financial Businesses and Persons (DNFBPs) are covered by additional relevant laws and regulations. DNFBPs include: lawyers, public notaries and other legal professionals; accountants, auditors and auditing firms; real estate agents; and dealers of gold, jewellery and precious metals.
3.2 To what extent have anti-money laundering requirements been applied to the cryptocurrency industry?
There are no amendments to the Anti-Money Laundering regimes that have incorporated any new articles in respect to the cryptocurrency industry, however, the same principles found in the Anti-money laundering laws will apply as well to the cryptocurrency industry.
In June 2018, Abu Dhabi Global Market (ADGM), the International Financial Centre in Abu Dhabi, launched its framework to regulate spot crypto asset activities, including those undertaken by exchanges, custodians and other intermediaries in ADGM. Other regulators in the country, namely the central bank of the UAE and the DIFC, have not yet issued a law that regulates cryptocurrencies.
3.3 Are certain financial institutions or designated businesses required to maintain compliance programmes? What are the required elements of the programmes?
As per the Central Bank regulations, all banks and other financial institutions are required to appoint an employee as the ‘compliance officer’.
The compliance officer is responsible for:
liaising with and contacting the Central Bank to report money laundering and suspected cases and sending reports;
training other members of staff;
receiving calls and contacts regarding AML compliance;
ensuring that internal control systems operate efficiently; and
ensuring that money laundering and terrorist financing risks are mitigated and controlled.
In addition, banks and other financial institutions should ensure:
compliance officers are appointed based on competency, subject to a ‘fit and proper’ test before employment;
the compliance officer’s function is subject to independent audit review by the internal audit department and regular reports are submitted to the chief executive; and
all compliance-related staff are given periodic training and more frequent in-house courses on handling AML and CTF cases.
For DFSA-regulated entities, appointing compliance officers and specifically a money laundering reporting officer (MLRO) is mandatory as per the DFSA Rulebook. Regulated entities may also outsource the function of the MLRO, based on the test of competency.
The MLRO is responsible for overseeing the AML function of the regulated entity, incorporating responsibilities of training staff, submitting STRs and responding to queries from relevant authorities.
Entities regulated by the FSRA are subject to similar obligations.
3.4 What are the requirements for recordkeeping or reporting large currency transactions? When must reports be filed and at what thresholds?
The AML Regulations specifies that all institutions shall maintain records for a period of five years from the following:
the date of the closure of accounts of clients;
the date on which the transaction took place in the absence of an account;
the culmination of a regulatory inspection by a regulatory authority; or
the date of issuance of a final judgment by a relevant judicial authority.
3.5 Are there any requirements to report routinely transactions other than large cash transactions? If so, please describe the types of transactions, where reports should be filed and at what thresholds, and any exceptions.
As previously mentioned, the AML Law mandates that employees of any institution in the UAE must report money laundering, terrorism and terrorist funding activities to the AMLSCU. Failure in this duty can lead to penalties, including imprisonment, fines or both.
Correspondingly, articles within the law criminalises the intentional failure to report or disclose information that is requested by the authorities during AML investigations.
The same law states that any individuals or entities that report suspicious transactions will be exempt from any resultant administrative, civil or criminal penalties, provided that the reporting is done in good faith.
3.6 Are there cross-border transactions reporting requirements? Who is subject to the requirements and what must be reported under what circumstances?
Yes, the institutions who are handling such transaction must report the origin and destination of the transaction, the amount, the purpose of the transaction, and any available information related to that transaction.
3.7 Describe the customer identification and due diligence requirements for financial institutions and other businesses subject to the anti-money laundering requirements. Are there any special or enhanced due diligence requirements for certain types of customers?
On 14 December 2016, the UAE Central Bank issued a resolution to amend Circular No. 24/2000 concerning Procedures for Anti-Money Laundering and its amendments, modernising its identification procedures in order to strengthen its anti-money laundering regulations. The Resolution altered the phraseology of the existing Circular to expand customer identification requirements and provide that banks must now personally inspect either the original UAE identity card or the passport of any individual opening a new bank account, whereas before it covered only passports. This prevents the opening of fraudulent bank accounts under assumed names or numbers. The Resolution is reflective of the Central Bank’s commitment to complying with the Recommendations for the International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation published by the FATF in October 2016.
3.8 Are financial institution accounts for foreign shell banks (banks with no physical presence in the countries where they are licensed and no effective supervision) prohibited? Which types of financial institutions are subject to the prohibition?
As per the Dubai Financial Services Authority “DFSA” Rulebook Anti-Money Laundering, Counter-Terrorist Financing and Sanctions Module (AML) A Relevant Person must not establish or maintain a business relationship with a Shell Bank.
Rule 6.1.3 prohibits a Relevant Person from establishing or maintaining a business relationship with a Shell Bank. The DFSA does not consider that the existence of a local agent or low-level staff constitutes physical presence.
Rule 9.2.2 prohibits an Authorised Firm from entering into a correspondent banking relationship with a Shell Bank or a bank which is known to permit its accounts to be used by Shell Banks. See the Guidance after Rule 6.1.4 for more information about what constitutes a Shell Bank.
An Authorised Firm must:
(a) not enter into a correspondent banking relationship with a Shell Bank; and
(b) take appropriate measures to ensure that it does not enter into, or continue a corresponding banking relationship with, a bank which is known to permit its accounts to be used by Shell Banks.
For the purposes of these Rules, a Relevant Person means:
(a) an Authorised Firm other than a Credit Rating Agency;
(b) an Authorised Market Institution;
(c) a DNFBP; or
(d) a Registered Auditor.
3.9 What is the criteria for reporting suspicious activity?
Money laundering and Terrorist Financing mean the criminal offences defined in the Federal AML legislation.
A Relevant Person must ensure that where the Relevant Person’s MLRO receives a notification under Rule 13.2.2, the MLRO, without delay:
(a) inquires into and documents the circumstances in relation to which the notification made under Rule 13.2.2 was made;
(b) determines whether in accordance with Federal AML legislation a Suspicious Activity Report must be made to the AMLSCU and documents such determination;
(c) if required, makes a Suspicious Activity Report to the AMLSCU as soon as practicable; and
(d) notifies the DFSA of the making of such Suspicious Activity Report immediately following its submission to the AMLSCU.
Rule 13.3.2 states that where, following a notification to the MLRO under 13.2.2, no Suspicious Activity Report is made, a Relevant Person must record the reasons for not making a Suspicious Activity Report.
Rule 13.3.3 states that a Relevant Person must ensure that if the MLRO decides to make a Suspicious Activity Report, his decision is made independently and is not subject to the consent or approval of any other person.
3.10 Does the government maintain current and adequate information about legal entities and their management and ownership, i.e., corporate registries to assist financial institutions with their anti-money laundering customer due diligence responsibilities, including obtaining current beneficial ownership information about legal entity customers?
Yes, it is very prevalent in the UAE to request information regarding the beneficial owner to property and companies.
3.11 Is it a requirement that accurate information about originators and beneficiaries be included in payment orders for a funds transfer? Should such information also be included in payment instructions to other financial institutions?
Yes, the institution must: (a) when it sends or receives funds by wire transfer on behalf of a customer, ensure that the wire transfer and any related messages contain accurate originator and beneficiary information; (b) ensure that, while the wire transfer is under its control, the information in (a) remains with the wire transfer and any related message throughout the payment chain; and (c) monitor wire transfers for the purpose of detecting those wire transfers that do not contain originator and beneficiary information and take appropriate measures to identify any money laundering risks.
The requirement set out above does not apply to an institution which transfers funds to another Financial Institution where both the originator and the beneficiary are Financial Institutions acting on their own behalf.
The institution must ensure that information accompanying all wire transfers contains, at a minimum: (a) the name of the originator; (b) the originator account number where such an account is used to process the transaction; (c) the originator’s address, or national identity number, or customer identification number, or date and place of birth; (d) the name of the beneficiary; and (e) the beneficiary account number where such an account is used to process the transaction.
3.12 Is ownership of legal entities in the form of bearer shares permitted?
Bearer shares are not available in the UAE. The company laws do not allow bearer shares.
3.13 Are there specific anti-money laundering requirements applied to non-financial institution businesses, e.g., currency reporting?
No, the AML module has been designed to provide a single reference point for all persons and entities (collectively called Relevant Persons) who are supervised by the DFSA for Anti-Money Laundering (AML), Counter-Terrorist Financing (CTF) and sanctions compliance under the two regimes referred to above. Accordingly, it applies to Authorised Firms, Authorised Market Institutions, Designated Non-Financial Businesses and Professions (DNFBPs), and Registered Auditors.
Recommendations set out in the issued Guidelines are not mandatory and it is up to each DNFBP to determine the extent to which they implement such recommendations. Each DNFBP is responsible for his own policies and implementation.
3.14 Are there anti-money laundering requirements applicable to certain business sectors, such as persons engaged in international trade or persons in certain geographic areas such as free trade zones?
Criminal regulations and laws apply to all entities within the UAE but within the UAE some authorities will be responsible for certain persons and entities within different geographical areas. An example of that is that the DFSA covers the DIFC area whilst the central bank covers the whole of the UAE, except for the DIFC.
4.1 If not outlined above, what additional anti-money laundering measures are proposed or under consideration?
Customer due diligence (CDD) requirements are specified by the AML Regulations, as well as various sector-specific regulations issued by the different governing bodies.
4.2 Are there any significant ways in which the anti-money laundering regime of your country fails to meet the recommendations of the Financial Action Task Force (“FATF”)? What are the impediments to compliance?
No, there are not.
4.3 Has your country’s anti-money laundering regime been subject to evaluation by an outside organisation, such as the FATF, regional FATFs, Council of Europe (Moneyval) or IMF? If so, when was the last review?
Yes, for example, there is an assessment of the anti-money laundering (AML) and combatting the financing of terrorism (CFT) regime of the United Arab Emirates (UAE) is based on the Forty Recommendations 2003 and the Nine Special Recommendations on Terrorist Financing 2001 of the Financial Action Task Force (FATF), and was prepared using the AML/CFT assessment Methodology 2004, as updated in February 2007. The assessment team considered all the materials supplied by the authorities, the information obtained on site during their mission from February 28 to March 15, 2007, and other verifiable information subsequently provided by the authorities. During the mission, the assessment team met with officials and representatives of all relevant government agencies and the private sector. A list of the bodies met is set out in Annex 1 to the detailed assessment report.
4.4 Please provide information for how to obtain relevant anti-money laundering laws, regulations, administrative decrees and guidance from the Internet. Are the materials publicly available in English?
The materials are sometimes found online and the original language is Arabic. As for any DIFC related material, they can be found on the DFSA website.
- The forum ‘Offshore Company’ is closed to new topics and replies.