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Anti-Money Laundering (AML) Consulting Services

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Anti-Money Laundering (AML) Consulting Services

The United Arab Emirates (UAE) is committed to contributing towards global anti-money laundering (AML) efforts as well as combating the financing of terrorism (CFT) and is striving to completely implement the standards that have been set by the International Financial Action Task Force (FATF) in relation to AML compliance. In 2018, UAE’s very first national risk assessment with regards to money laundering and terrorism financing was conducted. The assessment helped the UAE government in identifying different areas having high risks of terrorist financing and money laundering. In 2019, FATF evaluated and examined UAE in light of requirements of international standards and found multiple areas that would benefit from a national framework for countering terrorism financing and money laundering.

Federal Decree-Law No. (20) of 2018 on money laundering and terrorism financing as well as financing of illegal organizations together with its implementation regulation, was issued. It is a legislative framework that criminalizes terrorism financing activities and money laundering and capitalizes on the effectiveness of the legal framework in the implementation of measures and procedures that contribute to efforts directed at combating money laundering and financing of terrorist activities and illegal/banned organizations. That comes with the requirement of strict AML compliance in the UAE. 

In order to understand the aforementioned legislation, it is important to understand Money laundering. Money laundering can be defined as any transaction aimed at either changing or concealing the identity and source of funds that were illegally obtained, bypassing them through the banking and financial system as if these transactions originated from legitimate activities/sources, and then re-investing them in a legal way contrary to their actual nature.

The relevant authorities in the UAE have established an institutional system to monitor, collect and control information on all activities and operations that may lead to finance-related crimes so that these crimes may be countered including the ones related to terrorism financing and money laundering. The UAE authorities realize that the national framework together with coordination to CFT/AML must continue to be developed in order to improve its effectiveness. Push Digits Chartered Accountants has detailed knowledge and experience in relation to anti-money laundering compliance. We are providing AML consulting services to a range of Designated Non-Finance Businesses and Professions in the UAE. We not only make sure that your business remains 100% compliant with the AML regulations, but we also provide detailed training to your staff so that they can also contribute towards compliance.  

The purpose of the above-mentioned legislation and national framework is to ensure that UAE is viewed as a country in which no one can carry operations related to money laundering and terrorism financing.

The UAE Federal Law on Anti-Money Laundering (AML) and Combating Terrorism Financing (CTF) applies to both:

  • Financial Institutions; and
  • Designated Non-Financial Businesses and Professions (DNFBPs).

In the context of the relevant cabinet decisions, the Ministry of Economy (MOE) is entrusted with the responsibility of regulating and supervising entities falling under the category of Designated Non-Financial Businesses and Professions (DNFBPs) that are operating within the state, including the ones operating in commercial free zones regarding financing terrorism operations and money laundering related crimes as well as financing of banned/ illegal entities.

In other words, the MOE is responsible for developing a strong system based on an equally strong regulatory framework for providing a safe and stable business environment for companies, organizations, and DNFBPs to work within.

The Ministry has established a separate department under its existing structure, called Anti-Money Laundering Department, for implementing its operational strategy regarding inspecting and controlling all the operations listed under DNFBPs, in accordance with the requirements of the Federal Decree-law No. (20) of 2018 on AML And CFT and Financing Of Illegal organizations and its related implementing regulation.

Cabinet Decisions related to AML/ CFT

The cabinet decisions passed in relation to AML/ CFT:

  • Federal Decree-law No. (20) of 2018 on AML And CFT and Financing Of Banned/ Illegal organizations;
  • Cabinet Decision No. (10) of 2019 related to implementing regulation of the above mentioned legislation On AML and CFT and Financing of Banned/ Illegal organizations;
  • Cabinet Decision No. (58) of 2020 related to regulating the Beneficiary Owner Procedure;
  • Cabinet Decision No. (74) of 2020 related to Terrorism Lists Regulation and Implementation of UN Security Council Resolutions regarding Preventing and Combating Financing of Terrorists & Proliferation of Weapons of Mass Destruction and other Related Resolutions.

Categorization of Sectors Falling Under DNFBPs

DNFBPs have further been divided into the following four sectors:

  • Independent accountants and auditors;
  • Real estate agents and brokers;
  • Dealers of precious metals and stones
  • Corporate service providers

The requirement of Anti-Money Laundering and Combating Financing Terrorism Legislation

This legislation requires a Financial Institution/ DNFBP to do the following:

  • Appoint a Compliance Officer;
  • Perform Due Diligence Measures;
  • Reporting Suspicious Transactions;
  • Register in the goAML System; and
  • Registration in the automatic reporting system for sanction lists.

Appointing a Compliance Officer

A Financial Institution or a DNFBP should appoint a compliance officer, having appropriate competencies and adequate experience, who will be responsible for performing the following tasks in connection to the provisions of AML/ CFT Legislation:

  • Detecting/ identifying any transaction related to any crime;
  • Review, scrutinize, and analyze records concerning Suspicious Transactions, and take the decision regarding whether to notify the said transactions to the Financial Intelligence Unit (FIU) or maintaining them for record purposes while ensuring complete confidentiality.
  • Review internal procedures and rules relating to countering terrorism financing and money laundering-related crimes. Assess the application of these internal procedures rules, and propose changes to develop and update these procedures and rules accordingly. The compliance officer should prepare a report on a semi-annual basis on the aforementioned points and submit it to the entity’s senior management. A copy of the said report should be sent to the relevant designated monitoring authority together with remarks and decisions of the senior management.
  • Initiate, implement and document training and development plans and programs for the entity’s employees on combating situations involving Money Laundering, the Financing of Terrorists, and the Financing of Illegal institutions or entities.
  • Fully collaborate and coordinate with the FIU and the relevant designated Supervisory Authority, and provide them with all the information they need in addition to allowing their authorized representatives to view the necessary documents and records for enabling them to execute their responsibilities.

It is important for a financial institution/ DNFBP to maintain the compliance officer’s data such as name, contact, a copy of ID card and passport, and letter of assignment specifying all the duties that have been assigned by the entity to the officer.

Push Digits Chartered Accountants offers outsourced compliance officer services both in commercial free zones and the mainland UAE. We are committed to providing our clients with quality outsourced AML consulting services as we have a number of highly experienced professionals that are capable to carry out tasks of a compliance officer both in the commercial free zones and the mainland UAE.

Performing the Due Diligence Measures

It is the process of identifying the client entity and/ or the ultimate beneficial owner either before or during the establishment of the business relationship or before carrying out a transaction for a client entity with whom there was no previous business connection or relationship. Entities are allowed to complete the process of verifying the identity of a customer after the establishment of the business relationship but under the following circumstances:

  • The process of verifying the customer identity will be completed in a timely manner as of the commencement of the business relationship or the implementation of the business transaction;
  • The delay is important in order not to obstruct the natural course of business; and
  • Implementing effective and appropriate measures to manage the risks associated with money laundering and terrorism financing crimes.

Entities should undertake Due Diligence measures in the following circumstances:

  • Establishing a business relationship;
  • Conducting occasional business transactions with a customer for a total amount equal to or exceeding AED 55,000;
  • Conducting occasional business transactions through wire transfers for amounts equal to or exceeding AED 3,500;
  • Where there is suspicion of any crime; and
  • Where there are potential doubts regarding the adequacy of previously obtained information regarding the customer’s identity.

Simply put Financial Institutions and DNFBPs should verify the identity of the customer/ beneficial owner, whether the customer/ beneficial owner is a legal or a natural person, or a legal arrangement, the intended nature and purpose of the business relationship, the nature of the customer’s business including its ownership and control structure. This verification of identity should be performed through obtaining data or any other identifying information from an independent and reliable source.

Beneficial Owner can be defined as a person who either owns or has the power to exercise effective control, directly or indirectly, over a client entity or the natural person on whose behalf a transaction is being carried out or the natural person who exercises ultimate control over a legal arrangement or legal person.

Financial Institutions and DNFBPs should not establish or maintain a business relationship or execute any business transaction in case they are not able to undertake Due Diligence measures with regards to specific customers/ beneficial owners and instead should consider reporting suspicious transactions with such customers to the FIU.

At Push Digits Chartered Accountants, we are prepared to go to any extent to verify the identity of customers and the ultimate beneficial owners. We have a number of highly qualified professionals that are capable of performing Due Diligence measures in connection to verifying information related to the identity of customers/ beneficial owners

Reporting Suspicious Transactions

If Financial Institutions and DNFBPs have reasons to suspect that a specific transaction constitutes a crime or is related to any crime then the compliance officer, regardless of the amount, must report such transactions to the FIU through the use of the goAML system. In addition, the officer should respond to all the additional information required by the FIU.

In the event that customer due to diligence procedures and measures taken and there were suspicious in any form, the compliance officer must submit the suspicious transaction reports to the FIU through the goAML system.

Establishments of DNFBPs/ Financial Institutions, their directors, employees, and other authorized personnel must not disclose to the client entity or any other third party, neither directly nor indirectly, that they have reported, or are about to report specific suspicious transactions or data and information related to them, or that there is an investigation being carried out in this regard.

If you outsource your compliance officer position to Push Digits Chartered Accountants then you can rest assured that not only your suspicious transactions Report (STR) will include all the suspicious transactions but the said report will be submitted to the goAML system on a timely basis.

Definition of goAML System

The goAML system was developed by the United Nations Office on Drugs and Crime (UNODC) to counter the financing of terrorism and money laundering related crimes.

It is an internationally approved electronic system that is used by the Financial Intelligence Unit (FIU) for receiving, analyzing and distributing suspicious transaction reports (STRs) in an efficient and effective manner. Multiple FIUs around the world are using it, and the UAE is the very first Gulf country to implement this system.

Advantages of goAML System

The advantages of using goAML system are as follows:

  • Fast sending STRs;
  • Receive information requests from the FIU in a more rapid and efficient manner;
  • Send STRs in a more secure way; and
  • Reduces the cost incurred on sending STRs.

Registration in goAML System

Registering in the goAML system is a pre-requisite as far as submitting STRs are concerned. The legal person (for example, a company) is obligated to register itself in the said system of the FIU, as part of the effective implementation of the legislation to combat terrorist financing and money laundering.

Registration in the Automatic Reporting System for Sanction Lists

DNFBPs should implement Cabinet Decision No. (74) of 2020 regarding the regulation of terrorism lists as well as Implementation of United Nations Security Council (UNSC) resolutions on combating terrorism financing & proliferation of weapons of mass destruction, and other related resolutions.

DNFBPs must register in the automatic reporting system for sanctions lists in order to obtain automatically-updated lists of targeted financial sanctions from the United Nations Security Council consolidated sanctions lists and domestic terrorism lists.

Registration to the aforementioned system for sanctions lists can be done by using the website of the committee for material and goods subjected to export and import control to ensure that updates are obtained as soon as they are issued.

Upon a change or a new update to the relevant sanctions list, screen the customer database without any delay on the inclusion of new names. In case of a match, inform the relevant supervisory authority.

At Push Digits Chartered Accountants, we also help our clients in getting registered with the Automatic Reporting System for sanction lists.

Inspection Procedures

The Ministry applies inspection procedures to DNFBPs as per the requirements of the Financial Action Task Force (FATF) and in accordance with international standards and practices. The ministry applies the methodology of off-site and on-site inspections.

Inspection procedures have been summarized as follows:

  • Sending a letter to entities informing them about the inspection date and the requirements.
  • Commencing the process of onsite inspections and visiting entities as per the prepared plan/ schedule.
  • Fill in the inspection forms according to what you found and observed during an inspection visit.
  • Request additional information or records from entities during or after the inspection only if required.
  • Imposing fines on entities found in violations of the provisions of the AML/ CFT Legislation.

 

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