UAE to Impose Penalties and Fines from July 8 on Business Establishments not Disclosing Information about Ultimate Beneficiary
UAE government is all set to impose heavy fines and penalties on businesses that do not provide information regarding their ultimate beneficial owners, from July 8 2021.
Firstly, written warnings will be issued to businesses that do not comply with the provisions of Cabinet Resolution No. (58) of 2020 on the Regulation of Ultimate Beneficial Owner Procedures, beginning from July 1, 2021. The UAE government has taken a strict approach regarding extraction of information of actual ownership of all registered businesses establishments within the country. All the businesses operating in the UAE were provided with an extensive roadmap to comply with the rules and regulations relating to the ultimate beneficiary procedures and owners.
Once warnings are issued to all the non-complying business establishments, the UAE government will then impose penalties on businesses that failed in adopting the necessary measures recommended to correct their status. The imposition of UBO related penalties on non-complying businesses will begin from July 8, 2021. In this phase, penalties and fines stated in Cabinet Resolution No.53 of 2021 will be levied on non-compliant businesses.
Identification of UBOs and the submission of information relating to ‘ultimate beneficial owner’ by registered and licensed business establishments operating in the UAE to the relevant authorities, is a legal requirement which all the business establishments in the UAE should comply with. Non-compliance with the aforementioned requirement will lead to the imposition of penalties mentioned in Cabinet Resolution No. (53) of 2021. Moreover, it is also essential to always keep your company’s UBO register up to date to avoid any issues in case a surprise audit happens by the relevant authorities.
To be clear, this process of penalizing businesses first begins with the issuance of a written warning and if businesses still show non-compliance then those businesses can be given a fine of AED 100,000 and additional administrative penalties such as restrictions on the powers of the board of directors or the suspension of the license for a year. However, the amount of fine and nature of administrative penalties could vary depending on the nature and type of the non-compliance.
Businesses can appeal against the penalties and fines imposed on them within the specified period of 30 days since the notification date of the non-compliance or violation.
The ministry is planning to detect violations and situations of non-compliance by carrying out a desk inspection. An inspection like this will involve the examination of a business establishment’s records shared with the licensing authority to assure the extent of its commitment towards providing required ultimate beneficial owner information.
If any violation or non-compliance is found during the process of this examination then a written warning will be issued to the non-compliant business establishment and if that establishment does nothing to rectify its status then fines and administrative penalties will be imposed on that enterprise.
In addition, field inspections will also be carried out for detecting violations and instances of non-compliance, during which, visits will be made to the offices of the non-compliant establishments.