The UAE has enacted a new Anti-Money Laundering (AML) law
that updates regulatory frameworks to align with international standards. Key
changes include expanded definitions of reporting entities, enhanced due
diligence processes, more robust penalties, and new obligations for businesses
to better detect and prevent illicit financial activities.
The New AML Law and Its Purpose
According to the legal analysis by White & Case, the new
AML law aims to strengthen the UAE's commitment to fighting money laundering
and terrorist financing in line with global standards set by the Financial
Action Task Force (FATF). The legislation updates and expands upon previous
regulations, reflecting the country’s evolving financial landscape and the
international community's expectations.
Key Changes Under the Law
The law introduces several notable modifications to the AML
regime:
Broader Scope of Obliged
Entities: The definition of entities required to comply with AML
procedures has been extended. This includes not only financial institutions but
also certain designated non-financial businesses and professions (DNFBPs), such
as real estate brokers, dealers in precious metals and stones, and corporate
service providers.
Enhanced Customer Due Diligence
(CDD): The law mandates stronger identification and verification processes
for customers. This involves enhanced scrutiny on high-risk individuals,
politically exposed persons (PEPs), and those conducting complex or large
transactions.
Stricter Reporting Requirements: Businesses
must report suspicious activities promptly to the designated authorities. The
law enforces timely and accurate disclosure obligations to support law
enforcement and regulatory investigations.
Penalties and Enforcement: The
new AML law increases penalties for non-compliance, including fines and
potential imprisonment. It also empowers regulatory bodies to conduct
inspections and audits to ensure adherence.
Obligations for Beneficial
Ownership Transparency: Entities must maintain up-to-date records of
beneficial owners and make such information available to competent authorities.
Implications for Businesses in the UAE
As outlined by White & Case, companies operating in the
UAE must revisit and possibly overhaul their AML compliance programmes. This
includes updating internal policies, training employees, and investing in
technology to monitor transactions effectively. Businesses should be aware of
the heightened regulatory scrutiny and enhanced due diligence standards to avoid
penalties.
Strategic Considerations
Legal experts advise companies to conduct a comprehensive
risk assessment to identify vulnerabilities in their current AML practices.
Proactive steps involve strengthening governance frameworks and engaging with
legal counsel for ongoing compliance support. The law also underscores the
UAE's broader aim to promote a secure and transparent business environment to
attract international investors.
The enactment of the new AML law marks a significant development in the UAE's legal landscape, underscoring its dedication to combating money laundering and terrorist financing. Businesses in the UAE must prioritise compliance efforts to align with these new obligations, ensuring they contribute to a robust and trustworthy financial system.