Compliance Alert: AML Compliance Alert for UAE Firms – 11 banks fined for AML deficiencies

February 4, 2021 by

re think in Compliance

Warning from CBUAE

The Central Bank of UAE (CBUAE) has put all banks on notice that non-compliance in future will result in further administrative and/or financial sanctions!

CBUAE imposes Financial sanctions

On 24^th January 2021, CBUAE imposed financial sanctions on 11 banks for non-compliance with UAE AML Regulations.[1] This comes only a few months after over 200 UAE law firms had their license suspended by the Ministry of Justice[2] in October last year and 7 Law Firms being fined[3] in November 2020 for breaching AML procedures.

Why were the fines imposed?

The CBUAE enforcement action came as a result of the banks in question failing to achieve appropriate levels of compliance regarding their AML and Sanctions Compliance Frameworks as at the end of 2019.

Explanatory note: In the middle of 2019, the banks operating in the UAE were directed to take the necessary actions to remedy any shortcomings by the end of the year 2019, but had failed to do so.

The fines imposed on these 11 banks amounted to a total of AED 45.76 million dirhams (USD 12.5 million).

Key takeaways

The recent series of actions taken by regulatory organisations reinforces UAE’s seriousness towards AML compliance and that the firms will be penalised for non-compliance with the UAE’s Federal Law on AML and Sanctions (“the Federal AML Law”’)[4] compliance pursuant to the regulatory powers under Federal AML Law.

We believe this is just the beginning! Many other regulatory bodies are anticipated to join hands in monitoring AML compliance by various AML-impacted businesses across UAE thereby reflecting a united approach in preventing money laundering and the effectiveness in ensuring implementation of AML provisions.

Who may be next?

After banks and law firms, the focus is likely to expand to other designated non-financial business and professions (DNFBP) such as Corporate Service Providers, Accountancy and Audit firms, Dealers in Precious Gems and Metals and Real estate agencies. Per Article 16 (2), for purposes of implementation of the Federal AML law, the implementing regulations shall also apply to the non-profit organizations.

Take Action Now – Do Not Be Next!!!

How can we assist?

Outsourcing the compliance function – to a firm like Re/Think – is an efficient and cost-effective way to ensure regulatory standards are met at all times.

Depending on the nature of your business and your existing AML framework, we assess the extent of support that may be required to ensure AML compliance under the UAE AML Federal Law. Our scope of work includes:

AML health check
AML Business Risk Assessments
Develop AML Framework including Policy, Procedures, Forms, Templates, Register, etc.
Remediation of Client and Business Partner Files to ensure necessary due diligence measures and procedures adopted
Provide a designated compliance professional as Outsourced Compliance Officer
AML Training to senior management, client servicing team & compliance team

Who are we?

Rethink is a team of highly skilled and qualified professionals, specialized expertise as a certified anti-money laundering specialist including a FATF trained legal expert examiner, experience across financial services industry and multiple related fields from reputable jurisdictions.

We are currently advisors to real estate firms, law firms, corporate service providers, accounting and audit firms, regulated entities within UAE and also act as the appointed Compliance Officer for some of these firms.

200 UAE law firms suspended by Ministry of Justice over AML breaches – How to avoid being the next!

[1] https://www.centralbank.ae/sites/default/files/2021-01/CBUAE%20imposes%20financial%20sanctions%20on%2011%20banks%20operating%20in%20the%20UAE_En.pdf

[2] https://www.moj.gov.ae/en/media-center/news/21/10/2020/licences-of-200-uae-law-firms-suspended-over-breaches-in-anti-money-laundering-regulations.aspx

[3] https://www.khaleejtimes.com/news/7-uae-law-firms-fined-dh100000-in-anti-money-laundering-crackdown

[4] Federal Law 20 of 2018 http://rethink-hq.com/wp-content/uploads/2021/02/قانون-20-لسنة-2018.pdf