Compliance Alert: DNFBPs must comply: AML Administrative penalties issued by MoE
Enforcement Action by MoE
The Ministry of Economy (MoE) of UAE has stepped up its enforcement actions by imposing fines of Dh50,000 each on 20% of a total of 15,000 establishments operating and deemed non-compliant Designated Non-Financial Business and Professions (DNFBPs) firms.
On Tuesday 17th August 2021, news hit the stands, as MoE declared that about 3083 firms still have not complied with the rules of the International Financial Action Task Force.
Four main sectors like the real estate agents, brokers, dealers of gems of metal, auditors and corporate service personnel[1] fall under the regulation and supervision of the MoE. Accordingly, compliance is needed for the DNFBPs in both rules and supervision because it is a legal requirement.
The Recent Past
78,787 warnings has been issued for the violators by MoE for violation of the rules under the Anti-Money Laundering[2]. From July 2021, the MoE started its second level implementation of penalties, resulting in about 42,011 violations registered with the maximum fine per violation was up to 15000 Dh. The total amount of the fine stands today at 630 million Dh.
Data gathered and released by Al Janahi; Head of the MoE’s AML Supervision section, revealed that of the approximated 565,000 private firms spread across various sectors who have completed registration with the Registrar of Companies, the MoE will be targeting as its second main area of supervision as relates to Ultimate Beneficial Ownership (UBO) registration.
The Risky DNFBPs
DNFBPs is a high-risk category. The UAE is under stress to ensure DNFBPs complies to the rules as the violators falling under the high-risk category have reached 255, which calls for the scrutiny and thorough onsite inspection[3]. The medium risky enterprises may be inspected through desk inspection only. MoE Head Supervisor warned that (1) the violators should cooperate with the AML inspectors so that violations could be minimized and (2) if the inspection results in violation of laws, the MoE would take up decisions.
The procedure of Inspection as under the AML
The authorities of AML would conduct a three-step scrutiny and find out the enterprises who have violated against the international financial rules.
Step 1: Only warnings would be issued i.e., Firm request to comply with the rules and regulations.
Step 2: Administrative penalties imposed on the firm at the rate of Dh15,000 for non-compliance.
Step 3: Harsh scrutiny i.e., continued non-compliance would attract a fine of 30,000 Dh. Failing evidence of compliance within 15 days’ time of issuance of the fine and inspection.
Only way out: Exercise the right to apply for remediation and show valid proof and documents why their fines can be lifted or Comply!
The Key Takeaways
- The MoE is being stern! DNFBPs are being thoroughly scrutinized as to whether they have failed to comply with the laws with 78,787 written warnings already issued to violators.
- Following a 3-step supervisory approach DNFBPs may end up with Fines of Dh15,000 per violation[4] for non-compliance which may be doubled!
(*So far, a total of 42,011 violations have been recorded, with the total value of the fines reaching Dh630 million!)
- High and medium risky DNFBPs may face reviews and inspected via *onsite inspection and desk inspection. *If a DNFBP is unable to pass the first level of inspection – increased administrative fine is likely.
How can we assist?
Outsourcing the advisory and compliance function – to our firm: Re/Think
This is an efficient and cost-effective way to ensure independent review, fast remediation and assurance in meeting regulatory standards at all times.
Depending on the nature of your business and your existing business operations, we assess the extent of support that may be required to ensure compliance and provide a bespoke scope of work accordingly.
References
[1] MSN, ‘Moe Steps Up AML Drive, Imposes Fines On Non-Compliant Firms’ (MSN, 2021) <https://www.msn.com/en-ae/news/middleeast/moe-steps-up-aml-drive-imposes-fines-on-non-compliant-firms/ar-AANqLC2?ocid=msedgntp> accessed 18 August 2021.
[2] Mohammed Ahmad Naheem, ‘Presenting A Legal And Regulatory Analysis Of The United Arab Emirates’ Past, Present And Future Legislation On Combating Money Laundering (ML) And Terrorist Financing (TF)’ [2020] Journal of Money Laundering Control.
[3] Haitham Nobanee and Nejla Ellili, ‘Anti-Money Laundering Disclosures And Banks’ Performance’ [2017] SSRN Electronic Journal.
[4] rethink, ‘DNFPBS UNDER HIGHEST LEVEL OF SCRUTINY EVER FOR NON-COMPLIANCE WITH ANTI-MONEY LAUNDERING LAW – Rethink’ (Rethink, 2021) <http://rethink-hq.com/dnfpbs-under-highest-level-of-scrutiny-ever-for-non-compliance-on-anti-money-laundering-law/> accessed 18 August 2021.
Who we are?
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 and appointed MLRO to DNFBPs (i.e. accounting and audit firms, corporate service providers, law firms, real estate agents) as well as regulated entities within UAE.
We also act as appointed Compliance Officer/MLRO for a cross-section of regulated and non-regulated entities.
Authors
Gail Johnson-Goring
Partner & Director of Regulatory and Compliance Services
Reeva M
Assistant Compliance Manager
