Compliance Alert: DNFPBS UNDER HIGHEST LEVEL OF SCRUTINY EVER FOR NON-COMPLIANCE WITH ANTI-MONEY LAUNDERING LAW

February 10, 2021 by

re think in Compliance

What happened?

The Ministry of Economy has launched an awareness and monitoring campaign to encourage the Designated Non-Financial Businesses and Professions (DNFBPs)[1] established in the UAE to take certain actions to ensure compliance with the UAE AML Law[2].

The grace period for compliance to these measures has been extended till March 31, 2021.

DNFBPs that do not comply with these requirements will be penalized as per the UAE AML Law.

The Ministry will organize field inspection campaigns to monitor the extent of the DNFBPs’ commitment to take actions and adopting relevant measures associated with implementing the UAE AML Law.

The recent past

In October 2020, over 200 UAE law firms had their license suspended by the Ministry of Justice[3].
In November 2020, 7 Law Firms were fined for breaching AML procedures in a crackdown[4].
In January 2021, the Central Bank of UAE imposed financial sanctions on 11 banks for non-compliance with UAE AML Regulations[5].

Take Action Now – Do Not Be Next!!!

Who are DNFBPs?

The DNFBPs include a wide range of non-financial activities that are most exposed to money laundering. As per Financial Action Task Force (FATF) and the UAE AML Law, they have been divided into the following categories:

Brokers and Real Estate Agents
Dealers of Precious Metals and Precious Stones
Law firms, Notaries and independent legal professionals
Professionals including Accounting and Audit Firms
Corporate Service Providers and Trusts

What actions must be taken by DNFBPs?

The immediate requirement is to register in the system of:

Financial Intelligence Unit (goAML); and
Committee for Commodities Subject to Import and Export Control (Automatic Reporting System for Sanctions Lists)

In addition to the above, the DNFBPs are required to:

Appoint a Compliance Officer;
Exercise due diligence on clients by verifying the identity of customer and beneficial owner before establishing a business relationship or opening an account; and
Ensure compliance with Sanctions screening and reporting any suspicious activity.

What is goAML and Automatic Reporting System for Sanctions Lists?

The goAML system is an integrated digital platform through which Suspicious Transaction Reports (STRs) and Suspicious Activity Reports (SARs) can be submitted by financial institutions, DNFBPs, and the relevant authorities.

The Automatic Reporting System for Sanctions Lists receives automatic notifications via e-mail to all registered establishments and authorities and by registering in this system, DNFBPs and Financial Institutions receive timely updates regarding sanctions list maintained by the UN Security Council and accordingly can take necessary measures internally which includes SAR reporting via goAML.

Key Takeaways

The series of alerts issued and actions taken by regulatory organisations (including Central Bank, Ministry of Justice and Ministry of Economy) emphasizes UAE’s seriousness towards AML compliance and that the firms will be penalized for non-compliance with the UAE’s Federal Law on AML and Sanctions (the UAE AML Law) compliance according to the regulatory powers under Federal AML Law.

The development of the systems of goAML and the Automatic Reporting of Sanctions Lists represents significant efforts to combat money laundering and contribute to raising the UAE economy’s ability to achieve healthy and sustainable growth by preventing financial crimes.

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
Assist in registering in the goAML portal and the Automatic Reporting of Sanctions Lists.

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 the 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 the UAE and also act as the appointed Compliance Officer for some of these firms.

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

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

[1] https://www.economy.gov.ae/English/Media-Section/News/Pages/NewsDetails.aspx?ItemID=960

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

[3] 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

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

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