New CBUAE guidance for licensed financial institutions

Lily Eid Compliance Specialist lily.eid@bsabh.com

Over the past two years, the UAE Central Bank (“CBUAE”) has been actively working on issuing updated circulars to address the growing concerns and challenges relating to money laundering, financing of terrorism and sanctions. This is part of the overall approach the CBUAE is adopting as part of their ongoing efforts to protect the integrity of the financial system and reconfirm their commitment to comply with Financial Action Task Force (“FATF”) recommendations.

The CBUAE regularly publishes regulations and standards for the banking sector that encompass numerous key areas, including anti-money laundering and transaction monitoring. At the time of writing, the most recently published guidance was issued on 02 August 2022 for the licensed financial institutions (“LFIs”) on payments risks.

The following article looks at the most noteworthy points from the new guidance. 

The aim of the new guidelines is to help LFIs address money laundering, terrorism financing and sanctions risks, assisting in understanding the related risks, and in implementing the necessary and preventive measures to mitigate those risks. It also takes FATF standards into account.

Due to the rapid movement of funds between payment participants and across borders, LFIs should take a risk-based approach to mitigate and manage money laundering and the terrorism financing risks. LFIs are required to conduct due diligence on customers and regular risk assessments to cover all transactions, reporting any suspicious transaction to the UAE’s Financial Intelligence Unit using the “goAML” portal.

In correspondent relationships, financial institutions should not process any payments for a correspondent unless they are entirely confident that the correspondent conducts appropriate screening.

The new guidance will ensure that all LFIs in the UAE understand their Anti-Money Laundering (“AML”) responsibilities and have a sanctions compliance program that will screen the transactions and assist with mitigating the related risks.

The UAE has reiterated its strong commitment and the ongoing effort that has been put into strengthening its regulatory framework in relation to AML and Combating the Financing of Terrorism (“CFT”), by taking effective measures to remedy several areas of improvement through the implementation of a high regulatory control system and spreading awareness. 

The guidance also provides LFIs a timeline of one month to comply with the new requirements.

This guidance is one out of many regulations and policies issued by the CBUAE, which seeks to address the challenge of money laundering and terrorist financing as a strategic priority and to stress on the importance that LFIs understand their AML responsibilities and comply with its requirements.