KYC AML Guide to The UAE New Laws and Regulations 2024

For those in finance, business, or compliance, be sure to take notes of these laws and avoid risky companies. Financial crimes in the UAE are susceptible to fraud including money laundering and terrorist financing. They follow tight procedures following international norms. The UAE has expanded dramatically in recent years. Special courts were established to handle money laundering matters. In February 2024 the Financial Action Task Force (FATF) stated that the UAE did not require further investigation and was out of the gray list.

Both local and multinational companies should follow the KYC AML laws and regulations. These include:

• Financial institutions (FI) such as banks, lenders, money changers, and trade and finance regulators. For more information on KYC AML rules and regulations for financial institutions, refer to “Comprehensive KYC AML Guide for Fintech Companies in 2023”
• Designated Non-Financial Businesses and Professions (DNFBPs) including real estate agents, brokers, attorneys, and suppliers of related services
• Non-profit organizations (NPOs) though with few responsibilities, must follow KYC laws and regulations.

The Legal Framework:

Regulatory bodies include the

• Central Bank of the United Arab Emirates (CBUAE),
• The Securities and Commodities Authority of the United Arab Emirates (SCA),
• The Dubai Financial Services Authority (DFSA) and
• The Abu Dhabi Global Market Financial Services Regulatory Authority (ADGM FSRA).

The UAE has many AML/CFT laws. The most important of these are:

It should be mentioned that the United Arab Emirates has recently launched goAML, a thorough anti-money laundering reporting portal. This platform also allows companies and designated non-financial businesses and professionals as well as financial institutions to submit Suspicious Activity Reports (SARs).

Having been under development for over two years, the Central Bank Digital Currency (CBDC) was initially introduced by the United Arab Emirates. Notwithstanding significant government control and privacy concerns, the CBDC’s objectives are accountability, access to funds, and fighting money laundering.

Through Cabinet Orders No. 109 and 132 of 2023, the United Arab Emirates amended the Ultimate Beneficial Ownership (UBO) rules. It includes AML’s extensive review committee, sets operational limits, and enhances the definition of complex systems. It also uses a risk-based approach to compliance and is transparent in identifying beneficiaries.

UAE has progressed in crypto regulations in 2024. The Dubai Financial Services Authority (DFSA) has released its action plan for 2023 and 2024. To maintain market integrity, the plan focuses on monitoring compliance and policy implementation. It also identifies the financial crime risks arising from digital assets and implements strict but fair rules.

Also Read: Understanding KYC Regulations: A Comprehensive Guide for Businesses

What are the Penalties?

Failing to disclose suspicious behavior may result in imprisonment and a fine of Dh100,000 and Dh100,000 fine. Other AML/CFT regulation violations can result in jail time or fines ranging from Dh10,000 to Dh100,000. DNFBPs are subject to fines ranging from 50,000 to 200,000 AED. The new AML regulation has increased the penalty for money laundering to 50,000,000 AED.

How to Stay Compliant?

Customer Due Diligence (CDD) Requirements:

The DNFBPs and financial institutions as per Article 6 of the AML/CFT decree are expected to implement CDD based on risk assessment. This requires comprehending the nature of the business and the transaction’s purpose.

Suspicious Activity Reporting:

Financial institutions must notify the appropriate authorities in the event of any illicit activity, including money laundering and financing terrorist activities. Reporting suspicious activities, money laundering, and terrorist financing are not subject to any minimum requirements. Regardless of whether the unit is based in a free zone or the United Arab Emirates, the Financial Intelligence Unit is a designated authority under federal legislation with the authority to handle reports of suspicious behavior.

Know AML and KYC Compliance:

Businesses must comply with AML and KYC laws and regulations when dealing with customers. They need to collect documents from customers and companies to verify their credentials.

Companies can ensure the following essential aspects of AML compliance by adhering to the AML Compliance Calendar:

Also Read: KYC Document Verification Requirements in UAE

Final Thoughts

This move could help companies and businesses in the UAE. Stringent anti-money laundering measures and due diligence requirements expanded the business operations in the UAE. These changes are intended to boost investor confidence, encourage further investment, and reduce long-term compliance costs. Although companies may pay more for initial regulatory costs, they face a relatively low-risk compliance regime and an easier way to operate across geographies.