UAE issues new anti-money laundering guidance for banks

Dubai - Financial institutions have one month to demonstrate compliance with the new requirements

Licensed financial institutions (LFIs) in the UAE will have to comply with the new guidance of the Central Bank of the UAE (CBUAE ) within one month on transaction monitoring and sanctions screening to ensure anti-money laundering measures.

The CBUAE said in a statement on Monday that the new stipulations aimed to promote the understanding and effective implementation by LFIs of their statutory anti-money laundering and combatting the financing of terrorism (AML/CFT) obligations.

The guidance came into effect on September 13 and requires LFIs to demonstrate compliance with CBUAE’s requirements within one month from said date.

Khaled Mohamed Balama, governor of the CBUAE, said “as we continue to enhance the effectiveness of AML/CFT measures to safeguard the UAE financial system, we expect licensed financial institutions to fulfill their duties as well. This guidance serves as a key point of reference for licensed financial institutions to ensure their compliance with AML/CFT requirements.”

As per the guidance, LFIs are obliged to develop internal policies, controls, and procedures that are commensurate with the nature and size of their business that are approved by their senior management, to enable them manage their identified money laundering and financing of terrorism risks.

In February, the UAE government created an Executive Office for Anti-Money Laundering and Counter Terrorism Financing and, last month, Dubai set up a money laundering court.

“LFIs must also put in place indicators to identify suspicious transactions and activities in order to file suspicious transaction and activity reports or other report types to the UAE’s Financial Intelligence Unit,” said the CBUAE statement.

In addition, LFIs are obliged to regularly screen their databases and transactions against names on lists issued by the United Nations Security Council and its relevant Committees (UN Consolidated List) or by the UAE Cabinet (UAE Local Terrorist List) before conducting any transaction or entering into a business relationship with any client, whether it is individual or corporate.

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The CBUAE guidance also stipulates that LFIs should establish and maintain effective transaction monitoring and sanction screening programs consisting of a well-calibrated risk-based framework, training and awareness of their employees and active oversight by their board. In addition, LFIs should ensure the ongoing enhancement of their transaction monitoring and sanctions screening systems based on their risks.

The systems, including the relating monitoring and screening models used should be subject to independent testing, validation, and auditing.

— issacjohn@khaleejtimes.com

• Dubai