May 20, 2024
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UAE Central Bank Issues AML Guidelines for Crypto and NFTs

The Central Bank of the United Arab Emirates has officially issued new guidance for anti-money laundering and counter-terrorism financing. The guidance is targeted at financial institutions that regularly deal with virtual assets like cryptocurrencies and non-fungible tokens.

The Central Bank’s new guidance highlights possible risks that may arise with dealing with virtual assets and virtual asset service providers. These possibilities include due diligence for licensed financial institutions when dealing with customers and counterparties. More importantly, from all indications, the guidance considers and incorporates the provisions of the Financial Action Task Force (FATF). This comes after the FATF moved UAE to its “grey list”. The grey list includes a list of jurisdictions that will be subject to increased monitoring. As it seems, the UAE Central Bank has released the AML guidance to demonstrate its commitment to anti-money laundering and work closely with the FATF to improve its ratings.

Central Bank has stated that the guidance will take effect in June, with its coverage extending to finance companies, banks, payment service providers, insurance companies, agents, brokers, and registered hawala providers.

UAE’s Anti-Money Laundering Regulations

The UAE has a comprehensive anti-money laundering regulatory framework. For instance, the country’s 2018 Federal Decree on Anti-Money Laundering was enacted to ensure compliance with global AML and CFT standards. According to the UAE government, one of the law’s primary objectives is to counter the financing of terrorist operations and organizations in its territory. The decree criminalizes transferring proceeds of crimes or concealing the true nature of money proceeds. However, the UAE’s anti-money laundering structures are not limited to its AML laws.

In 2020, the UAE Central Bank established a department dedicated to the enforcement of AML regulations. The department is responsible for examining licensed financial institutions and identifying possible threats to the country’s financial sector.

Similarly, the UAE has special anti-money laundering courts both at the federal and local levels. These courts were established as specialized courts dedicated to hearing money laundering cases. The Federal-level courts have minor, major, and appellate jurisdiction for hearing all forms of money-laundering-related crimes.

The Central Bank seems to be making intentional efforts toward the enforcement of these regulations. Earlier this year, the UAE Central Bank fined a finance company for breaching the country’s AML and CFT laws. The sanctions were issued after a review and examination by a third-party consultant who ultimately found that there were repeated AML breaches and operational failures that failed to secure against those breaches. While the Central Bank failed to name the company, it stated that its findings revealed a weak compliance culture and multiple contraventions of the country’s anti-money laundering regulations.

Conclusion

While the UAE has been intentional about pushing its anti-money laundering drive, its decision to establish AML guidelines for crypto companies is a step in the right direction. The crypto industry has consistently been excluded from most AML regulatory frameworks in many countries, and this has led to increased crypto-driven financial crimes. Thus, this new coverage will likely boost the UAE’s chances of improving its AML ratings.

Last Updated on 2 months by newseditor

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