Violators of anti-money laundering or ultimate beneficial owner procedures may lead to administrative fines ranging from AED 50,000 to AED 1,000,000, according to the Ministry of Economy (MoE).
This was reported as the ministry held an extensive media briefing on the system for combating money laundering; battling the financing of terrorism; the financing of illegal organizations; and the financing of the multiplication of weapons of mass destruction. The meeting also advised participants on the most significant international commitments in this regard, laws, and decisions related to them, the commitments they put on public and private areas, and the Ministry’s and its partners’ endeavors in this field.
The occasion also managed the Ministry’s efforts in organizing the ultimate beneficial owner procedures and the execution of the Ministry’s and its partners’ plan to gather information on definitive recipients of private area establishments, notwithstanding the endeavors embraced in the field of control and inspection, ensuring the execution of legal requirements and accomplishing the country’s global obligations in such manner.
Safeya Al Safi, Director of the Anti-Money Laundering Department at the Ministry of Economy; Ahmed Al Hosani, Director of the Commercial Registration and Certificates of Origin Department; and Mohamed Janahi, Head of Money Laundering Control Department at the Ministry of Economy; addressed the media during the briefing session.
“Money laundering and terrorism financing crimes are a major concern that plagues most of the world’s economies, especially today with the advent of modern digital technologies in the financial sector, trade and investment activities, and doing business. These provide new tools and complex systems for money launderers to commit crimes. Countries around the world are working, in cooperation with the relevant international organizations, to put in place legislation and regulations to ensure that these crimes are tackled in the best possible way, and to monitor their effectiveness,” Safeya Al Safi said.
She added that the UAE, under the orders of its wise leadership, is one of the first nations to construct an integrated system to counter money laundering and battle the financing of terrorism. Among its most noticeable components are the Federal Decree-Law No. 20 of 2018 on countering money laundering crimes, fighting the financing of terrorism, and financing illegal associations, and its guidelines and leader list and related choices. Furthermore, the UAE has developed various online systems and institutional and authoritative procedures that guarantee the execution of the law and the accomplishment of oversight as per the best global principles and practices, like the goAML system and the automatic announcement system for sanctions records.
She confirmed that the concerned government entities will keep on evaluating the presentation of these mechanisms; confirm the viability of the nation’s methodology and foster them persistently.
Al Safi defined money laundering as a group of financial operations aimed at concealing the illicit source of funds and passing them off as funds generated from a legitimate source. She clarified that behind each endeavored money laundering is wrongdoing, or a set of crimes that may increase to the degree of organized crime, through which criminals get these assets and attempt to pump them back into the authority financial system of the separate country through tasks designed to cover its real source and then legitimize it.
In this regard, she said: “Money laundering is an immoral act linked to crimes that destroy human lives and societies, such as drug trafficking, human smuggling, and trafficking in persons, illicit arms trade, child exploitation and other crimes that number 21 crimes according to the classification of the International Financial Action Task Force (FATF), and any support or facilitation of money laundering operations is offering support to crime, drugs, violence, and corruption. “
Al Safi explained the negative economic impacts of money laundering operations on the economy. “Money laundering crimes cause low real growth rates, destabilization of the financial and banking system, instability of prices, weakening of vital and productive sectors, and an imbalance in the concentration of wealth and the distribution of national income,” she said.
She added: “Classifying a country as a high-risk destination in terms of money laundering also leads to limiting its access to the global financial system, increasing the cost and time of financial transactions, the poor reputation of the economy, and consequently a drop in market competitiveness, a decline in trade and exports, a decrease in foreign investment, the withdrawal of private establishments and global financial institutions from the market and an increase in the burden on individuals and financial initiations, commercial and investment dealings with abroad, and it may lead to sanctions and financial and economic crises. “
Al Safi underlined the significance of helping out government efforts to stand up to illegal money laundering as it is a national responsibility, and ethical action, a legal requirement, an economic necessity, and an interest in protecting businesses and investments and contributing to their growth and prosperity.
She clarified that the methodology adopted by the UAE government in this regard is to solidly address money laundering and terrorism financing crimes, to save the positive standing of the national economy globally. It also guarantees the reinforcement of the UAE’s role as the main part of the worldwide economic landscape, and the consolidation of its position as a competitive economic hub that follows the highest standards of integrity and transparency in the field of financial and commercial control and confronting unsound practices in business activities.
Al Safi investigated MoE’s efforts in such manner, in view of the Ministry’s responsibility in the oversight of Designated Non-Financial Businesses and Professions or the DNFBPs area inside the country and in the free zones, which incorporates: brokers and real estate agents, dealers of precious metals and gemstones, account auditors, and companies’ service providers. These exercises are of a high-risk nature and are generally turned to by money launderers to conduct their suspicious operations.
She further said that the Ministry seeks to enhance understanding and raise awareness among the establishments of this sector on the dangers of money laundering, their methods, and means of protection against it. “We also seek to raise awareness on the importance of cooperation with government oversight in this context to protect establishments’ investments and business, as well as the need to comply with laws and implement the requirements of relevant legislation and decisions,” she added.
“A national team has been formed by the Ministry and its partners to implement action plans to raise awareness, whether through the media, through direct communication channels, or by issuing evidence, holding workshops, and providing information that underlines the measures that establishments must take to comply with the requirements of the law. It is available on the Ministry’s website and social media platforms,” Al Safi said.
“As you may have followed during the last period, our awareness-raising efforts have previously focused on registering the targeted establishments in the FIU system. As a result, more than 13,000 establishments have registered so far, with a compliance rate of 70 percent of the registration requirement. We call on the establishments included in the Information Unit System to actively use this leading digital platform to file Suspicious Transaction Reports (STRs) and Suspicious Activity Reports (SARs), in order to enhance the ability of the regulatory authorities to analyze and evaluate risks and take the necessary actions and measures accordingly,” she added.
She also encouraged the establishments that have not yet enrolled in the system to enlist at the earliest opportunity and submit reports of dubious transactions and exercises through the framework to stay away from fines of up to AED 5 million or suspension of the license or even the conclusion of the actual foundation.
‘Our awareness-raising efforts included encouraging Designated Non-Financial Businesses and Professions to register with the Automatic Reporting System for Sanctions Lists, which will enable these establishments to receive updated information on the local and international sanctions lists of the Security Council and to take necessary measures of preventing crime associated with terrorism financing,” Al Safi added.
“The Ministry of Economy is committed to raising awareness on the dangers of money laundering, and enhancing your knowledge of the tools, methods, and mechanisms of money laundering and terrorism financing crimes. Know your clients, and protect your investments by complying with legal requirements in this regard. Improve your internal systems to enhance your ability to identify sources of money laundering and monitor and report suspicious transactions. Registration in anti-money laundering systems is a major and mandatory action, but it is only the first step, to be followed by many other essential steps. The most important of these is actually using these systems for reporting, taking customer diligence measures, and providing the ultimate beneficial owner data. It is important to communicate continuously with government entities and follow their directions. The Ministry of Economy welcomes any inquiries you may have regarding the anti-money laundering system. Let us be careful not to be the instruments through which criminals achieve their goals and let us work together to protect our national economy, enhance its stability and competitiveness, increase global confidence in it, and ensure its true growth that reflects on the prosperity of society and the UAE’s sustainable development.” Al Safi concluded.
While addressing to the media, Ahmed Al Hosani, stressed that extreme beneficial owner techniques are key components in the UAE’s way to curb money laundering and financing of terrorism and illegal associations and financing the spread of weapons of mass obliteration, in accordance with the Financial Action Task Force’s requirements and the National AML system’s determinants. These will support the accomplishments of the destinations of Federal Decree-Law No. 20 of 2018 on Anti-Money Laundering and Countering Financing of Terrorism and Financing of Illegal Organizations, and in accordance with the Cabinet Resolution No. 58 of 2020 regulating the ultimate beneficial owner procedures.
Al Hosani clarified that the collection of private area establishments’ ultimate beneficial owner data adds to the advancement of governance and disclosure/ reporting systems in the UAE’s business environment, in this way offering increased security against financial crimes, money laundering, and commercial fraud. This move will upgrade trust in our national economy’s straightforwardness and versatility as per international guidelines.
Al Hosani added that the campaign that the Ministry launched last week in participation with its partners, included a mindfulness campaign devoted to bringing issues to light among private area establishments about the significance of submitting extreme beneficial owner information to the licensing authorities as a compulsory legal requirement that should be conformed to, to keep away from punishments and fines.
He brought up the goal of extreme beneficial owner procedures focusing on all foundations authorized and enlisted in the UAE, including those licensed by the local licensing authorities and the non-financial free zones, excluding the establishments owned by, or associated with, the government or local governments, and the foundations recorded in financial free zones, to be specific: Abu Dhabi Global Market and Dubai International Financial Center. The total number of targeted establishments across the UAE is around 513,000, managed by 38 licensing specialists.
Deadline for submission of ultimate beneficial owner data to end on June 30; detection of violations from July 1.
“This campaign will continue till the end of June 2021 as part of our efforts to raise more awareness in this regard. Following this, starting from July 1, 2021, the penalties stipulated in Cabinet Resolution No. 53 of 2021 on the Administrative Penalties Against Violating ultimate beneficial owner procedures will come into effect. These include the issuance of written warnings up to imposing AED 100,000 in fines in the event of recurrence and continued noncompliance, along with additional administrative penalties, including, among others, license suspension for one year, and restrictions on board of directors’ authority,” Al Hosani said.
Private area foundations can submit extremely helpful proprietor information in 3 simple steps:
Step 1: Creating a register of their definitive beneficial owner information and keeping up something very similar inside their records, so this register is dealt with like the memorandum of association, interior guidelines, and the rest of the main documents of the establishment. Appropriately, the previously mentioned register will be displayed upon the request of concerned entities and individuals. In this regard, licensing authorities have provided forms stating all the details and data to be recorded in the Ultimate Beneficial Owner Register. These structures are accessible on the concerned authorities’ official sites.
Stage 2: Submission of an undertaking to make the registry and guarantee the precision of its information to the licensing authority to which every foundation is answerable. This progression offers the chance for foundations with complex structures to begin the systems for deciding their ultimate beneficial owner and keep them in the addresses enrolled with the licensing authority and submit their information to the competent authorities. This undertaking is submitted online through the official websites of the respective licensing authority.
Stage 3: Entering definitive beneficial owner information in the frameworks of licensing authorities through committed site pages on their official websites. Consequently, every establishment should constantly check the official website of its licensing authority and speak with it in this regard as soon as possible, to avoid penalties.
Al Hosani explained that the Cabinet Resolution No. 58 of 2020 defines an ultimate beneficial owner as “the natural person who owns or controls the establishment definitively, through direct or indirect ownership shares of 25 percent or more of the firm’s capital, or someone who holds the right to vote by 25 percent or more; or to appoint and dismiss the majority of the establishment’s managers; or any other means by which he exercises ultimate control over the establishment; or a natural person holding the position of a senior management official.
Al Hosani clarified that an ultimate beneficial owner technique has been intended to make this simpler and without forcing any burden on the private area establishments. It will be associated and inducted inside the data sets of the National Economic Register and made accessible to the concerned authorities when required. He pointed that this step is important to accomplish effective disclosure of the ultimate and politically exposed beneficiaries, and the disclosure of the complex structures related to the ownership chain and the ultimate benefactors of the licensed establishments in the country. This in turn will raise the degree of transparency in the economic climate and meet the country’s commitments towards important worldwide associations, for example, the Financial Action Task Force (FATF).
“Ultimate beneficial owner database of the establishments will be dealt with by government entities in accordance with the highest levels of confidentiality. It will not be used for any commercial purposes, and even the employees of these government entities do not have free access to this data except in cases of investigation and the required disclosure to specific official entities, according to strict internal policies and regulations,” Al Hosani confirmed.
Al Hosani approached targeted establishments to help out government elements and licensing authorities in giving definitive gainful owner information as per the means referenced above, and to follow up with the authorities in this regard. In case of any change or alteration to ultimate beneficial owner information, the significant licensing authority should be advised within 15 days of that change or correction. Establishments are needed to appoint an individual living in the country as a resource, so the licensing authority can speak with that person in regards to definitive helpful proprietor information and the basic information regarding the company.
“These establishments should take adequate steps to ensure transparency, obtain accurate information regarding the ultimate beneficiaries, and update the information in the records on an ongoing basis. Also, the Ministry of Economy will continue the awareness-raising efforts through workshops in cooperation with its partners and provide support and guidelines that can help establishments achieve the highest levels of compliance,” he concluded.
During his speech, Mohamed Janahi stated that the monitoring efforts being applied by the Ministry have recently been stepped up through the improvement of an authoritative unit spent significant time in checking has been set up inside the Money Laundering Department at the Ministry of Economy. The unit is worried about inspection and control of the designated non-financial business and professions or DNFBPs, which incorporate real estate agents and brokers, sellers of valuable metals and gemstones, evaluators, and corporate specialist co-ops.
“Last April, the Ministry of Economy launched its supervisory and monitoring plan to combat money laundering, and an inspection and control team was formed in cooperation with some expert government entities with experience and in accordance with best practices. Work is underway to implement this plan on an ongoing basis, targeting the four sectors included in the designated non-financial business and profession category,” he added.
Janahi additionally said that an inspection plan for June 2021 has been set up to cover 425 establishments across the UAE through more than 100 investigators. The aftereffects of the control and investigation plan will be persistently assessed and explored in accordance with the evolving nature of risks.
Janahi explained that the Ministry’s supervisory and checking plan focuses on a bunch of primary components. The inspections will focus on these elements, most notably on conducting a comprehensive assessment of the risks and establishment is prone to, thorough inspections of offices, and field visits to their headquarters. Besides, it also focuses on directing investigations focusing on an example of the concerned foundations to inspect their compliance and implementation of a set of key measures concerning anti-money laundering. He pointed that the comprehensive assessment of the establishment’s risks, the Ministry follows a risk-based approach to determine the establishments targeted for evaluation so that establishments whose nature of work have a high risk of money laundering are selected. The exhaustive evaluation incorporates: First, providing support and guidance to enterprises belonging to the Designated Non-Financial Businesses and Professions (DNFBP) sector in a way that reduces the risks they face and reduces their classification to low risks.
Second, a detailed examination of the establishment’s systems, policies, and methodology for Anti-Money Laundering and surveying their appropriateness and nature of execution. The goal of these systems, strategies, and methods is to lessen the dangers inherent in the establishment’s activities.
Third, an appraisal of other risks in the wake of setting Anti-Money Laundering guidelines, policies, and procedures, as this assessment will take care of the Ministry’s supervisory plan on that establishment in the long haul.
Besides, Janahi asked the targeted establishments to guarantee that a bunch of essential prerequisites is applied, the most noticeable of which are 5 methodologies:
1.Registration in the Anti-Money Laundering and Combating the Financing of Terrorism systems 1) The Financial Information Unit system 2) the automated reporting system for sanctions lists. In addition, they must report suspicious transactions or activities using the goAML platform. It is also important to establish a list of indicators that enhance the awareness of the employees of these establishments.
2. Appointing a qualified and appropriate compliance officer.
3. Ensure that the establishment conducts an internal study of its money laundering risks. This study requires identifying, assessing, and understanding money laundering risks and takes into consideration the following aspects: The business of the establishment.
Type of clients (politically exposed clients, high-income clients, corporate).
Countries and regions with which the establishment deals.
The financial and operational volume of the business of the establishment.
Channels for providing a service or product.
4. Taking due diligence measures against clients through Gathering complete KYC information, which includes ultimate beneficial owner information.
Identifying risk rating for all its clients (example: high, medium, or low).
Conducting the appropriate level of ‘Customer Due Diligence’ measures based on the identified risk rating, including Simplified due diligence for low-risk customers.
Regular due diligence for medium-risk clients.
Enhanced due diligence for high-risk clients.
Conducting ongoing due diligence measures against clients’ overtime periods based on client risk rating.
5. Providing appropriate training for the concerned employees in meeting the general requirements of Anti-Money Laundering procedures, considering the nature of the establishment’s business activities.
He added that all the measures and procedures required of establishments in this regard are explained in the executive regulations of the law, which are available on the official website of the Ministry of Economy. They have also been clarified a lot in the manuals and workshops issued and led by the Ministry. The Ministry invites any inquiries or explanations by the DNFBPs with respect to these legal requirements and international obligations.
Janahi concluded with an audit of the infringement of Anti-Money Laundering or extremely helpful owner systems that may prompt administrative fines ranging from AED 50,000 to AED 1,000,000. The criminal violations of Anti-Money Laundering legislation could even prompt court sentences or imprisonment as well as managerial fines ranging from AED 50,000 to AED 5,000,000, in outrageous cases, he finished up.