Anti-Money Laundering and Combating the Financing of Terrorism and Illegal Organisations

 

 Overview

As a committed member, the United Arab Emirates (UAE) contributes to global anti money laundering efforts and combating financing of terrorism (AML/CFT), and strives to fully implement the standards set by the International Financial Action Task Force (FATF). In 2018, the UAE, with the extensive participation of all concerned authorities, conducted its first national risk assessment on money laundering and terrorist financing. The assessment identified a number of areas in which the risks of money laundering and terrorist financing are high. In 2019, FATF also evaluated the UAE in accordance with international requirements and found a number of areas that will benefit from a national framework for combating money laundering and terrorist financing, in order to develop further.

Federal Decree-Law No. (20) of 2018 on Money Laundering and Combating the Financing of Terrorism and Financing of Illegal Organizations, and its Implementation Regulation was issued. It is the basic legislative framework that criminalizes money laundering and terrorist financing operations and capitalizes on the effectiveness of the legal and institutional framework in the implementation of procedures and measures that contribute to anti-money laundering efforts and combating the financing of terrorism and illegal organizations.

Money laundering is defined as any financial or banking transaction aimed at concealing or changing the identity of illegally obtained funds by passing them through the financial and banking system in order to make them appear as originating from legitimate sources, and then re-pumping and investing them in a legal manner contrary to their real nature.

 

The Risks of Money Laundering and Terrorist Financing

Money laundering leads to
Weakening financial institutions
Threat to economic stability
Increase in crime and corruption
Economic recession

 

The UAE is fully committed to combating money laundering and terrorism financing and detecting and deterring them in accordance with established legislation. The competent authorities in the country have put in place an institutional system to oversee, control, and collect information on all practices that may lead to financial crimes to address them, including money laundering and terrorism financing. The authorities realize that the national framework and coordination to AML/CFT must continue to be enhanced and developed to improve their effectiveness.

The national institutional framework is represented in the National Strategy to AML/CFT, with a view to continuously improve governmental operations in a comprehensive institutional manner and implement it effectively to counter the risks of money laundering, terrorism financing and the risks of illegal organizations in the UAE.

The UAE must be viewed as a country in which criminals cannot carry out money laundering and terrorism financing operations, neither as a transit route to transfer proceeds originating from any criminal activity.

 Institutional Framework forAML/CFT

In line with the UAE’s interest in and commitment to enforcing AML/CFT legislation, the ‘Higher Committee Overseeing National Strategy on Anti-Money Laundering and Countering the Financing of Terrorism’ was formed, headed by His Highness Sheikh Abdullah bin Zayed Al Nahyan, Minister of Foreign Affairs and International Cooperation. Through this strategy, 12 national strategic goals are to be implemented during the period from 2020-2023. This strategy defines the UAE's approach during the period 2020-2023, as a whole, in order to enhance its response system to money laundering crimes and combating the financing of terrorism and the financing of illegal organizations. In particular, this strategy identifies the main areas that require improvement, by setting strategic priorities and providing a more comprehensive work methodology for the purpose of managing the process of mitigating potential risks and challenges to designated non-financial businesses and professions, through supporting several initiatives and basic operational action plans emanating from the National Strategy on Anti-Money Laundering and Countering the Financing of Terrorism (2020-2023) and the National Action Plan.

AML/CFT is considered as one of the priorities and concerns of the UAE government. National Anti- Money Laundering and Combating Financing of Terrorism and Financing of Illegal Organizations Committee - NAMLCFTC was established in the year 2000, headed by the Governor of the Central Bank. It oversees policies and efforts to combat money laundering and counter terrorism financing in the country. It works specifically to improve the efficiency and effectiveness of the institutional framework for AML/CFT and national coordination in the UAE, through its sub-committees, and by verifying the continued commitment to international standards related to AML/CFT crimes.  NAMLCFTC strives to continuously improve the effective implementation of an overall government system that aims to mitigate the risks of money laundering, terrorist financing and financing of illegal organizations.

 

The following is an illustration of the organizational structure of the UAE’s money laundering framework.

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 Approach of the Ministry of Economy

(Risk Based Control Approach)

Pursuant to the relevant Cabinet decisions, the Ministry of Economy is the supervisory authority entrusted with the supervision of the ‘Designated Non-financial Businesses and Professions’ (DNFBPs) sector at the state level and commercial free zones with regard to AML/CFT. It is committed to developing a strong regulatory framework and providing a safe environment for organizations, companies, and designated non-financial professions to work within.

The DNFBPs sectors include a wide range of non-financial sectors and activities that mostly exposed to the risks of money laundering and misuse of commercial transactions and the funds traded in them for the purposes of money laundering or other illegal practices, given the nature of the services they provide or the products they deal with. This falls in line with international standards issued by FATF. The categories under these sectors have been divided according to the nature of activity in each sector, as follows:

  • Brokers and real estate agents
  • Dealers of precious metals and gemstones
  • Independent accountants and auditors
  • Corporate service providers

To implement the supervisory role that it has been entrusted with, the Ministry announced the development of its operational plan and initiatives under the National Strategy on AML/CFT, through the role it plays in supporting the UAE’s efforts in confronting money laundering practices, and strengthening its framework for action in confronting money laundering crimes combating the financing of terrorism and financing illegal organizations at the global level.

The Ministry has established a specialized department within its organizational structure, called the ‘Anti-Money Laundering Department,’ to follow up and implement its operational strategy with regard to awareness, control and inspection of all activities listed under the designated non-financial business and professions sectors, in accordance with the provisions of Federal Decree Law No. 20 of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Financing of Illegal Organizations, and its Implementing Regulation.

The main objective of the Ministry's efforts in this area is to raise the level of compliance and commitment to international requirements and to preserve the position and status of the national economy and its good reputation in various global markets and among all partner countries and international organizations. The priorities during the next phase are based on providing all forms of awareness, advisory and training support possible for designated non-financial businesses and professions and raising their level of knowledge in order to be able to fulfill their obligations in partnership with various economic sectors.

The Ministry's economic policy contributes to its institutional work based on integrated legislation in accordance with international best practices on AML/CFT in raising the competitiveness of the country's economic, investment and financial environment to pioneering levels, and this leads to an attractive climate for business and investment in a wide range of sectors that represent a driver to build a balanced, resilient and sustainable future economic model derived from the reputation and effectiveness of the UAE economy.

 Financial Action Task Force (FATF)

Definition of the Financial Action Task Force (FATF):

It is an intergovernmental organization based in the French capital, Paris, founded in 1989. The Financial Action Task Force aims to combat currency counterfeiting and terrorist financing, and it has 37 members within the organization. They are the United States of America, the United Kingdom, Argentina, Australia, Austria, Belgium, Brazil, Canada, China, Denmark, the European Union, Finland, France, Germany, Hong Kong, the Gulf Cooperation Council, Iceland, India, Ireland, Spain, Israel, Italy, Japan, South Korea, Malaysia, Mexico, Luxembourg, Netherlands, New Zealand, Norway, Portugal, Russia, Singapore, South Africa, Sweden, Switzerland, Turkey, Saudi Arabia.

Role of FATF:

FATF recommendations set out a comprehensive and consistent framework of measures that countries should implement in order to combat money laundering and the financing of terrorism, in addition to financing the proliferation of weapons of mass destruction. Since the legal, administrative and operational frameworks and financial systems vary in various countries, it is not possible for all of them to take identical measures to confront these threats. Therefore, the FATF recommendations set an international standard, which countries should implement by taking measures that have been adapted to their own circumstances. (FATF website)

Suspicious Transaction Reports

About UAE FIU

The UAE Financial Intelligence Unit (FIU) analyses suspicious transactions and activities that may involve money laundering, terrorism financing and related criminal activities, on the basis of data and reports from financial institutions (FIs) and designated non-financial business and professions (DNFBPs) who collaborate and share knowledge to detect and act against such activities.

FIU encourages collaboration and strategic partnerships with local, regional and international stakeholders that have similar goals of combatting financial crimes. Such collaboration entails developing shared network platforms that allow for enhanced knowledge sharing between agencies to combat money laundering and terrorism financing.

Definition of goAML

The goAML system was developed by the United Nations Office on Drugs and Crime  (UNODC) to combat money laundering and the financing of terrorism.

The goAML system is considered as an integrated system used by the Financial Intelligence Unit (FIU) to receive, analyze and distribute suspicious transaction reports (STRs) in a fast and efficient manner, and a large number of financial intelligence units worldwide are currently using it, and the United Arab Emirates is the first Gulf country to apply this modern system.

goAML.png

The goAML system has many advantages, including raising the operational level of the Financial Intelligence Unit (FIU) significantly, also at the level of the notifying institutions with the following:

  • Fast sending suspicious transaction reports (STRs).
  • Send suspicious transaction reports (STRs) in a more secure way.
  • Receive information requests from the unit in an efficient and rapid manner.
  • Reduce the cost of sending suspicious transaction reports (STRs).

 Before Registration

To register on goAML you need to know that there are two registration stages:

  1. The first stage: the registration stage in the protection system (SACM) of goAML portal.
  2. The second stage is the registration stage in the goAML system.

Note: (You will not be able to open the goAML portal page without successfully passing through the SACM portal by putting the username that you will obtain from the registration stage of the SACM protection system and the password from the google Authenticator application)

 

Click here for more details

 

Before registering for the two stages, you must prepare the following:

  • Authorization letter from the institution you represent (download the form).
  • A copy of the passport, resident VISA, Emirates ID.
  • A copy of the commercial trade license (for companies).
  • Download the "Google Authenticator" application on the phone. (This application contains the password for the SACM protection system, which is a password that changes every minute)

 

Note: All documents must be added in one attachment with total size less than 5MB

 

To learn more about how to register your company in the goAML system and how to file suspicious transaction reports (STRs), please click on the following links according to your commercial activity:

Brokers and Real Estate Agents
Dealers in Precious Metals and Precious Stones
Independent Accountants
Providers of Corporate Services

Licensing Section Procedures

License Issuance

Required Documents :-

  • License Form.
  • Trade Name Certificate.
  • Copy of Passport and Emirates ID.
  • Certified No Objection Letter (Expatriate).
  • Technical Evaluation Report (Commercial Control Section).
  • Certified Copy of Lease Contract and Title Deed.
  • Official Entities Approvals According to Commercial Activities.
  • Service Agent Contract/ Civil Company Certified by Commercial Legal Affairs (Legal Status: Service Agent/ Civil Company).
  • Approved Legal Contracts
  •  Certified copy of license, Copy of Memorandum of Association and meeting minutes for Branches from outside the Emirate.
  • Notarization of Partnership Agreements- Memorandum of Association from Commercial Legal Affairs (Legal Status: Limited Liability Company/ General Partnership/ Public or Private Joint Stock Company)
  • Certified Copy of Company's Policies (Joint Stock Companies).
  • Agency Contract between Foreign Company and Certified Local Agent. (Legal Status: Local/ Gulf/ Foreign Branch with its Legal Translation).
  • Sole Proprietorship companies with service agent system (approval from license owner to open a branch).
  • Various companies (approval from license owner to open a branch).

Fees:-

License issuance: the collection rate is 8% for citizen and 13% for expatriate (from lease value)
Record issuance: AED 500/ 1000/ 1200/ 1700/ 4000/ 5000/ 7000 (depending on legal status)
Printing: AED 300
Signboard: AED 200
Smart Services: AED 100
Representative ID: AED 300
Technical Evaluation: AED 150
Extra fees associated to other Departments will be charged.

License Renewal

Required Documents:-

  • License Form.
  • Approvals from official authorities if necessary and according to business.
  • Certified copy of lease contract and title deed.

Fees:-

License renewal: the collection rate is 8% for citizen and 13% for expatriate (from lease value)
Wearhouse renewal: the collection rate is 6% for citizen and 10% for expatriate (from lease value)
Register renewal: AED 500/ 1000/ 1200/ 1700/ 4000/ 5000/ 7000 (depending on legal status)
Printing: AED 300
Signboard: AED 200
Smart Service: AED 100
Representative ID: AED 300
Extra fees associated to other Departments will be charged.

Licenses Amendment

License Amendment is either a waiver or partner entry, changing the activity, or amending a trade name. Such a procedure is carried out into two stages or steps which are initial and final approvals.

Required Documents:-

  • License Form
  • A copy of valid passport and ID for partners certified No objection Letter for non-citizens (in cases of adding new partners).
  • Approvals from official authorities if necessary and according to business. 
  • Declaration from the public notary or Commercial Legal Affairs Section (waiver, partner entry, trade name amendment).
  • Technical evaluation report if the amendment includes (changing site, adding activity, cancelling activity).
  • Certified copy of lease contract and title deed.
  • Sale of shares contract (waiver, entry of partner, removing partner, changing trade name, or changing activity).
  • Legal contracts: service agent contact/ Business Company/ memorandum of association.

Fees:-

Register amendment: AED 500/ 1000/ 1500/ 2000 (depending on legal status)
Printing: AED 300
Activity addition: AED 500 (for each activity)
Technical Evaluation: AED 150
Adding Partner/ Service Agent: AED 1000 (for each)
Removing Partner/ Service Agent: AED 1000 (for each)
Signboard: AED 200
Extra fees associated to other Departments will be charged.
Extra fees will be charged in case of waiver for certain activates (General Trade - Contracting – Engineering Consultancy - Real Estates and Properties).
 

Warehouse Permit Issuance

Issuance of warehouse permit for a licenses that is carried inside or outside the emirate.

Required Documents:-

  • License Form.
  • Copy of the main company’s license.
  • Letter from the main company to issue a warehouse permit in Sharjah in the case if the company is located outside the emirate.
  • Partners’ passport and ID.
  • Approvals from official authorities if necessary and according to business.
  • Certified copy of lease contract and title deed.

Fees:-

Warehouse Permit Issuance: the collection rate is 6% for citizen and 10% for expatriate (from lease value)
Register issuance: AED 500
Printing: AED 300
Signboard: AED 200
Representative ID: AED 300 (for licenses from outside the emirate only)
Technical Evaluation: AED 150
Extra fees associated to other Departments will be charged
 

Warehouse Permit Cancellation

Cancellation of warehouse permit that is related to a license carried inside or outside the emirate.

Required Documents:-

  • Licensing Form.
  • Technical evaluation from Commercial Control Section
  • Letter from company indicating warehouse cancellation request.

Fees:-

Printing: AED 300
Warehouse Permit Cancellation: AED 500
Technical Evaluation: AED 150
Extra fees associated to other Departments will be charged
 

Trade Names Section Procedures

Trade Name Issuance

Required Documents:-

License Form
Copy of valid passport, emirates ID for citizens or residency for expatriates.
Certified No Objection Letter for expatriates.
Permission for minors (under 21) to carry out business from the Legal Court.
Approvals from official authorities if necessary and according to business.
Presence of concerned ones or their legal representatives.

Fees:-

Trade Name Issuance: AED 250
Translated Trade Name Issuance: AED 1250 (for Local and Foreign Companies Branches)
Foreign Trade Name Issuance: AED 2250 (for Local and Foreign Companies Branches)

Trade Name Renewal

Required Documents:-

  • Expired Trade Name Certificate, if any
  • Presence of concerned ones or their legal representatives.

Fees:-

Trade Name Renewal: AED 150
Trade Name Issuance fees are applied after the expiry period

Trade Name Amendment

This refers to any amendment to be applied to the Trade Name or business activity, adding a business partner or service agent, withdrawal of a business partner, or amending the license type or the legal status.

Required Documents:-

License Form.
Copy of valid passport, emirates ID for citizens or residency for expatriates.
Certified No Objection Letter for expatriates in cases of adding partner.
Approvals from official authorities if necessary and according to business.
Presence of concerned ones or their legal representatives.

Fees:-

Trade Name Amendment: AED 100
Fees are applied in case of changing Trade Name to a foreign or translated one.
 

Trade Name Cancellation

Required Documents:-

Trade Name Cancellation Form.
Presence of concerned ones or their legal representatives.
Referring to Legal Affairs Department to ensure that no legal action exists on Trade Name.

Fees:-

Trade Name Cancellation: AED 100
 
A paragraph is a self-contained unit of a discourse in writing dealing with a particular point or idea. Paragraphs are usually an expected part of formal writing, used to organize longer prose.
A paragraph is a self-contained unit of a discourse in writing dealing with a particular point or idea. Paragraphs are usually an expected part of formal writing, used to organize longer prose.