Who are the Anti Money Laundering (AML) Laws applicable to in the UAE?

The United Arab Emirates (“UAE”) is fast emerging as a global centre for international trade and finance. The country has multiple free trade zones, which attract large businesses but also pose money laundering and terrorist financing threats. Because of globalization and easy access to information, there has been an exponential increase in finance-related crimes which has necessitated the Financial Action Task Force (“FATF”), an intergovernmental organization to tighten the regulation for such white-collar crimes.

The UAE itself on the recommendations of the FATF has implemented rigorous AML laws and regulations to prevent money laundering and terror financing. Over the last few years, the UAE has taken tremendous strides to improve its AML legislation. This not only involves the regulations introduced over the years but also includes the publication of revised guidelines for financial institutions in June 2021, as well as the establishment of the New Specialised Money Laundering Court. In recognition of the significant progress made in this field, the UAE was reclassified as a Whitelist country in February 2024.

This blog aims to shed light on the laws and regulations in UAE for AML understanding AML compliance:

AML Laws and Regulations in UAE

The main laws for AML in UAE are:

• Federal Decree-Law No. (20) of 2018 On Anti-Money Laundering and Combating the Financing of Terrorism and Financing of Illegal Organizations (the “AML-CFT Law” or “the Law”);
• Cabinet Decision No. (10) of 2019 Concerning the Implementing Regulation of Decree-Law No. (20) of 2018 On Anti-Money Laundering and Combating the Financing of Terrorism and Illegal Organizations (the “AML-CFT Decision” or “the Cabinet Decision”).

As per the AML-CFT a person is considered to be committing money laundering if they:

• Transfer or transport proceeds of crime with intent to conceal or disguise its illicit origin;
• Concealing or disguising the true nature, origin, location, way of disposition, movement, or rights related to any proceeds or the ownership thereof;
• Acquiring, possessing, or using such proceeds;
• Assisting the perpetrator of the predicate offense to escape punishment.

Who are these laws applicable to??

 Financial Institutions:

All financial institutions (“FIS”) must comply if they execute one or more financial actions or operations on behalf of a customer.

a.      Receiving deposits and other monies that can be paid by the public, including Sharia-compliant deposits (Islamic religious law).

b.      Private banking services, cash brokerage services, all sorts of credit facilities.

c.       Currency exchange and money transfer services, stored value services, electronic payments for retail and digital cash, virtual banking services.

d.      Issuing and administering payment methods, guarantees, or commitments.

e.      Investing in, operating, or managing funds, options contracts, futures contracts, exchange rate and interest rate transactions, and other derivatives or negotiable financial instruments.

f.       Participating in issuing securities and providing financial services related to these issues.

g.      Managing and saving funds and portfolios of all kinds.

2.   Designated Non-Financial Businesses and Professions:

Designated Non-Financial Businesses and Professions (DNFBPs), similar to FIs, conduct financial activities on behalf of their customers. DNFBPs usually include the following types of businesses.

a.      Brokers and real estate agents.

b.      Dealers in precious metals and precious stones in carrying out any single monetary transaction or several transactions that appear to be interrelated or equal to more than AED 55,000/- (approximately USD 15,000/-).

c.       Lawyers, notaries, and other independent legal professionals and independent accountants, when preparing, conducting or executing financial transactions for their customers.

d.      Providers of corporate services and trusts upon performing or executing a transaction on behalf of their customers.

e.      Other professions and activities as may be determined by a decision of the cabinet.

3.  Virtual Asset Service Providers:

To govern virtual asset transfers, UAE has adopted regulations to monitor and supervise virtual asset service providers (VASPs). It is critical to understand VASP and its operations.

A company that performs any of the following activities or operations involving virtual assets for or on behalf of another person:

a.      Exchange between fiat currency and virtual assets.

b.      Exchange between different forms of virtual assets.

c.       Transfer / transaction of virtual assets.

d.      A business of providing services of safekeeping and administration of virtual assets.

e.      Providing financial services relating any sort of virtual asset, or engaging in sale of virtual assets.

Regulatory Body

The Central Bank of the UAE (CBUAE) formed a separate department in August 2020 to handle all things relating to anti-money laundering (AML) and counter-terrorism financing (CFT). Previously, the Banking Supervision Department was in charge of such operations.

The Anti-Money Laundering and Combating the Financing of Terrorism Supervision Department (AMLD) is concerned with three key goals:

• Examining licenced financial institutions;
• Ensuring adherence to the UAE's AML/CFT legal and regulatory framework;
• Identifying threats, vulnerabilities, and emerging hazards to the UAE's financial industry.

The AMLD collaborates with the UAE's National AML/CFT Committee and the Banking Supervision Department's Examination Division. Furthermore, the AMLD acts as a go-between for CBAUE and domestic stakeholders.

How Water and Shark can help?

AML procedural and compliance requirements are very crucial for any FI or DNFBP to stay afloat, especially in UAE where they are cracking down on anti-money laundering activities and other AML non-compliant entities.

Water and Shark is an eminent AML consultancy and service provider in the UAE for FIs and DNFPBs, for identifying any money laundering or terror financing risks associated with any entity and to stay compliant with the AML Laws and Regulations of the UAE, where we can help you understand the AML regulatory landscape and effectively meeting the compliance checklist and provide other ancillary services in setting up your business in UAE by making sure it remains AML compliant.