Financial Crime World

Financial Crime Trends in the United Arab Emirates: A Year of Accelerated Digitization and Growing Concerns

In a year marked by unprecedented challenges, the Middle East has witnessed a significant shift towards digital payments, accelerated by the COVID-19 pandemic. This transformation has created new opportunities for criminals to devise innovative schemes, while governments and financial institutions have had to adapt their strategies to stay ahead of the curve.

Fraud and COVID-19: A Perfect Storm

The UAE saw a staggering 250% increase in cyberattacks last year, including phishing and ransomware incidents. With the region’s traditional reliance on cash payments rapidly giving way to digital transactions, financial institutions must reassess their fraud controls and educate customers about new risks and typologies.

Spotlight on Digital Onboarding and eKYC

Regulators in the Middle East have been actively promoting digitization, with the Arab Monetary Fund publishing guidelines for adopting digital identity and electronic Know-Your-Customer (eKYC) solutions. The UAE and Bahrain have taken the lead in implementing eKYC platforms, but it is essential that firms select technological solutions that minimize risk exposure and integrate them effectively into their compliance processes.

FATF Mutual Evaluation Report on the UAE

In a major development, FATF issued a critical report highlighting the need for fundamental improvements to the UAE’s anti-money laundering and terrorist financing controls. The country was placed under observation for a year to ensure it implements its recently adopted laws. Financial institutions must review their risk assessments and align procedures with the identified threats.

MEA Regulators Warm Up to Cryptocurrencies

The growth of cryptocurrency has continued, albeit at a relatively slow pace, in both Africa and the Middle East. With compelling use cases and increasing interest, commentators believe regulators will soon issue crypto-specific regulations. The UAE, Nigeria, South Africa, Kenya, and potentially Saudi Arabia are likely to follow suit.

Slow Steps Towards Greater Transparency and Access to Data

Several governments have taken steps towards greater transparency by introducing requirements for companies to declare their ultimate beneficial owners. Industry bodies must now lobby for public disclosure of this information, while financial institutions must integrate these new sources into their onboarding and customer risk assessment processes.

FINTRAIL’s Coverage in 2020

As the region’s compliance landscape continues to evolve, FINTRAIL has expanded its coverage with a dedicated team focused on Middle East and Africa. We have completed several projects, including training for compliance teams across Kenya, Nigeria, and South Africa, and launched a digital product focusing on the African diaspora. With ambitious plans for 2021, we remain committed to assisting financial institutions navigate the complex world of financial crime compliance.

Contact FINTRAIL

If you would like to discuss any of these topics or require assistance with your financial crime compliance needs in the MEA region, please contact Maya Braine. FINTRAIL offers a range of services, including:

  • Risk assessments
  • Training
  • RegTech solutions
  • Policy development
  • Control design

Visit our website for more information.