Financial Crime World

UAE Banks Under Scrutiny: Compliance Framework Assessment Takes Centre Stage

In a bid to tackle ongoing regulatory changes, banking compliance procedures in the United Arab Emirates have become more stringent. To address this, the UAE Banking Federation (UBF) has introduced an effective compliance framework for banks in 2017.

Introduction of the UBF’s Compliance Framework

The UBF’s framework aims to outline essential components of Anti-Money Laundering (AML) and sanctions compliance, as well as controls deemed necessary by local and international regulators. The assessment assesses the effectiveness of the compliance function within UAE-based banks, adhering to fundamental standards such as:

  • FATF recommendations
  • Basel Committee standards
  • Wolfsberg Principles
  • Regulations issued by the UAE Central Bank

Scope of the Assessment

The scope of this comprehensive assessment encompasses the following key areas:

Governance Framework and Management Oversight

  • Resourcing and allocation of necessary resources for compliance functions
  • Effectiveness of governance framework in ensuring compliance with regulatory requirements

AML and Sanctions Compliance Risk Assessment Framework

  • Identification and assessment of risks related to AML and sanctions non-compliance
  • Development and implementation of effective risk mitigation strategies

Monitoring and Surveillance

  • Implementation of effective monitoring and surveillance mechanisms to detect and prevent suspicious transactions
  • Regular review and update of risk assessments and mitigation strategies

Assurance and Independent Verification

  • Enterprise-wide risk management framework to ensure comprehensive coverage of all risks
  • Independent verification and assurance processes to ensure compliance with regulatory requirements

Training and Awareness Programs

  • Development and implementation of effective training programs for employees on AML and sanctions compliance
  • Regular awareness campaigns to ensure that employees are aware of their roles and responsibilities in ensuring compliance

Conclusion

The UBF’s compliance framework serves as a benchmark for UAE banks to ensure they meet international standards and regulatory requirements. By implementing this framework, banks can strengthen their compliance functions and mitigate potential risks associated with AML and sanctions non-compliance.