Financial Institution Customer Due Diligence Procedures in UAE Get a Boost from Central Bank Guidance

The Central Bank of the United Arab Emirates (CBUAE) has issued new guidance for licensed financial institutions (LFIs) to ensure they comply with anti-money laundering and combating the financing of terrorism (AML/CFT) regulations. The move comes as the CBUAE steps up its efforts to combat money laundering offenses in the UAE, following the country’s addition to the Financial Action Task Force’s (FATF) grey list.

Key Aspects of the Guidance

The guidance sets out detailed requirements for LFIs to follow when conducting customer due diligence, including:

• Enhanced Due Diligence Procedures: Conducting enhanced due diligence procedures for high-risk customers
• Ongoing Monitoring and Reporting: Ongoing monitoring and reporting of suspicious transactions
• Online Validation Gateways: Use of online validation gateways to verify customers’ Emirates IDs
• Geographic Location Tools: Geographic location tools to identify suspicious log-in attempts or movement patterns

Important Developments in the Payments Landscape

The guidance highlights the changing payments landscape, with a focus on digital and electronic due diligence. This includes:

• Stored Value Facility Due Diligence: Conducting due diligence for stored value facilities
• Merchant Due Diligence: Conducting due diligence for merchants
• Chargeback Monitoring: Implementing chargeback monitoring

LFIs Must Ensure Effective Control and Oversight

The CBUAE emphasizes that LFIs are ultimately responsible for monitoring all transactions processed or conducted through them, even where such transactions involve multiple other participants and are part of a more complex and extended transaction chain.

AML/CFT Obligations Under UAE Legislation

LFIs have specific obligations under the UAE’s AML/CFT legislation to comply with the legal and regulatory framework regarding targeted financial sanctions. This includes:

• Registration with IEMS: Registering with the Integrated Enquiries Management System (IEMS)
• Sanctions Compliance Programs: Implementing and maintaining appropriate sanctions compliance programs
• Transaction Screening: Screening transactions related to their products or services

Incorporating AML/CFT Governance and Training Frameworks

The guidance sets out specific criteria that LFIs must endeavour to incorporate into the design of their legally mandated AML/CFT governance and training frameworks. This includes:

• Additional Employee Training: Providing additional employee training
• Agent Governance and Training: Ensuring clear allocations of AML/CFT responsibilities among LFIs
• Clear Allocations of Responsibilities: Implementing clear allocations of AML/CFT responsibilities among LFIs

Conclusion

The CBUAE’s guidance is a significant development in the UAE’s efforts to combat money laundering offenses. LFIs must ensure they comply with these new requirements to avoid any potential consequences. For support required in this area, please reach out to specialist regulatory teams for further advice and guidance.