UAE Takes Major Step Towards Combating Online Money Laundering with New Digital Currency Legislation
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The United Arab Emirates (UAE) has taken a significant step towards addressing online money laundering by introducing new legislation that brings digital currencies into the scope of the law for the first time.
Addressing the Growing Threat of Financial Crimes
The UAE’s move comes as the threat of financial crimes, particularly in the context of cryptocurrencies, continues to grow. The country’s regulators are working closely with international authorities to combat financial crime and maintain a robust approach to investigating and addressing incidents involving financial wrongdoing.
Key Provisions of the Legislation
- Financial institutions and designated non-financial businesses and professions (DFNBPs) must implement adequate systems and controls to assess their risk exposure to financial crimes.
- Customer due diligence is required at the start of each business relationship for transactions above AED 55,000 (or wire transfers above AED 3,500).
- The concept of controlled delivery allows authorities to permit a suspected money laundering activity to continue in order to better investigate and arrest persons suspected of conducting such acts.
Strengthening Cooperation with Foreign Law Enforcement Agencies
The UAE has strengthened its cooperation with foreign law enforcement agencies, including the Financial Action Task Force (FATF), to combat financial crime. The FATF report highlighted several significant white-collar crime risks facing the UAE, including its status as a cash-intensive economy and active markets for trading golds, precious metals and stones.
Welcome from International Authorities
The UAE’s efforts to combat financial crime have been welcomed by international authorities. The country’s financial regulators are taking a robust approach to investigating and addressing incidents involving financial wrongdoing. Recent high-profile cases, such as the collapse of NMC Health and the fraud scandal at Abraaj Investment Management, have highlighted the need for greater vigilance in preventing financial crimes.
Enhancing National AML Framework
The UAE has taken steps to enhance its national Anti-Money Laundering (AML) framework, including the preparation and submission of Suspicious Activity Reports to the Financial Information Unit. The country’s regulators are working closely with foreign enforcement authorities to combat cybercrime and other forms of financial crime.
Industry Expert Opinion
Industry experts welcome the new legislation as a significant step towards combating online money laundering and promoting transparency in the financial sector. However, they also caution that more needs to be done to enhance corporate governance practices and improve access to independent reliable sources of information to verify data provided by management.
Conclusion
As the use of digital currencies continues to grow, it is essential that governments and regulatory bodies work together to ensure that these new forms of currency are used responsibly and do not facilitate financial crime. The UAE’s move towards bringing digital currencies into the scope of the law is a positive step in this direction.