UAE Strengthens Measures in Anti-Money Laundering and Counter-Terrorism Financing System

The Ministry of Economy conducted a briefing session where it examined key updates pertaining to the advancement of the anti-money laundering and counter-financing of terrorism system (AML/CFT) in the nation. Specifically, the focus was on Cabinet Decision No. 109 of 2023 concerning the organization of real beneficiary procedures.

Another noteworthy development is the Cabinet Decision on administrative sanctions for violations of the provisions outlined in Cabinet Decision No. 109 of 2023. The aim is to bolster the competitiveness of the national business environment and reinforce the UAE’s economic standing on both regional and global scales.

Undersecretary of the Ministry of Economy, Abdullah Ahmed Al Saleh, emphasized the significance of refining real beneficiary procedures within the UAE’s AML/CFT framework. He highlighted that these recent resolutions mark a crucial step forward in supporting the country’s endeavors to combat suspicious financial activities. This initiative aligns with the Ministry’s strategic objectives and adheres to global standards set by the Financial Action Task Force (FATF).

Al Saleh underscored that these resolutions constitute a valuable addition to existing AML legislation, particularly in the regulation of real beneficiary procedures. The updates aim to enhance the collection, evaluation, and registration of real beneficiary data for all private sector enterprises in the country, including those in commercial-free zones, in collaboration with relevant local licensing entities.

The amendments introduce novel mechanisms for registration authorities in the country, specifying the procedures for registrars and legal entities to establish a minimal regulatory framework for real beneficiary procedures in alignment with licensing, registration, partner, or shareholder registry procedures.

These changes seek to achieve the highest levels of compliance, fortifying the UAE’s economic position. They also encompass the development of efficient and sustainable operational and regulatory mechanisms to oversee the real beneficiary procedures of all registered companies, conforming to international transparency standards.

The Ministry stressed that these amendments better support the regulation of real beneficiary procedures, fostering partnerships through consolidated procedures within a unified national system involving all registrars. Semi-annual performance reports are to be submitted, reinforcing coordination, and providing indications of registrar compliance with the resolution’s provisions.

Cabinet Resolution No.109 emphasizes regulating access to real beneficiaries in complex structures, establishing grievance standards and controls, and obliging registrars to adopt a risk-based approach. This includes identifying risks, policies, and measures to reduce risk through simplified or enhanced due diligence requirements, facilitating the reporting of suspicious transactions to the Financial Information Unit.

The amendments also incorporate clauses on the organization of real beneficiary procedures, defining nominal members and complex structures to prevent the concealment of the identity of the natural person controlling a legal entity.

The resolution outlines five steps to identify the real beneficial owner, incorporating a risk-based approach, tracing through legal persons or arrangements, considering joint ownership or control, determining the natural person who controls the legal entity, and designating the senior management officer as the ultimate beneficial owner.

Nominee board members are assigned specific duties, such as informing the legal person of their status and providing required data, notifying of any changes, and reporting cessation of their role within a specified timeframe.

The decision underscores the necessity of applying a certified risk management-based approach to registered enterprises, ensuring they are not exploited for money laundering or terrorism financing. This involves classifying, assessing, addressing, and mitigating potential risks through risk assessment, verification, and monitoring.

Additionally, the resolution addresses the establishment of a Registrar’s AML/CFT unit responsible for implementing anti-money laundering and counter-terrorism financing policies, procedures, and requirements. This unit will provide real-time reports and updates to the Ministry.

The Cabinet Decision on administrative sanctions outlines penalties for violations, ranging from warnings to financial penalties and license suspensions, emphasizing the Ministry’s commitment to fortifying the national AML/CFT system. The Ministry aims to raise awareness and compliance levels among companies to solidify the UAE’s position as a global economic hub.