Greetings for the day, AML Team!
The AML regulations in UAE provide that the regulated entities, whether a Financial Institution, Designated Non-Financial Business and Profession (DNFBP), or Virtual Asset Service Provider (VASP), must apply adequate Customer Due Diligence measures to identify the customer and determine their risk profile before establishing a business relationship.
However, the law prescribes certain circumstances where the regulated entities are restricted from establishing a business owing to the increased financial crime risk.
In this video, we shall discuss these different scenarios or the nature of customers with whom the regulated entities must refrain from dealing.
The onboarding decision is dependent on the identification of the person and the beneficial owners and the assessment of their risk profile.
If the person is designated under the UAE Local Terrorist List of the UNSC Consolidated List. When a person is identified as Sanctioned under these lists, the regulated entity must reject the onboarding of the person or terminate the business relationship if any existing customers get designated.
This restriction is in compliance with the Targeted Financial Sanctions regime.
As we know, satisfactory completion of adequate Customer Due Diligence is necessary before establishing a business relationship with any person.
Thus, if the person does not share the required details for information for completing the required CDD measures or is being evasive or uncooperative where the #CDD cannot be successfully concluded, then the related entity should not onboard such person.
This restriction safeguards the interest of the regulated entity from being exploited by the person for whom the necessary identification and identity verification measures have not been applied.
When the customer is a legal person or legal arrangement and all its Ultimate Beneficial Owners cannot be identified, or their identity cannot be verified, the regulated entity shall not establish any relationship with such corporates.
This restriction shall reduce the misuse of the legal structure created to launder the criminal proceeds and obscure the identity of the actual owners.
Regulated entities are prohibited from setting up a business relationship with a shell or fictitious bank with no physical presence or employees for actual business operations and merely exist on paper.
Further, no business relationship must be set up with a person on an anonymous basis or under any pseudonyms.
When the customer proposes to use any numbered names or refrains from identifying himself, the basic requirement of Customer Due Diligence gets compromised, posing a significant risk to the entity in terms of ML FT exposure.
The regulated entities must include these limitations around business relationships in their AML framework and create awareness among the compliance team to ensure that the business does not unknowingly get into a restricted category of business relationships and expose itself to higher ML/FT vulnerabilities and non-compliance penalties.
Believe that the discussion is helpful. Stay connected for more informative videos on AML UAE statutes and guidelines.
Timestamps:
0:00 Introduction on Avoiding Risky Business Relationships UAE AML CFT Law
0:47 How a person is designated under the UAE Local Terrorist List?
1:21 Why CDD is important for onboarding a person?
1:58 How the misuse of legal structure created to launder criminal proceeds can be reduced?
2:23 Why no business relationship must be set up with a person on an anonymous basis?
2:58 Which limitations must be included in AML framework of any business realtionship?
3:19 Conclusion and regards
#AMLUAE #uaeaml #dnfbps #vasps #amlcdd #amllaw #UBO #amlcompliance #UNSC #businessrelationships #amlregulations #uae #ultimatebeneficialowners #customerduediligence
