The United Arab Emirates (UAE), as a member of the United Nations, is committed to implementing UNSCRs, including those related to the UN’s sanctions regimes. Consequently, through the Cabinet Decision No. 74 of 2020 and Cabinet Decision No. (10) of 2019 concerning the implementing regulation of decree law no. (20) of 2018, UAE is implementing relevant the United Nations Security Council Resolutions (UNSCRs) on the suppression and combating of terrorism, terrorist financing and countering the financing of proliferation of weapons of mass destruction, relating to Targeted Financial Sanctions (TFS). Relevant Persons should note that, in accordance with the laws of the UAE, the UAE Government also applies TFS by publishing a Local Terrorist List in accordance with UNSCR 1373 (2001)
The term TFS refers to asset freezing and other financial prohibitions, agreed upon by the UNSC, to prevent funds or other assets from being made available, directly, or indirectly, for the benefit of designated individuals, entities, or groups.
Accordingly, Financial Institutions (FIs), Designated Non-financial Businesses and Professions (DNFBPs), and Virtual Assets Service Providers (VASPs) are obliged, by UAE law, to apply policies, procedures and controls to implement TFS to those sanctioned and designated in the Local Terrorist List and UN Consolidated List (Sanctions Lists).
DNFBP: Designated Non-Financial Businesses and Professions are entities carrying out trade or business activities which includes:
According to Law,
- Subscribe: All FIs, DNFBPs, and VASPs are required to subscribe to the EOCN Notification System on the EOCN’s website to receive automated email notifications on any updates to the Sanctions Lists.
- Screen: FIs, DNFBPs, and VASPs must undertake regular and ongoing screening on the latest Local Terrorist. Screening should be conducted in the following circumstances:
i) Upon any updates to the Local Terrorist List or UN Consolidated List.
ii) Prior to onboarding new customers.
iii) Upon KYC reviews or changes to a customer’s information.
iv) Before processing any transaction.
v) Screening should include existing customer databases, ultimate beneficial owners, and parties to transactions.
Depending on the level of risk of money laundering and terrorist financing associated with a particular customer or business relationship, companies conduct either Simplified Due Diligence (SDD), Customer Due Diligence (CDD), or Enhanced Due Diligence (EDD).
EDD is required as an additional type of step-up KYC process for customers who are deemed to be high-risk. A customer may be deemed high-risk due to their location, profession, or political exposure. The requirements for completing EDD vary based on local regulation, but it is commonly required if entering a business relationship with a politically exposed person (PEP), if the transaction involves a person from a high-risk or sanctioned country, or any other situation where there is increased risk of money laundering.
3. Apply Targeted Financial Sanctions: The following are the TFS measures that must be implemented if a match with the Local Terrorist List or UN Consolidated List is identified.
i) Freeze all funds or other assets without delay (immediately or in any case within 24 hours)
ii) Prohibition of making funds or other assets or services available
4. Report: The mechanism to report any freezing or suspension measures taken upon identifying confirmed or partial name matches is through the goAML platform.
i) Confirmed Match: Freeze all funds or other assets without delay. Submit Fund Freese Report (FFR) within 5 business days.
ii) Partial Match: Suspend all Transaction without delay and prohibition of making funds or other assets or services available. Submit Partial Name Match Report (PNMR) within 5 business days.
iii) No Match: No further action is required.
Any suspicious transactions or activities that might be related to sanctions evasion, and which do not include confirmed or partial name matches to the UAE Local Terrorist List or UN Consolidated List, should be reported to the FIU by raising a Suspicious Transaction Report (STR) or Suspicious Activity Report (SAR) through the goAML platform.
Further, Ministry of Economy issued Circular Number 8 effective June 12, 2021 to Dealers in Precious Metals & Stones licensed in the United Arab Emirates licensed in the United Arab Emirates to file Dealers in Precious Metals and Stones Report (DPMSR) for cash transactions equal to or exceeding AED 55,000 and register the information in the Financial Intelligence Unit’s (“FIU”) GoAML platform.
Also, Ministry of Economy issued Circular Number 5 on June 6, 2022 to Real estate brokers and agents licensed in the United Arab Emirates to file Real Estate Activity Report (REAR) for Purchase and sale transactions of Freehold real estate, according to the description and determination of the law of each emirate, in carrying out any single physical cash (or virtual asset or converted from a virtual asset) transaction or several transactions equal or exceeding AED 55,000 for the entire, or a portion, of the property value.
Note that submissions of DPMSR or REARs does not exempt businesses from your existing obligations to submit the following types of reports via goAML:
Consequences for FIs, DNFBPs, and VASPs:
Any Person, found to violate and/or be in non-compliance with the obligation in the Cabinet Decision No. 74 of 2020 or failing to implement procedures to ensure compliance may face imprisonment of no less than one year and no more than seven years and/or a fine of no less than AED 50,000 (fifty thousand dirham) and no more than AED 5,000,000.
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