AML gets more critical than ever! Non-compliance shuts down a major money exchange company
Regulatory Actions Against Non-Compliant Entities
The Central Bank of the UAE (CBUAE) shut down a major currency exchange company in August 2023 due to an inadequate Anti-Money Laundering (AML) compliance framework and deficiencies in enhanced customer due diligence measures. This action underscores the regulator’s zero-tolerance approach toward non-compliance and highlights the increasing scrutiny on financial institutions and DNFBPs operating in the UAE.
AML Penalties and Fines in the UAE
The UAE has solidified its role as a major participant in the worldwide effort to combat financial wrongdoing. During the initial quarter of FY23, the UAE imposed fines amounting to AED 65.9 million on 137 companies due to their non-compliance with AML regulations. Given the heightened regulatory oversight and the swiftly changing financial misconduct environment, it has become increasingly crucial for financial institutions and businesses operating in the UAE to conduct AML risk assessments and proactively embrace the most up-to-date AML compliance measures.
Common AML Violations Identified by Regulators
Regulatory inspections frequently identify recurring gaps in AML compliance frameworks. The most common penalties imposed by CBUAE on exchange houses are:
| Article | AML Violation | Penalty |
|---|---|---|
| Article (5) | Failure to undertake the necessary customer due diligence measures before establishing the business relationship. | 100,000 AED |
| Article (24) Clause 2 | Failure to keep records and documents related to the financial transactions for a period of five years from the date of concluding the transaction or terminating the business relationship with the customer. | 50,000 AED |
| Article (17) Clause 1/A | Delay in notifying the Financial Intelligence Unit of the suspicious transaction report in case there is suspicion or if there are reasonable grounds to suspect that the business relationship with the customer is in whole or in part linked to the crime. | 100,000 AED |
Why AML Risk Assessment Is Critical for UAE Businesses
We at MBG Corporate Services provide AML consulting services in order to ensure our clients follow all the AML compliances and are ready for the new regulations in 2024.
- Registration on the Go AML portal.
- AML/CFT training, policies & procedures.
- KYC forms and internal reporting forms.
- Risk assessment matrix.
- Monthly/periodic AML compliance review report over KYC documents.
- Review of AML compliance framework.
- AML agreed upon procedures.
