Humans are the only species that pay to live on this earth. Let’s face it! We all need green to live on the planet blue! But to enjoy life to the core and take a deep plunge into the pool of luxury, we require lots of water named money! And we all know making this much money is not an easy feat. It takes tons of hard work and stress, mental as well as physical, which is not everyone’s cup of tea. No wonder, these people easily get lured by unfair or illegitimate means to earn easy money! And as they can’t divulge the source of their illegally obtained income (aka black or dirty money) or declare it for tax purposes to the Government, they, unbeknownst to the consequences, find ways to convert their black money into white, typically by means of transfers involving foreign banks or legitimate businesses. This practice of concealing and converting the illegal origins of money into legitimate ones is what we know as money laundering. Employed by white-collar and street-level criminals alike, money laundering is a serious crime in any country. With the meteoric rise of money laundering activities, almost every country the world over had to come up with strict measures to combat financial crimes. And the UAE is no exception. The country executed goAML system which eases the receipt, analysis and dissemination of suspicious transactions and activity and reporting them to the UAE’s Law Enforcement Authorities.
Money Laundering & Anti-money Laundering
Money laundering is the practice of first making money in large amounts via some criminal activity, such as drug trafficking or terrorist funding, and then making it appear to have come from a legitimate source. Simply put, the process of cleaning the dirty money (money obtained from unlawful exercises is deemed dirty) to hide its sources from the Government (to escape from taxes is money laundering). Governments and financial institutions try to safeguard themselves from this crime by implementing Anti-money Laundering Laws. Clearly, anti-money laundering is the process of putting policies in place to quickly detect and prevent this activity.
Points to Mark
- Money laundering is growing at a lightning speed. So is the amount of ill-gotten money.
- These days, wrongdoers can easily transfer/withdraw funds without detection. Thanks to online banking and cryptocurrencies such as Bitcoin.
- Deterrence of money laundering has become an international agenda and now terrorist funding is among its targets.
- The financial industry worldwide has its own set of stringent anti-money laundering (AML) standards in place.
- Entities such as financial institutions (i.e., banks, exchange houses, finance companies), law enforcement, Designated Non-Financial Businesses and Professions (DNFBPs), etc. are required to report considerable cash transactions and other suspicious activities that are a dead giveaway of money laundering.
- The deadline to register on UAE’s goAML system for DNFBPs was first 27th June 2019 after the announcement was made which was extended twice to 31st March, 2021 and 30th April 2021.
Common Money Laundering Techniques
From the simple to the very complex, there are myriad money-laundering techniques offenders use to make unlawfully-acquired funds appear clean. For instance, a legitimate, cash-based business (aka fronts) owned by the wrongdoer. Other methods of laundering money include:
- By smurfing (aka “structuring”). It is the process of breaking up big chunks of cash into multiple small deposits, often spreading them over many different accounts, to avoid detection
- By using currency exchanges, wire transfers, and “mules”. Cash smugglers sneak heavy sacks of cash across borders and deposit them in foreign accounts, where money-laundering enforcement is not that rigid
- By investing in commodities such as gems and gold that can be rolled easily from one place to other
- Confidentially trading valuable assets such as real estate, cars, and boats
- By gambling and laundering money at casinos as nobody at casinos is bothered where the money came from. Dirty money earned from illegal activities like human trafficking or drug trafficking can be brought into a casino and laundered into clean hard currency notes by playing and winning the games
- By forging or counterfeiting; and
- By using shell companies (inactive corporations that basically exist on paper only)
How does the money laundering process work?
The major user of dirty money is criminal organizations. But they can’t deal with large amounts of illegal cash just like that. It could be risky for them. So, they figure out ways to deposit the cash in legitimate financial institutions after making it appear to come from honest sources. Usually, the laundering of money is done in three steps:
- Placement: stealthily shoots the “dirty money” into the legitimate financial system
- Layering: masks the root of the finances through a series of transactions and bookkeeping ploys
- Integration: is the final step where cleaned or laundered cash is withdrawn from the legitimate account to be utilised for whatever intents the criminals have in their head
What are the AML Measures Taken by the UAE
With an aim to combat money-related crimes, the UAE Government implemented in 2019 the goAML Suspicious Transaction Reporting System. Designed by the United Nations Office on Drugs and Crime (UNODC) to fight money laundering and the financing of terrorism, goAML is an integrated system that helps Financial Intelligence Unit (FIU) in determining any suspicious money laundering activities and preparing suspicious transaction reports (STRs) to be sent to concerned authorities (when considered necessary) in a quick and efficient manner. A swarm of financial intelligence units across the world has adopted this advanced framework, and the United Arab Emirates is the first Gulf country to implement it.
Role of the UAE Financial Intelligence Unit in the UAE
The UAE Financial Intelligence Unit (FIU) shoulders the responsibility of analysing questionable transactions and actions that may involve money laundering, terrorism financing and related criminal activities, established by investigating data and reports provided by goAML registered financial institutions (FIs) and DNFBPs that collaborate and share knowledge to notice and act against such practices. Furthermore, FIU promotes collaboration and strategic partnerships with local, regional and international stakeholders that hold identical objectives of battling financial offences. Such teamwork is imperative to develop shared network platforms that enable enhanced knowledge sharing between agencies to defy money laundering and terrorism financing.
goAML Registration in the UAE
As per the Federal Decree Law No (20) of 2018 and Federal Decree-Law No. 26 of 2021 [to amend certain provisions of Federal Decree-Law No. (20) of 2018] and Article 20 of Cabinet Decision No. (10) of 2019 concerning the Implementing Regulation of Decree Federal Law No. (20) of 2018, it is mandatory to have procedures in place to convey suspicious dealings to supervise anti-money laundering (AML). The UAE government has mandated the registration on the goAML portal for all financial institutions and DNFBPs, so they stay connected with the concerned law-enforced authorities on the integrated platform and can communicate any suspicious activity to them right away by filing Suspicious Transaction Reports (STRs) and/or Suspicious Activity Reports (SAR). DNFBP Entities that qualify for goAML registration may attract harsh penalties invoked by the Ministry of Economy for not registering. Therefore, if you are not sure whether you have to register for goAML system or if you know you have to but have not registered yet, it is highly advised that you complete your goAML registration at the earliest. You may get in touch with one of the best corporate services providers in the UAE such as Adam Global to apply for goAML.
Responsibilities of goAML Registered Entities
Laws applicable to DNFBPs involve requirements to recognise, evaluate and take preventative steps to mitigate any risks of unconsciously partaking in facilitating the transfer of unlawful proceeds for money laundering or terrorist financing purposes such as securities fraud and market manipulation. To ensure the same, Financial Institutions (‘FIs’) and DNFBPs must:
1. Complete Customer Due Diligence (CDD, EDD, SDD) when dealing with new clients. The process involves obtaining and verifying specific details, whether they are an individual or legal entity, referred to as Know Your Client (‘KYC’) requirements, as well as some other elements where there is an elevated risk
2. Should maintain a record of all transactions with their clients and must ensure that the information is readily available when requested by the authorities in the event of an investigation
3. Should closely gauge the involvement of third-party service providers in case these activities are outsourced to external entities entitled by the law, and directly report to the competent authorities if any suspicious transactions are identified right away
What are the AML Policies & Procedures in the UAE
No organizations in the UAE or anywhere in the world want to fall prey to money laundering activities and terrorism financing and jeopardies their reputation, but they are always at risk. Therefore, it is crucial for companies prone to financial crimes to follow procedures to keep any such risks at bay. Implementation of AML policy and procedures reduces financial fraud worldwide, protects the reputation of entities and nations, and slashes the costs of AML activities. AML policy prerequisites include gathering customers’ information, monitoring transactions, determining suspicious transactions, and implementing AML procedures.
It is important that AML policy, controls, and procedures have been approved by the management and applied to all branches, subsidiaries, and affiliated entities in which Designated Non-Financial Businesses and Professions (DNFBPs) hold a majority interest. In addition, it must take into account the outcome of the National Risk Assessment (NRA). Supervised organisations are directed to ensure that these AML policies, controls, and procedures they enforce are appropriate, proportionate to the risks concerned, and uniform with the outcomes of their risk assessments.
What are the Primary Elements of AML Policy in the UAE
AML policy in the UAE boasts the following six main components:
1. The identification and assessment of ML/TF Risk
2. Application of Customer Due Diligence (CDD) Measures
3. Suspicious Transactions Reporting
4. Governance of AML/CFT
5. Record Keeping
6. International Financial Sanctions
How Adam Global can help?
Under the UAE AML-CFT Law 16.1 (d) (Federal Decree-Law No. (20) of 2018) and AML CFT Decision 4.2(a), and 20 (As per Cabinet Decision No. (10) of 2019 concerning the Implementing Regulation of Decree Federal Law No. (20) of 2018), reporting institutions must enforce policies, controls, and procedures to mitigate the recognised ML/FT peril, in line with the type and size of their business. That’s where companies such as Adam Global come into the picture and help them remain compliant with the AML laws in the UAE by offering them AML/CFT policy, controls, and procedures documentation services. We design the policies, rules, and procedures concerning AML/CFT frameworks that are right for you. Here’s how:
- By identifying risks, you are exposed to: Our AML team pinpoints any loopholes in your organisation that may be compromised by money launderers by analysing the business processes. We also empower our clients by enabling them to comprehend the money laundering and terrorism financing risks their businesses are prone to.
- By assessing the existing AML policies: Then we study your existing AML and CFT policies and procedures. After ensuring that your operations are safe from criminal proceeds, we check the effectiveness of these AML policies to figure out any possible gaps or any scope of improvement needed to protect the company from the risk of financial crimes.
- By performing gap analysis: Based on the conclusions drawn in the first two steps, we conduct a gap analysis to recognise where we can add value to attain AML compliance for your firm. The results of this gap analysis are then discussed with the AML Compliance Officer and stakeholders to fetch their views on each, as they are closely involved in the process and cognizant of possible money-laundering hazards and ambiguities.
- By structuring suitable AML/CFT frameworks: At this stage, our team of compliance and regulatory experts come up with robust AML compliance frameworks and control procedures that are appropriate for your business, considering the types of money laundering risks your business is prone to.
- By preparing the relevant training material and training the concerned staff: We execute in-house compliance training for your employees working in the AML department or performing related functions to keep your company up-to-date with the laws, the latest expectations from the organisations with regard to AML compliance programs, and best global practices.
Adam Global AML Compliance Services
We are a one-stop shop for all the AML needs an individual in the UAE can have. Carrying out business and client risk assessments is one of them. The team of Compliance Officers and Money Laundering Reporting Officers at Adam Global are well acquainted with reporting obligations in regard to suspicious transactions. They are hands-on with identifying and analysing potential AML/CFT risks an organisation can attract in the country and frame the most fitting measures to deal with them. Based on the risk assessments, we further assist our clients in onboarding processes in terms of KYC checks. In addition, we monitor reviews to ensure that CDD documents are up-to-date and transactions are meeting the UAE legal and regulatory requirements. Our company also provides assistance to companies in targeted financial sanctions screenings, documenting reviews and the assessments of matches post screenings. What’s more, we conduct AML/CFT-specific audits to affirm salient aspects of the AML/CFT framework objectively and independently. This allows us to estimate the adequacy and efficacy of the AML/CFT framework and compliance thereto, as well as the consistency with which the framework is implemented.
Being in the industry for more than two decades, we take pride in being able to help a slew of entities in diverse sectors put in place the most suitable Anti-Money Laundering and Combatting the Financing of Terrorism and Proliferation Financing Frameworks. We closely monitor our client’s business processes to comprehend the risks they are exposed to so that we can suggest to them AML/CFT solutions. The AML/CFT manuals, policies and procedures, checklists and monitoring instruments that we present to our clients are completely tailored to their business type and size which are easy to implement and follow to stay compliant with the UAE AML Law. Simply put, we make practical and relevant recommendations and assist in their implementation.
Outsource Compliance Officer in the UAE
Most organisations in the UAE and worldwide prefer to outsource all their AML compliance work to save money, time and energy and of course to get the compliance done by experts in the field such as Adam Global. Your AML Compliance Officer assists you with your AML and KYC compliance. They evaluate the effectiveness and the compliance status of your operations by taking a risk-based review, including a thorough examination of existing policies, procedures and risk mitigation processes and systems. They not just ensure regulatory compliance, enact enforcement actions on the compliance program, and do annual reviews of the organisation’s compliance rules but also provide a range of corporate governance and regulatory training solutions including customised and interactive online courses for all levels of business stakeholders without costing you a fortune. An experienced Compliance Officer is indeed a Godsend!
AML Training Services in the UAE
AML training is one of the compliance requirements for financial institutions and DNFBPs necessitated by AML regulations of the UAE. The appointed compliance officer must develop relevant AML/CFT training programs and deliver them to employees to help combat financial fraud in the country. The UAE Organisations can enrol in AML/CFT-specific training conducted by an expert team of regulators, compliance professionals, and AML specialists.
How Adam Global can help?
A proficient provider of AML compliance consulting services in the UAE, Adam Global develops and delivers relevant AML/CFT Risk training programs for your employees. Whether you are a bank, financial institution, insurance company, real estate firm, precious metals and stones dealer, company service providers, or any other designated non-financial business that falls under the AML regulatory system, you are covered at Adam Global. As we know, different industries sit at different degrees of risk and there are different guidelines for each sector as well, we supply bespoke training based on the industry of your business operations. Adam Global AML practitioners extend bespoke AML/CFT-related training to officers and directors in the company so that they can fulfil their ongoing training and awareness obligations. Also, our UAE AML Compliance Officers in the UAE prepare your existing as well as new team members to efficiently deal with every aspect of the company’s compliance framework. To sum up, our customised AML training program readies your business enough to meet AML compliance requirements so that you can become insulated from any possibilities of money laundering and terrorism financing activities.
Meet Adam Global for AML Compliance Assistance in the UAE
Committed to giving confidence to businesses in the UAE to stay compliant with AML laws, we, at Adam Global, equip you with all the appropriate measures necessary to mitigate money laundering risks with our expert AML consultancy & compliance services. With Adam Global AML specialists by your side, you may sit back knowing that your anti-money laundering compliance is being handled by expert brains and experienced hands. You may count on us for the following services in the AML domain.
- Anti-Money Laundering Compliance Services
- AML Consulting Services
- Outsourced Compliance Officer
- AML Compliance Policy & Procedures
- AML Registration
- Regulatory Compliance Audits
- Risk Management Solutions
- Corporate Compliance Solutions
- Compliance Review
- Compliance Monitoring & Ongoing Support
- AML Compliance Training
- STR Filing Assistance
Drop by our office at Gold & Diamond Park and share your requirements with us and go home with a mental peace! You may click here to book your free consultancy with one of our most experienced AML Compliance Consultants in the UAE.