MoE announces list of violations, fines to combat money laundering

The violations relate to the activities of the business sector and the Designated Non-Financial Businesses and Professions (DNFBPs) that the Ministry supervises, with regard to combating money laundering and terrorism financing, according to the provisions of Federal Decree-Law No. 20 of 2018 on countering money laundering crimes, combating the financing of terrorism and illegal organizations, and its implementing regulations and relevant decisions. These activities include 4 main categories: brokers and real estate agents, dealers of precious metals and gemstones, auditors, and corporate service providers.

The Ministry called on the companies practicing such activities to enhance their awareness and knowledge on the risks of money laundering and keep pace with the government's efforts in this regard. It further explained that the first necessary step is their registration on the Financial Intelligence Unit (goAML) and on the Committee for Commodities Subject to Import and Export Control system (Automatic Reporting System for Sanctions Lists). Following their registrations on these two systems, they should adopt other measures related to the two systems in accordance with the provisions of the Decree-Law, its implementing regulations and the relevant decisions. 

The Ministry clarified that the grace period for registering on the two systems has been extended until March 31, 2021, and that the companies that fail to do so before this date will be subject to penalties, including suspension of the license and closure of the facility. In addition, it underlined the significance of completing the post-registration procedures and measures to avoid the fines set by the Cabinet Resolution No. 16 of 2021. These fines range from AED 50,000 to up to AED 1 million and can be doubled up to AED 5 million based on the provisions of the law and according to the assessment of the Supreme Committee for Combating Money Laundering, and Financing of Terrorism and Illegal Organizations.

Safeya Al Safi, Director of the Anti-Money Laundering Department, MoE, said: ‘The Department is committed to answering the inquiries of all stakeholders and helping the targeted establishments comply with the requirements of the law, via the Ministry's call center number 800-1222. We call on all concerned companies to establish internal policies, procedures and controls to avoid money laundering risks in accordance with the measures set forth by the executive regulations of the law, which can be found on the official website of the Ministry of Economy via the link https://www.economy.gov.ae/arabic/AML/Pages/default.aspx
 
Al Safi explained that the issuance of the violations and fines list supports the UAE’s efforts in combating money laundering crimes and financing of terrorism. It enhances the business sector’s and non-financial professions’ compliance levels as defined by the provisions of the law and its implementing regulations, thereby contributing to raising the national economy’s ability to achieve healthy and sustainable growth. Furthermore, the measure reflects the UAE’s keenness, under the guidance of its wise leadership, to continuously develop its economic legislation to enhance its competitiveness as a safe and stable global business destination.

Al Safi also affirmed the Ministry of Economy’s commitment to strengthening partnerships with private sector companies and establishments that belong to the designated non-financial business and professions sector. The cooperation with target establishments is vital in preventing them from violations of the adopted measures, apart from supporting the UAE’s efforts to confront money laundering and combat terrorist financing, which in turn enhances its ranking on the relevant global indicators.

The list of violations mentioned in the Cabinet resolution includes 3 items with a fine of AED 1 million each. These are: 1- Dealing with fake banks in all ways, 2- Opening or maintaining bank accounts with fake names or numbers without the names of their owners, 3- Failure to take measures related to clients listed on international or domestic sanctions lists,  prior to establishing or continuing a business relationship.

The list includes 5 violations with a fine of AED 200,000 each, as follows: 1- Failure to take enhanced due diligence measures to manage high risks, 2- Not notifying the Financial Information Unit of a suspicious transaction report when it is not possible to take due diligence measures towards a client before establishing or continuing a business relationship with him or carrying out a transaction for the benefit of the client or in his name, 3- Failure to respond to the additional information request by the Financial Information Unit regarding the suspicious transaction report that has been filed, 4- Disclosure, directly or indirectly, to the customer or to others about  reporting the customer or the intention to report him, on suspicion of the nature of the business relationship with him, 5- Failure to implement the measures set by the National Committee to Combat Money Laundering with regard to clients from high-risk countries.

The decision lists seven violations with fines of AED 100,000, namely: 1- Failure to take the necessary measures to determine the risks of crime in one’s field of work, 2- Failure to identify and assess risks that may arise in his field of work when he develops the services he provides or undertakes new professional practices through his establishment 3- Failure to take due diligence measures towards clients before establishing or continuing a business relationship or carrying out a process in the name of or for the benefit of the client, 4- Failure to verify - using documents or data from a reliable and independent source - the identity of the customer and the real beneficiary or someone their behalf before establishing business relationship or account opening or during them, or before carrying out a process for a client with whom he has no existing business relationship, 5- Delay in informing the Financial Information Unit of a suspicious transaction report if there is suspicion or there are reasonable grounds to suspect that the business relationship with the customer is linked to the crime in whole or in part, or that the client’s money that is the subject of the business relationship from the proceeds of a crime or used in it, 6- Failure to apply due diligence measures towards politically exposed clients before establishing or continuing a business relationship, 7- Not creating records to keep track of financial transactions with clients.

The resolution includes 11 penalties with fines of AED 50,000 each, as follows: 1- Failure to take necessary measures and procedures to reduce the identified risks according to the results of the national risk assessment, or the results of the self-assessment given the nature and volume of its work, 2- Failure to set internal policies, procedures and controls at the facilities aimed at combating the crime or engaging in a suspicious business relationship, 3- Failure to take simplified due diligence measures to manage low risk, 4- Failure to take the necessary measures to understand the purpose and nature of the business relationship, or failure to seek to obtain information related to this purpose when needed, 5- Failure to take the necessary measures to understand the nature of the client's business, the ownership structure of his business, and the extent of the client's control over it, 6- Failure to take due diligence measures of continuous monitoring towards clients during the business relationship, 7- Failure to appoint a compliance officer, 8- Create records for keeping financial transactions with clients in an irregular manner that does not allow data analysis and tracking of financial operations, 9- Failure to keep records of financial transactions and documents related to them for a period of five years from the date of completion of the process or the termination of the business relationship with the customer or from the date of the end of the inspection process of his facility, 10- Failure to provide information related to customer due diligence and continuous monitoring and results of their analysis, as well as their records, files, documents, correspondence and forms to the concerned authorities upon their request, 11- Failure to train employees at his facility on countering money laundering and combating terrorism financing. 

In terms of administrative fines and the grievance mechanism, the resolution states that the Ministry shall notify the violators of the Designated Non-Financial Businesses and Professions (DNFBPs) included in the administrative fine decision signed on him within 15 days from the date of its issuance. The violator has the right to grievance against the decision of the administrative fine to the Minister or whoever he authorizes within 15 days from the date of his notification of the decision or his knowledge of it. The Minister can take one of the following three measures when considering the issue of the grievance: 1- upholding the prescribed administrative fine if the reasons and justifications are found to be valid, 2- replacing the prescribed administrative fine with another penalty according to the nature of the violation and in line with the law and its executive regulations, 3- cancelling the fine if the reasons for the violation have been removed or proven incorrect. The decision on the grievance is considered final, and failure to respond to the grievance within 30 days from the date of its submission is considered a rejection of the grievance, and the appeal against the decision of the administrative fine signed before the grievance and rejection against it or the deadline for responding to it is not accepted.

The Ministry had recently launched an awareness and monitoring campaign to encourage the business sector and DNFBPs registered in the UAE to register on the system of Financial Intelligence Unit (goAML) and on the Committee for Commodities Subject to Import and Export Control (Automatic Reporting System for Sanctions Lists). It also encouraged them to take further measures related to the two systems as per the articles of Federal Law No. 20 of 2018 on Anti-Money Laundering and Countering the Financing of Terrorism and illegal organizations, and its implementing regulations and relevant decisions. For more information about the steps of registration in the goAML system, please visit the following link: 
https://www.economy.gov.ae/arabic/AML/Pages/goAML-registration.aspx

For more information about automatic reporting system for sanctions lists and the registration process, please visit the following link: 
https://www.economy.gov.ae/arabic/AML/Pages/circulars-notices.aspx