So far, financial institutions were the most regulated, but henceforth all companies from every sector must implement strict compliance processes in their internal policy to abide by the rules

To combat money laundering and adhere to international regulations, the UAE last month issued new guidelines on anti-money laundering (AML) and combating the financing of terrorism (CFT). This is in addition to the strict laws and numerous measures the emirates already had in place to fight financial crimes.

 
What necessitated these additional guidelines?

Too many companies have not been taking compliance seriously and do not implement compliance processes internally because they believe they do not fall within the category of regulated financial institutions. A few have been taking advantage of confidentiality policies offered by free zone entities while others have been benefitting from being in non-financial or professional sectors. But now it is set to change as regulations have broadened its footprint with new focus on non-financial businesses and professional sectors such as real estate agents, gold dealers, auditors and corporate service providers.

So far, financial institutions were the most regulated, but henceforth all companies from every sector must implement strict compliance processes in their internal policy to abide by the rules related to AML, CTF and KYC (know your customer). Each and every business entity is required to ensure its own third parties are not linked to any fraudulent actions because they will also be responsible by association. The fines for violations start from Dh50,000 and go up at Dh5 million, and could even lead to the revocation of the licence or the closure of the facility itself.

In today’s heightened business and regulatory climate, it is absolutely critical to correctly identify who you are dealing with. Especially when an institution creates a new business partnership with an organisation or individual, regardless of the industry, it is important to verify their credentials to meet know your business (KYB) and AML guidelines in order to avoid regulatory fines and reputational damage. It starts with the customer and third-party onboarding process:

• Verification of the existence of the company/individual (KYC/KYB)

• Verification of the compliance of the subject (sanctions, PEP, adverse media)

• Verification of the company hierarchy and ultimate beneficiary owner (who is the real owner of the subject)

• Conduct of due diligence process (field investigation) to get all final checks done

• Monitor all third parties all year long and investigate any red flag or alerts

Comprehensive, timely and trusted compliance checks about business associates, vendors and employees can help organisations make informed and reliable decisions and accelerate the onboarding process. With the new technology it is possible to have automated compliance checks on legal and natural entities to uncover sanctions, PEPs (politically-exposed persons) and adverse media within seconds, via the Web, API, or batch search. These are great to detect, assess and minimise potential risks and can help avoid associated reputational and financial damages.

Before it is too late, demonstrate your commitment to good behaviour and compliance and do not wait for the authorities to impose sanctions in your industry.