The Central Bank of the United Arab Emirates (CBUAE) has issued updated guidance on Anti-Money Laundering, Combating the Financing of Terrorism and Proliferation Financing (AML/CFT/CPF), in alignment with international practices and covering several supervisory aspects.
The updates aim to enhance the regulatory framework and strengthen the financial sector’s compliance systems, in line with AML/CFT/CPF requirements.
The guidance is aligned with the National Strategy (2024-2027), international standards and the requirements of the Financial Action Task Force (FATF).
CBUAE issues new AML/CFT/CPF guidance to strengthen UAE financial sector compliance
It is intended to enable licensed financial institutions (LFIs) and Registered Hawala Providers (RHPs) to understand money laundering, terrorist financing, and proliferation financing risks, and to implement measures to detect and prevent suspicious activities.
The package comprises four regulatory guidance documents, along with two best-practice manuals.
The Guidance on Risks Related to Proliferation Financing (PF) aims to raise compliance levels and support the financial sector’s efforts in mitigating proliferation financing risks.
It outlines three components of a CPF framework: the assessment of inherent PF risk; the evaluation of policies, procedures, and controls in place to counteract those risks and implement remedial actions where gaps or weaknesses are identified; and the continuous monitoring of emerging risks associated with PF, including identifying new trends, typologies, and parties involved in potential PF activity.
The Guidance on Risks Related to Trade-Based Money Laundering (TBML) and Transshipment supports LFIs and RHPs in developing an understanding of money laundering, terrorist financing and proliferation financing risks associated with trade and transshipment.
The guidance aims to enhance readiness to monitor and manage these risks, ensuring compliance with the legal and regulatory frameworks in the UAE.
The Guidance on Correspondent Banking and Expectations for Managing Correspondent Banking Relationships aims to improve LFIs’ and RHPs’ understanding and ability to monitor the AML/CFT/CPF risks associated with correspondent banking services.
It assists institutions providing these services in formulating internal policies and procedures that comply with the UAE’s legal frameworks, ensuring their operations align with the guidance for managing risks arising from correspondent banking relationships.
The Guidance on Customer Due Diligence (CDD), Know Your Customer (KYC) Requirements, and Record Keeping is designed to clarify expectations of how LFIs and RHPs can verify their customers’ identities and assess their exposure to ML/TF/PF risks, from the onboarding stage and throughout the duration of their relationship.
The guidance outlines the principles that supervised institutions must consider when building a customer risk profile, clarifies simplified and enhanced due diligence procedures, and specifies the types of data and documentation that must be retained on record.
The Best Practices on Implementing a Risk-Based Approach and Conducting Risk-Based Institutional Risk Assessments aim to enhance LFIs’ and RHPs’ understanding and awareness of their legal and regulatory obligations to implement a risk-based approach and conduct risk-based institutional risk assessments.
The practices set out how to develop methodologies for assessing institutional ML/TF/PF risks, while providing a framework for implementing counter-measures proportionate to the scale and nature of the identified risks.
The Best Practices on Implementing Role-Based Training on AML/CFT/CPF aim to improve LFIs’ ability to meet their obligations in relation to developing the capabilities of employees and senior management.
They set out frameworks for designing training programmes that enhance the efficiency of early detection of suspicious activities, in accordance with professional standards.
