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The Central Bank of UAE (CBUAE) has issued guidance for Licensed Exchange Houses (LEH), keeping FATF’s standards into account to overcome AML/CFT implementation challenges.
The CBUAE guidance, which came into effect on 17 November, will assist LEH in understanding the risks and effective implementation of AML/CFT regulations. The released guidance, keeping FATF’s standard in view, states that LEH must demonstrate compliance in the span of one month.
In the United Arab Emirates (UAE), exchange houses are weighted as high risk due to increased exposure to cash, crypto, and cross-border transactions. Therefore, as mentioned in the guidance, exchange houses must adopt a risk-based approach for an effective AML/CFT program, such as AML verification during customer onboarding and ongoing AML for high-risk individuals. These programs will help businesses prevent the misuse of their platform for terrorist financing and money laundering activities.
The guidance further stipulates conducting a regular risk assessment that “covers all commensurate risks to their exchange business, including customers, products, services, delivery channels, new technologies, geographic, counterparties, and illicit finance risks.”
In tandem, the findings of risk assessment must include “dedicated compliance function, strong CDD, continuous transaction monitoring and full compliance with the UAE’s requirements of targeted financial sanctions and suspicious transaction training,” according to the CBUAE’s guidance on Licensed Financial Institutions (LFI).
In its press release, the Governor of CBUAE, Khaled Mohamed Balama, stated, “The CBUAE takes its regulatory and supervisor duties extremely seriously. We want to ensure that all licensed exchange houses in the UAE understand their AML/CFT responsibilities, have adequate programs to identify and mitigate AML/CFT risk in their operations and comply fully with their statutory obligations.”