UAE Central Bank Issues New AML/CFT Guidelines for Licenced Financial Institutions

CBUAE (Central Bank of UAE) has administered new AML/CFT guidance for Licensed Financial Institutions (LFIs), including banks, finance firms, exchange houses, agents, brokers and insurance companies.

The guidance that comes into effect immediately will aid LFIs’ risk cognition and practical implementation of statutory AML/CFT obligations and takes FATF (Financial Action Task Force) standards into account. It requires all licensed financial institutions to verify compliance with its prerequisites following the CBUAE notice. 

The guidance is subject to the latest regulations on using digital ID systems by LFIs to manage their CDD (Customer Due Diligence) obligations. It emphasises the Digital ID mechanisms that LFIs should utilise for CDD operations continuously in relation to natural persons. 

It specifically discusses the enrollment and authentication mechanisms of identity proofing in relation to LFIs’ use of digital ID systems. The licensed financial institutions are also directed to use the best technology approaches, adequate governance and well-defined policies and procedures.

All LFIs need to take sufficient measures to address digital ID systems’ inherent technology and security challenges. The LFIs should enforce and execute the necessary assessment measures to reduce the identity proofing, enrolment risks, including cyber attacks, use of stolen/synthetic IDs and security breaches, given the increasing complexity and severity of cyber breaches. 

Every LFI is expected to perform adequate assurance level and appropriateness assessments on the digital ID systems they opt for. They are also expected to implement and imply complete assurance protocols regarding the digital ID system’s accuracy. They may also perform guarantee reviews directly or get audit or assurance certification information from expert bodies. 

Khaled Mohamed Balama, Governor of the CBUAE, said, “The Central Bank is working closely with the Licensed Financial Institutions to ensure their full compliance and understanding of the guidances that we issue regularly. This guidance on the use of digital ID for Customer Due Diligence obligations, will enhance the anti-money laundering and combatting the financing of terrorism framework, and will mitigate the potential risks in order to safeguard the UAE’s financial system.”

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