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500,000+ firms in the UAE (United Arab Emirates) face disclosure of their Ultimate Beneficial Owners (UBOs) as the Middle East financial hub strives to avoid inclusion in the money laundering watch list.
The firms are required to disclose their UBO’s by Wednesday (7 July 2021) or face hefty fines and penalties.
The disclosed information about beneficial and legal owners will remain only with the government and will not be disclosed publicly, as mentioned under their legislation which was passed last year. Financial transparency advocates state that full disclosure would be the gold standard, although only a handful of countries are implementing this measure as yet.
A Reuters report in December showed the UAE was being used as a hub for companies helping Venezuela avoid United States oil sanctions.https://t.co/D2oGyLAAey
— The New Arab (@The_NewArab) July 1, 2021
While the Financial Action Task Force (FATF) has not commented on the subject, it redirected Reuters to a 2020 report that states “fundamental and major improvements” were needed by the UAE to avoid being placed on FATF’s ‘grey list’ of countries under increased monitoring.
Countries that are named in the grey list risk face reputation damage, increased transaction costs, and face trouble accessing global finance.
The UAE has been working towards removing the perception that it poses as a hotspot for criminal activities. In February, the government created an Executive Office particularly for Anti-Money Laundering and Counter-Terrorism Financing (AML/CFT).
#UAE’s Ministry of #economy now starts the inspections of businesses to make sure they are #complying with the anti-money laundering and countering #terrorism funding #regulations.
To read more, visit: https://t.co/SNEbQBQ304#UAE #economy #BreakingNews #terrorism #counterstrike
— Shufti Pro (@Shufti_Pro) April 28, 2021
UAE’s level of transparency and beneficial ownership has been re-rated from “partially compliant” to “largely compliant” by the Middle East and North Africa Financial Action Task Force (MENAFATF), stated Amna Fikri (foreign ministry’s economic and trade director) in response to questions about the disclosure of UBO information.
The UAE’s economy ministry added to this, stating that 513,000 companies across 38 licensing authorities must submit information regarding beneficial owners by Wednesday or risk facing fines.
Fines for non-compliance can be as high as DH 100,000, on top of a written warning, licence suspension, or restriction on powers of the board.
“The risk of criminals being able to misuse legal persons in the UAE for money laundering/terrorist financing remains high, particularly through concealment of beneficial ownership information via complex structures or the use of informal nominees,” the FATF’s 2020 report said.
Suggested Read: UAE Starts to Scrutinize Businesses to Ensure KYC/AML Compliance