UAE Issues Updated Targeted Financial Sanctions Guidance

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Significant changes have been introduced to the Guidance and as per the amendments, the UAE has shifted its sanctions regime from the multilateral sanctions from the UNSC to its own unilateral targeted sanctions. The Alert has the following three parts: 

Part I

The UAE’s legal framework in relation to targeted sanctions and provides a brief overview of the relevant laws. 

Part II

Article 60 of AML laws (stated in Part I) requires compliance with guidelines issued by any authority in UAE that is responsible for enforcing the UNSC resolutions regarding AML and CFT. 

With respect to this, The Guidance articulates certain laws that extend requirements applicable to all legal and natural persons in the UAE that are: 

1. Registration with The Executive Office is mandatory and it must receive an automated email notification
2. Screening of every entity by undertaking daily and ongoing checks against sanctions issued by the UN and UAE along with the local terrorist list of the country 
3. Application of targeted financial sanctions by freezing funds and ceasing the availability of funds to the entities listed on one more Sanction lists (freezing is different from rejecting) 
4. Notifying the Executives Office within two business days is essential if any action mentioned in (c) is taken

Part III

This part defines Financial Institutions (FIs) and DNFBPs. According to the regulations, if an entity undertakes activities listed in Article 2 of the AML laws, then the entity is considered as an FI. These generally include banks, exchanges, finance companies, MSBs (including hawala brokers or other money transfer services), insurance companies, securities and commodities brokers, dealers and investment managers.  

On the other hand, DNFBPs require a more analytical approach than simple screening against the listed AML activities. As per Article 3 of the AML laws, DNFBP is a business that falls in any of the following categories: 

• Real estate agency 
• Precious metal and stone dealers
• Notaries, lawyers and other legal business 
• Fund service providers and credit companies
• Other businesses and professions that are designated by the Minister of Finance 

The UAE, in the first issue of the Guidance, imposed hefty penalties for non-compliance with this regime. Organisations will be fined between AED 50,000 and AED 1 million. 

Recommended: UAE Central Bank: AML Guidelines Issued for Licensed Financial Institutes