The United Arab Emirates (UAE) Ministry of Economy has developed Guidelines for Designated Non-Financial Businesses and Professions (DNFBP) to help organizations conducting DNFBP activities in best grasping their statutory duties under Cabinet Decision No. (10) of 2019 Concerning the Implementing Regulation of Decree Law No. (20) of 2018 On Anti-Money Laundering and Combating the Financing of Terrorism and Illegal Organizations.
For many years, governments have made substantial efforts to stop the financing of terrorism and money laundering. The majority of protective frameworks concentrate on adding new requirements to the pertinent national Anti-Money Laundering (AML) laws in a way that is consistent with international norms. The Financial Action Task Force (FATF), an intergovernmental organisation charged with establishing and promoting control policies to safeguard the global financial system against illegal cash flows, has 40 recommendations that are considered to be the most important international standards.
The guidelines and criteria set out by FATF in response to the dangers and actions of the modern financial system have undergone tremendous development, particularly in the previous ten years. The growing significance of non-financial sectors, often known as gate keeping industries, which play a crucial role in regulating the flow of funds, is one of these significant trends.
The suggestions of the FATF, which call for the regulation of services offered by industries referred to as Designated Non-Financial Businesses and Professions (‘DNFBPs’), include a wide variety of operations carried out in non-financial sectors. The identification, assessment, and mitigation of any threats of being engaged in the transfer of illegal funds for the purpose of money laundering or terrorism financing are obligations of the regulations that apply to DNFBPs.
When working with a new client, one of the key obligations that apply to both Financial Institutions (FIs) and DNFBPs is the completion of Customer Due Diligence (CDD). This procedure include gathering and confirming particular information, known as Know Your Client (KYC) criteria, whether it pertains to an individual or a legal business, as well as some additional factors where there is a high risk.
Additionally, FIs and DNFBPs should keep a record of every transaction they have with their clients and should make sure that the information is easily accessible in case the authorities ask them for it during an inquiry. If allowed by law, third party engagement in any of these activities that are outsourced to third-party service providers should be rigorously monitored by FIs and DNFBPs, and any suspicious transactions must be immediately reported to the appropriate authorities.
Nevertheless, in order to take advantage of the relatively laxer regulations placed on DNFBPs compared to FIs, criminal actors have also created their instruments for concealing the movement of funds via non-financial sectors. Although there is still much work to be done in this area of reform, authorities in several countries, including the UAE, are working hard to include DNFBPs into their national AML frameworks.
Finally, this must be noted that, other than a high-level summary of some key facts pertaining to the UN Targeted Financial Sanctions (TFS) regime and the linked Cabinet Decision No. (20) of 2019 Regarding Terrorism Lists Regulation and Implementation of UN Security Council Resolutions On the Suppression and Combating of Terrorism, Terrorists Financing & Proliferation of weapons of mass destruction, and related resolutions. International Financial Sanctions, It is most suitable for this information to be thoroughly handled in distinct guidance papers due to the importance, complexity, and scope of the subject matter.
1. Applicability
Unless otherwise stated, these guidelines apply to all specified non-financial businesses and professions that are founded and/or functioning on UAE region, as well as the members of their boards of directors, administration, and staff.
Financial and Commercial Free Zones may interact in any financial activities and/or transactions, commerce and/or business activities, or both as described in Articles (2) and (3) of Cabinet Decision No. (10) of 2019 Concerning the Implementing Regulation of Decree Law No. (20) of 2018 On Anti-Money Laundering and Combating the Financing of Terrorism and Illegal Institutions.
They particularly apply to all such natural and legal persons in the following categories, without racial bias to the definition of a DNFBP as offered for in the related State legislative and regulatory framework (contains, National Legislative and Regulatory Framework): Real Estate; Dealers in precious metals and stones; Corporation and believe service providers; and other legal professionals and practitioners; notaries; Auditors and accountants; Lawyers.
1.2 Legal Status
According to Article 44.11 of Cabinet Decision No. (10) of 2019 Regarding the Implementing Regulation of Decree-Law No. (20) of 2018 On Anti-Money Laundering and Combating the Financing of Terrorism and Illegal Organizations, Supervisory Authorities are responsible for “offering, DNFBPs with guidelines and feedback to improve the efficacy of the execution of the Crime-combatting metrics.” As a result, these Guidelines are not new laws or regulations, and they are not meant to create a legal challenge governmental, or judicial precedent. The supervised institutions are reminded that the Guidelines do not substitute for or supersede any legal or regulatory prerequisites or legislated commitments and that they should instead be read in conjunction with the pertinent laws, regulatory rulings, regulations and cabinet decisions that are presently in effect in the UAE and their related Free Zones.
If there is a conflict among these Guidelines and the present legal or regulatory frameworks, the latter will take precedence. The Supervisory or other Competent Authorities must not be expected to defer to, waive, or refrain from using their judicial, enforcement, or punitive powers in the event that regulations, regulatory rulings or current laws are broken, and nothing in these Guidelines must be interpreted to do so.
Informe of the National Committee for Combating Money Laundering and Financing Terrorism and Illegal Organizations, in its meeting No. (2/2021) held on March 4, 2021, decided the following
High-Risk Jurisdictions
1. All DNFBPs must use increased due diligence procedures for all commercial dealings and transactions with high-risk jurisdictions, including with individuals, businesses, and other legal entities as well as those representing them.
2. Where needed by pertinent UN Security Council Resolutions, supervisory authorities shall take the appropriate steps to liquidate DPRK banks present branches, affiliates, and representative offices within the Country and ensuring that UAE institutions end correspondent agreements with DPRK banks.
3. Prior to conducting any transactions involving individuals or organisations from high-risk jurisdictions, all DNFBPs are required to report them. Such reported transactions may only be carried out if they are notified to the FIU within three working days and the FIU does not object to carrying them out within that time frame.
4. For all branches and subsidiaries of financial groups with locations in high-risk jurisdictions, all regulatory bodies in the State shall enforce higher external audit requirements.
5. In order to safeguard the financial and non-financial fields of the State from ML, TF, and PF risks, supervisory authorities must remind DNFBPs of the necessity to implement targeted financial sanctions in accordance with applicable UN security council resolutions.
6. In the event that the aforementioned steps are not put into action, the supervisory authorities must take legal action against DNFBPs.
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