AML Penalties on Various Violations

AML/CFT Compliance Services UAE

Penalties for Non-Compliance of AML Regulations

Administrative penalties for violation have been listed in Decree-law No. 10 of 20218. However, through Cabinet Decision No. (16) of 2021, the UAE Ministry of Economy and Justice has issued a unified list of violations and administrative fines for the said violations as a measure to combat money laundering and terrorism financing.

The violations relate to the activities of the Designated Non-Financial Businesses and Professions (DNFBPs) that the Ministry supervises. These include 4 main activities: brokers and real estate agents, dealers of precious metals and gemstones, auditors, and corporate service providers.

By now the message that all the DNFPBs are required to register on Financial Intelligence Unit (goAML) and on the Committee for Commodities Subject to Import and Export Control system (Automatic Reporting System for Sanctions Lists) and maintain adequate documentation on Policy and procedures to combat money laundering and terrorist financing has been made loud and clear.

MoE issued a list of 26 violations. For the ease of interpretation, we bifurcate the violation based on the value of fines:

A. Fine of AED 1 Million (3 violations)

This relates to dealing with fake banks, maintain accounts with a fake name,s and establishing or continuing to establish relationships with sanction lists clients

B. Fine of AED 200,000 is imposed on failure to conduct EDD

on high risks clients, not notifying FIU of suspicious transactions, or not responding to Authorities. Even tipping off the customer and failure to implement the measures set  by the National Committee to Combat Money Laundering with regard to clients from high-risk countries would attract a fine of AED 200,000

C.Fine of AED 100,000

is likely to be imposed on failure to undertake a risk assessment, identify and assess product/services related risks. 

Also, not undertaking CDD and identifying and verifying the UBOs of the customer before establishing a business relationship and especially in the case of a relationship with PEPs would attract a fine of AED 100,000.

D. Fine of AED 50,000 (11 violations)

Failure to establish internal policies and procedures, undertake due diligence, take measures to understand the purpose of transactions, nature of customer’s business and failure to undertake transaction monitoring would attract a fine of AED 50,000.

Failure to appoint a compliance officer, keep records for 5 years, or train employees would also attract a penalty of AED 50,000.

The Cabinet Decision also gives the Authorities right to double the amount of fine if the violation is repeated.

Right to File Grievance 

Article 5 of the CDN 16 of 2021 prescribes the procedure to raise the grievance against the fines levied.
 
As per the Decision, an appeal is required to be filed within 15 days from the date of being notified of the levy of penalty. Further, it also provides that if the grievance is not responded to within 30days, it is considered to be dismissed and that an appeal can be filed against the decision of the grievance filed.

This Decision compels the DNFPBs to ensure each and every aspect of the provision has been complied with. Non-compliance would lead to a fine.

For your better understanding please go through the video version of this blog.

 

For  AML/CFT compliance Service, Emirates Chartered Accountants Group has a dedicated department.

For your queries and clarifications please contact

Mr. Ragesh Mattummal, Partner

+971503578031

rag@emiratesca.com

 

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