Anti Money Laundering

AML stands for Anti-Money Laundering. It refers to laws, policies, and procedures designed to prevent criminals from disguising illegally obtained money as legitimate income. The broader UAE framework also addresses countering the financing of terrorism and proliferation financing.

Not every company has the same AML obligations. Requirements depend on the nature of the business, its activities, and its regulatory classification. Financial institutions and designated non-financial businesses and professions (DNFBPs), including relevant accounting and auditing firms, real estate brokers, dealers in precious metals and stones, and certain corporate service providers, are among the categories subject to specific AML requirements.

Even businesses outside these categories should understand their applicable legal obligations and maintain appropriate business records.

Certain accounting and auditing activities can bring a firm within the DNFBP framework. The classification depends on the services actually provided and the applicable legal definitions, not simply the company's name or trade licence description.

A firm should assess its activities, supervisory authority, and obligations before deciding which AML procedures and registrations are required.

goAML is the UAE Financial Intelligence Unit's reporting platform for submitting relevant suspicious transaction and suspicious activity reports.

Entities required to register must follow the applicable process under their supervisory arrangements. Registration requirements should be assessed based on the entity's classification and reporting obligations.

KYC means Know Your Customer. It involves obtaining and verifying relevant customer information to understand who you are dealing with, the nature of the relationship, and the associated risks.

Depending on the applicable requirements, this may include identity documents, company registration details, ownership information, the purpose of the relationship, and source-of-funds information.

CDD is the process of identifying and verifying customers and, where required, their beneficial owners. It also involves understanding the customer's business and risk profile and conducting ongoing monitoring where applicable.

Higher-risk relationships may require Enhanced Due Diligence (EDD), including additional checks and supporting information.

A UBO is the natural person who ultimately owns or controls a business, directly or indirectly, or otherwise meets the applicable beneficial ownership criteria.

Identifying beneficial owners helps businesses understand who is behind a corporate customer and assess relevant ownership and financial crime risks. The applicable identification and disclosure requirements depend on the relevant legal framework.

PEPs are individuals entrusted with prominent public functions, together with certain family members and close associates as defined by applicable rules. Their positions may create increased exposure to corruption or other financial crime risks.

PEP status does not automatically mean a person has committed wrongdoing. It may, however, trigger additional risk assessment and due diligence measures where required.

A transaction or activity may be suspicious when there are reasonable grounds to suspect a connection with criminal proceeds, money laundering, terrorist financing, or other relevant offences.

Examples of potential red flags include unexplained complex transactions, activity inconsistent with a customer's known business, unclear sources of funds, or attempts to conceal ownership. A red flag does not itself establish criminal activity, but it may require investigation and escalation.

Where reporting obligations apply, the relevant entity must follow the applicable reporting process and confidentiality requirements. Staff should not alert a customer that a suspicious report is being considered or filed where prohibited by law.

Written AML policies and procedures may be mandatory for businesses within regulated categories. The required scope depends on the applicable rules and the business's risk profile.

Where applicable, policies should address customer due diligence, risk assessment, record-keeping, suspicious activity escalation, employee responsibilities, and ongoing monitoring.

Record-retention requirements depend on the applicable legal framework, the type of record, and the nature of the business. Regulated entities should maintain records for the prescribed period and ensure that relevant information can be retrieved when lawfully requested by the competent authority.

Violations may lead to administrative penalties, financial sanctions, restrictions on business activities, or criminal consequences, depending on the nature and seriousness of the breach and the applicable legislation.

Failure to conduct required due diligence, maintain records, comply with reporting obligations, or implement required controls may expose a regulated business to enforcement action. Businesses should address compliance gaps promptly and seek appropriate professional advice.

Free zone incorporation does not automatically exempt a business from UAE AML requirements. The applicable obligations depend on the business activities, relevant laws, and the competent supervisory authority, including any applicable financial free zone framework.

The cost depends on your business activity, regulatory classification, customer and transaction volumes, risk profile, existing documentation, and the level of support required.

SolidStats can assess your requirements and provide a tailored proposal for the services that fall within its authorised scope.