UAE receives 7,000 suspicious transaction, activity reports in first 2 months of 2023

Hamid Al Zaabi, Director-General of the Executive Office for Anti-Money Laundering and Counter Terrorism Financing (AML/CFT), has announced that the UAE has made significant progress in combating money laundering and terrorist financing in the past year.

The Financial Intelligence Unit received nearly 7,000 suspicious transaction reports (STRs) and suspicious activity reports (SARs) from relevant entities across financial institutions and Designated Non-Financial Businesses and Professions (DNFBP) in the first two months of 2023, an increase of 81% from the previous year. STR/SAR submissions from DNFBPs, including exchange houses, cash service providers, precious metals and stones dealers, real estate, and virtual asset service providers, increased by 91%.

The Financial Action Task Force (FATF) recently commended the country's progress during its latest meeting. The Executive Office is working closely with the FATF to implement the UAE Action Plan and remains fully committed to achieving all objectives outlined in the plan.

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In an interview with the Emirates News Agency (WAM), Al Zaabi said that the UAE is working closely with authorities across the UAE and the private sector to ensure that all entities are implementing effective AML/CFT measures.

UAE supervisors issued 161 fines of 76 entities totalling more than Dhs115 million in Q1 2023, compared to Dhs76 million in 2022. Confiscations have also increased, with assets surpassing Dhs925 million confiscated from November 2022 to February 2023.

He said that the UAE has adopted a whole-of-government approach as one of the global economy’s most important trade and investment hubs. This means that the federal government is working closely with authorities across the UAE and the private sector to ensure that all entities are implementing effective AML/CFT measures.

Hamid Al Zaabi

The UAE economy grew 7.6% last year according to Ministry of Economy figures, and is expected to grow 4.1% in 2023 according to the World Bank. There are social and economic benefits to protecting the UAE economy and the ability of firms to conduct business with confidence and trust. "While our investment in the national AML/CFT framework is long-term in nature, we are already seeing improvements across the entire system. If we take compliance as an example, the private sector has adopted better procedures in response to supervisory policies and requirements, and awareness of financial crimes has drastically increased, indicating a responsive, cohesive, and dynamic system.”

Al Zaabi highlighted some of the main achievements of the past year, including the UAE's ranking as fifth globally in confiscations and arrests as a percentage of the country's total expected financial crime value. Emirati law enforcement agencies have contributed to major international investigations and arrests, including the largest drugs ring in Europe and INTERPOL's most wanted trafficker Kidane Habtemariam.

He said that the Executive Office has engaged with a wide range of sectors, particularly those identified as high-risk by the National Risk Assessment. The system has brought together the public and private sectors through the work of the UAE’s PPP Sub-Committee. And as mentioned, it has aligned with international efforts through the signing of new MLAs and higher numbers of STR/SARs involving foreign entities.

About the main legislative amendments that the EO is working on implementing now in cooperation with competent authorities, he said that in 2022, there were several major changes to AML legislation, including the adoption of Cabinet Resolution 111 concerning the regulation of Virtual Assets (VAs) and Virtual Asset Service Providers (VASPs).

The resolution develops the legislative framework of the VA sector in the UAE by setting out and protecting the rights and obligations of all relevant parties and establishing its regulatory basis. It also ensures that the VA sector in the UAE complies with Federal Decree Law No. (20) of 2018 on Anti-Money Laundering and Combatting the Financing of Terrorism and Financing of Illegal Organisations.

He noted that the Executive Office provides the Secretariat for the UAE’s Public-Private Partnership Sub Committee (PPPSC), an important bridge between corporate entities and government authorities. The PPPSC has completed its first consultative paper on the sharing of tactical information, and the findings of this will go towards recommendations for legislative reform that allows members to share sensitive information while also protecting privacy rights.

Looking ahead, the Executive Office’s Policy and Risk Department has successfully completed various policy papers relating to key sectors such as Art, Antiques and Cultural Objects (AACOs). The recommendations will be seriously considered when further reforms are made to the legislation.

Al Zaabi highlighted that the UAE supervisors continue to conduct risk-based inspections based on coherent Targeted Financial Sanctions criteria. During Q1 2023, all supervisory authorities were active, with the Central Bank of the UAE leading the way. It conducted 464 off-site inspections and 128 on-site inspections, applying fines reaching nearly Dhs70 million. The Ministry of Economy also conducted 4,344 off-site inspections and 3,360 on-site inspections, applying fines amounting to Dhs16.5 million.

In addition to inspections, the Ministry of Economy is working closely with registrars on a risk-based inspection programme to ensure compliance with national Ultimate Beneficial Ownership (UBO) regulations.

Regarding international cooperation, Al Zaabi stated that the UAE had signed 44 bilateral Mutual Legal Assistance Treaties and sent out 327 requests for information to foreign counterparts through various channels. The UAE works closely with its partners in the US, European Union, and Gulf region through working groups, task forces, and capacity-building exercises.

The Executive Office has also conducted outreach sessions for more than 17,000 public and private sector personnel to share sectoral risk assessment outcomes and other relevant information. The UAE hosted the 2023 MENAFATF Typologies and Capacity Building Workshop in March under the patronage of Sheikh Abdullah Bin Zayed Al Nahyan, Minister of Foreign Affairs and International Cooperation, drawing the participation of over 100 delegates representing more than 20 nations.

WAM