Eleven banks fined as UAE signals tougher action on FATF recommendations and a focus on TBML

Eleven banks operating in the UAE have been fined a total of 45.8 million UAE dirham (AED 45.8 million – US$12.5 million) for violations of anti-money laundering and counter financing of terrorism (AML/CFT) regulations by the Central Bank of the UAE amidst a flurry of activity that suggests a tougher UAE stance on regulatory compliance.

Trade-based money laundering (TBML) may well feature in this tougher stance because the fines indicate that the central bank and the UAE government are intent on strengthening the country’s AML/CFT framework after a highly critical recent report by the Financial Action Task Force (FATF) found an “absence of…specific measures” to address TBML risks, and emphasised this point several times.

Bank failures

The eleven banks have been fined for “failures to achieve appropriate levels of compliance regarding their AML & Sanctions Compliance Frameworks as at the end of 2019,” according to a central bank statement that did not name the financial institutions.

The statement also said UAE-based banks “have been allowed ample time” to comply with AML/CFT regulations issued after a visit by FATF officials in mid-2019 when financial institutions were told by the central bank that they faced fines for non-compliance.

Stern warning

The central bank then warned that it “will continue to impose further administrative and/or financial sanctions, as per the law, in cases of non-compliance.”

The statement also said the bank will “continue to work closely with all financial institutions in the UAE to achieve and maintain high levels of AML/CFT compliance,” and there are clear signs that this is happening.

Regular CCO forum

Last week the central bank’s governor, Abdulhamid Alahmadi, chaired a session of a forum attended by over 100 chief compliance officers (CCOs) and other senior compliance professionals that aims to create a dialogue between the central bank and CCOs and included the introduction of the central bank’s anti-money laundering department’s supervisory agenda. It specifically focuses on complying with FATF recommended actions.

Alahmadi confirmed at last week’s session that the forum is “strongly committed to applying FATF standards” and said he expected regular sessions of the COO forum in the expectation that this will “provide a solid platform for regulatory dialogue with the industry”.

New government AML/CFT body

Also on the central bank’s mind last week was how the federal government’s new Executive Office of Anti Money Laundering and Countering Financing of Terrorism – formally established last month but operational during 2020 – fits with the National Committee for Combating Money Laundering and the Financing of Terrorism and Illegal Organisations in which the bank participates.

The latter was established in 2000 to oversee the country’s AML policies while the new Executive Office aims to ensure the UAE’s active collaboration with companies and partners that engaged AML/CFT efforts.

Categories: Trade Based Financial crimes News

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