The Central Bank of the UAE (CBUAE) has issued new guidance on anti-money laundering and combatting the financing of terrorism (AML/CFT) for licensed financial institutions (LFIs) on the risks related to payments, and the preventive measures that LFIs should apply in order to mitigate such risks.
The guidelines, which came into effect on August 1, will further LFIs’ understanding of risks and effective implementation of their statutory AML/CFT obligations and takes Financial Action Task Force standards into account.
Licensed financial institutions have to demonstrate compliance with CBUAE’s requirements within a month.
According to the guidelines, LFIs should conduct a regular risk assessment to cover all the payment products, services, relationships and exposure to domestic and foreign payment sector participants.
The CBUAE states that LFIs are responsible for conducting due diligence on customers, monitoring all transactions processed or conducted through the LFIs, and reporting suspicious transactions to the UAE’s Financial Intelligence Unit.
The institutions are required to have a sanctions compliance programme with operational systems that appropriately screen transactions and transmit required information throughout the payment cycle.
In correspondent relationships, LFIs should not process any payments for a correspondent unless they are entirely confident that the correspondent conducts appropriate screening.
These preventive measures should be integrated into an LFI’s AML/CFT compliance programme and supported with governance and training.
Khaled Mohamed Balama, governor of the CBUAE, said: “We are committed to implementing high regulatory control over LFIs and their payment operations, including products, services and exposure. The new guidance ensures that all LFIs in the UAE understand their AML/CFT responsibilities and have compliance programmes to mitigate risks payment-related risks.”
In recent news, the CBUAE issued its Quarterly Economic Review for Q1 2022, which showed that the insurance sector in the UAE reflected growth, with an increase in the number of insurance policies, gross written premiums, and licensed insurance-related entities.