FINES IMPOSED FOR NON-COMPLIANCE OF ANTI-MONEY LAUNDERING LAWS IN THE UAE
25 October 2023
Manasi Dicholkar
The United Arab Emirates has enacted various laws and regulations to combat money laundering and terrorist financing. Any violation of these laws may generate into heavy fines and other serious legal consequences.
Dubai: The United Arab Emirates (UAE) has taken significant steps to combat money laundering through a robust legal framework. In this article, we will delve into the key aspects of UAE's anti-money laundering (AML) laws.
Federal Decree Law No. (20) of 2018: The Foundation
The cornerstone of AML regulations in the UAE is Federal Decree Law No. (20) of 2018. This law, which has seen amendments, addresses money laundering, the financing of terrorism, and the funding of illegal organizations.
Cabinet Resolution No. (10) of 2019: Implementation Guidelines
Cabinet Resolution No. (10) of 2019 complements the AML Law by providing essential implementing regulations. Together, these documents form the backbone of AML compliance in the country.
Federal Penal Law No. 31 of 2021: Legal Framework
Federal Penal Law No. 31 of 2021, also known as the Penal Code, adds further legal weight to the UAE's efforts against money laundering. It works in harmony with the AML laws to deter and penalize financial crimes
To establish a criminal violation of money laundering, the government must prove that an individual knowingly engages in specific acts involving funds derived from a predicate offense. These acts include:
- Transferring or moving proceeds with the intent to conceal their illicit source.
- Concealing the true nature, source, or location of proceeds.
- Acquiring, possessing, or using the proceeds.
- Assisting the perpetrator of the predicate offense in avoiding punishment. The term "funds" encompasses various assets and economic resources, whether tangible or intangible, that can be used to obtain goods or services. It includes electronic, digital, and crypto assets.
The AML Laws apply when illegal activities are processed to make them appear legitimate. Therefore in order to avoid fines institutions should adhere to the required risk analysis and due diligence policies and procedures as per the regulator.
At the federal level, UAE's law enforcement apparatus, comprising the police, public prosecution, and the Financial Intelligence Unit (FIU) of the Central Bank of the UAE (CBUAE), collaborates to investigate money laundering crimes. These authorities wield investigatory powers, enabling them to monitor accounts, records, and documents held by third parties, access computer systems, and gather evidence.
Individuals found guilty of money laundering may face imprisonment ranging from one to ten years and/or fines ranging from AED100,000 to AED5 million. For companies, fines can range from AED500,000 to AED50 million. Additional penalties may involve suspending a company's operations or revoking its license. Aggravating factors, such as abusing professional influence, committing crimes through non-profit organizations or organized criminal groups, or having a history of offenses, can lead to even more severe penalties. Foreign nationals convicted of money laundering may face deportation, depending on the severity of the offense.
Failure to report suspicious transactions or "tipping off" individuals under investigation can result in imprisonment or fines. These measures reinforce the importance of cooperation in combating financial crimes.
Upon conviction, the court has the authority to confiscate the funds, proceeds, and assets linked to the crime or an equivalent amount from the perpetrator's assets if the proceeds cannot be directly seized. While UAE's AML laws do not prescribe civil penalties, individuals and entities subject to AML compliance requirements may face civil liability for failing to meet these obligations. Additionally, civil claims for compensation for damages may follow a final and binding criminal judgment.
In conclusion
The UAE's stringent AML laws reflect the nation's commitment to combat money laundering effectively. By understanding these regulations, individuals and businesses can navigate the financial landscape with greater awareness and responsibility, contributing to a more secure financial environment in the UAE.
Any regulatory misconduct concerning AML and CTF is not and will not be taken lightly by the authorities, therefore we advise you to appoint lawyers and expert consultants to thoroughly review all the systems you have in place in order to ensure that they merge with the regulators transparency and integrity goals. In short your systems must be considered strong enough to pass their audit which will be searching in details for any operation malpractice.
ALKETBI TOUCH:
ALKETBI team is highly skilled and frequently provides legal assistance specializing in these kinds of money laundering cases in the UAE. The multitude of metrics under which fall the money laundering allegation are well-known to our team. Embezzlement of funds and financial transactions inconsistencies to laundering of money and loan/mortgage fraud, we have been able to guide and support our clients when they were charged by a criminal conviction. Let us know.
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