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Anti-Money Laundering and Terrorist Financing

Anti-Money Laundering and Terrorist Financing

​​The international community is deeply concerned about the potential consequences of money laundering and terrorism financing as well as the associated crimes as they tend to threaten the integrity and stability of the financial sector and the economy as a whole, undermine the soundness and stability of financial systems and instruments, discourage foreign investments, and affect international capital inflows. Such crimes may also have adverse consequences on the financial stability and the macroeconomic performance of a country, thus causing welfare loss and resource depletion.


In an increasingly interlinked and interrelated world, the negative impacts of financial crimes are taking on a global dimension as those involved in money laundering and terrorism financing take advantage of the deep interdependence at the heart of the global financial order to achieve their objectives. Accordingly, as such crimes compromise the integrity and stability of the financial sector and as financial markets and institutions are the most targeted by money launderers and terrorists in their attempt to conceal their identity and the sources of their funds, this has become a matter of great concern to SCA and has been mirrored in the creation of dedicated organizational unit concerned with this matter.


The Authority actively monitors the compliance of SCA-licensed entities with the provisions of Decree Federal law No. (20) of 2018 On Anti-Money Laundering and Combating the Financing of Terrorism and Illegal Organization, Cabinet Decision No. (10) of 2019 Concerning the Implementing Regulation of Decree Law No. (20) OF 2018 and with SCA Board of Directors Decision No. 21 of 2019 concerning procedures for Anti-money laundering and combating the financing of terrorism and illegal organizations. The Authority also continuously reviews and follows up on the implementation of procedures applicable to entities falling under SCA’s supervision in accordance with best international standards for combating money laundering and terrorism financing. In addition, The SCA always keeps up with the latest regional and international developments in this regard.


SCA urges related parties and investors in UAE-based financial markets to report any suspicious transactions as part of its ongoing cooperation and coordination efforts with government bodies and departments. It reiterates its commitment to maintain the confidentiality of the information and data provided, hoping to work collaboratively with individuals and institutions alike to combat money laundering and terrorism financing and to achieve tangible and concrete results, thus benefiting financial markets and the UAE economy at large.

  1. Circular No. (3) of 2015 Concerning the List of Terrorist Individuals and Organizations Approved by the United Arab Emirates
    (addressed to companies engaged in the securities and commodities business).
  2. Circular No. (4) of 2015 Concerning the List of Terrorist Individuals and Organizations Approved by the United Arab Emirates
    (addressed to licensed, UAE-based securities and commodities markets).
  3. Circular No. (1) of 2017 Concerning the List of Terrorist Individuals and Organizations Approved by the United Arab Emirates and its updates
    (addressed to licensed, UAE-based securities and commodities markets).
  4. Circular No. (1) of 2017 Concerning the List of Terrorist Individuals and Organizations Approved by the United Arab Emirates and its updates
    (addressed to companies engaged in the securities and commodities business).
  5. Circular No. (2) of 2017 Concerning the List of Terrorist Individuals and Organizations Approved by the United Arab Emirates and its updates
    (addressed to companies engaged in the securities and commodities business).
  6. Circular No. (2) of 2017 Concerning the List of Terrorist Individuals and Organizations Approved by the United Arab Emirates and its updates
    (addressed to securities and commodities markets).
  7. Circular No. (1) of 2018 Concerning the List of Terrorist Individuals and Organizations Approved by the United Arab Emirates
    (addressed to companies engaged in the securities and commodities business).
  8. Circular No. (1) of 2018 Concerning the List of Terrorist Individuals and Organizations Approved by the United Arab Emirates
    (addressed to securities and commodities markets).
  9. Circular No. (2) of 2018 Concerning the List of Terrorist Individuals and Organizations Approved by the United Arab Emirates
    (addressed to companies engaged in the securities and commodities business)

As part of its overall mandate under Decree Federal Law No. (20) of 2018 on Anti-Money Laundering (AML) and Combatting the Financing of Terrorism (CFT) and Illegal Organisations, and Cabinet Decision No. (10) of 2019, SCA oversees the regulation and development of capital markets and introduces regulations, rules, and instructions needed for the implementation of the provisions of capital market regulations. SCA is the federal authority within UAE land that is responsible for licensing capital market intermediaries’ firms, financial service firms, Fund management and exchanges. SCA is responsible for monitoring, supervising and enforcing compliance by these entities with their obligations under the AML/CFT Legislation. SCA is committed to develop a robust regulatory framework and provide a safe environment for Financial Institutions.


Money Laundering and Terrorist Financing are major risks that threaten any economic growth and social stability through the illicit flow of funds and illegal activities. Capital Market sector is vulnerable to ML/TF risks and are highly exposed to these risks in their business transactions. Financial institutions are highly exposed to ML/TF in their daily operations with customers and other associated parties.

All SCA licensed companies are inspected based on a Risk Based Approach. SCA has a ML/TF risk methodology in place where regulated companies are classified based on its risk rank. The methodology includes but not limited to: inherent risk factors such as customer risk, geographic risk, products & services risk, delivery channel risk and other risks beside the company’s level of controls in addition to the outcomes of the National Risk Assessment.

Both the UAE AML-CFT Law (Federal Law no. 20 of 2018) and its by-laws (Cabinet resolution no. 10 of 2019 – the ‘by-laws’) include well-established concept of a risk-based approach (RBA) to the identification and assessment of ML/FT risks. Specifically, the AML-CFT Law states that Entities should “identify crime risks within (their) scope of work” and should update their risk assessments on the basis of the various risk factors set out in the By-laws. Likewise, the by-laws state that Entities’ identification, assessment and understanding of the risks should be carried out “in concert with their business nature and size,” and that various risk factors should be considered in determining the level of mitigation required.

The use of a RBA thus allows entities to allocate their resources more efficiently and effectively, within the scope of the AML/CFT legislative and regulatory framework, by adopting and applying preventative measures that are targeted at and commensurate with the nature of risks they face.

In order to do so, they should identify and assess their exposure to ML/TF risks on the basis of a variety of dynamic risk factors some of which are related to the nature, size, complexity and operational environment of their businesses, and others are customer- or relationship-specific. Furthermore, they should take reasonable and proportionate risk mitigation measures based on the severity of the risks identified.

SCA has issued guidance where it contains further details in relation to the Risk-Based Approach. Licensed entities can access the guidance by clicking here

The requirement to file a Suspicious Transactions Report and/or Suspicious Activity Reports (STR/SAR) with the Financial Intelligence Unit (FIU) of the UAE is contained in UAE Federal Law No. 20 of 2018 and Cabinet Decision No. 10 of 2019 (‘Federal AML Legislation’). This Federal AML Legislation applies directly to all SCA regulated entities in accordance with SCA Board of Directors Decision no. 21 of 2019 concerning procedures for Anti-money laundering and combating the financing of terrorism and illegal organizations.

Apart from filing STR/SARs, entities are advised to provide any additional information required in relation to them, and also to put in place indicators that can be used to identify the suspicion of a crime involving ML/FT and to update those indicators on an ongoing basis, as well as in keeping with relevant developments concerning ML/FT typologies. In order to fulfil these obligations, regulated entities should implement adequate internal policies, procedures and controls in relation to the identification and reporting of suspicious transactions. Regulated entities should also consider the results of both the NRA and their own ML/FT risk assessments in this regard.

GoAML System:

Entities are required to report STR/SARs directly to the FIU using the “GoAML” portal. Registration on the GoAML portal is mandatory for all licensed entities regulated by SCA immediately after receipt of their SCA license. Even in case of a licensed entity being regulated by another financial regulatory authority in the UAE and registered on the GoAML portal under such other regulatory authority, it has to register itself again as an SCA regulated entity. Moreover, the FIU releases its periodic Trends and Typologies Reports on the GoAML system, which contain valuable guidance for regulated entities on identification of suspicious transactions based on an analysis of filed STRs/SARs.

The objectives of the GoAML system are for the FIU to:

  1. Strengthen its capability to meet and discharge its legislative objectives and functions;
  2. Ensure that the UAE’s financial system stays relevant and effective in the fight against money laundering and terrorism financing;
  3. Collaborate more effectively with various stakeholders such as reporting entities, supervisory bodies and law enforcement agencies and;
  4. Standardize and streamline all reporting requirements and ensure that the UAE is aligned with the Anti-Money Laundering and Combatting of TerroristFinancing AML/CTF standards of the Financial Action Task Force (FATF).

Registration

The SCA in its capacity as the regulatory authority for AML/CTF procedures for the capital market sector in the UAE is the Supervisory Body for approving:

  1. pre-registrations to allow SCA regulated entities to gain access to the GoAML portal; which can be done through the following link: Click here
  2. Registrations of SCA regulated entities on the GoAML portal (after completing the pre-registration stage) which can be done through the following link: Click here

Record Keeping

Entities are required to retain all records and documents pertaining to STRs and the results of all analysis performed. Such records relate to both internal STRs and those filed with the FIU, and include but are not limited to:

  1. Suspicious transaction indicator alert records, logs, procedures done to confirm suspicion, recommendations and decision records, and all related correspondence;
  2. Competent authority request for information and their related procedural files and correspondence;
  3. Customer due diligence and Business Relationship monitoring records, documents and information obtained in the course of analyzing or confirming potentially suspicious transactions, and all internal or external correspondence or communication records associated with them;
  4. STRs (internal and external), logs, and statistics, together with their related analysis, recommendations and decision records, and all related correspondence;
  5. Notes concerning feedback provided by the FIU with respect to reported Suspicious Transactions, as well as notes or records pertaining to any other actions taken by, or required by, the FIU.

The following process provides licensed entities with guidance on the STR/SAR submission process:

process provides licensed entities with guidance on the STR/SAR submission process


Enquiries

Entities can contact the SCA AMLTF Section for any GoAML related enquiries on the email. However, GoAML is a FIU hosted IT system and therefore, for technical support, entities are advised to contact the Technical Team at the FIU at the email

For any requirements kindly email us Click here

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