Anti money laundering in the UAE

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Staff Writer, TLR

Published on July 14, 2023, 17:40:59


Money laundering

The clampdown on money laundering and corruption is the common responsibility of all the countries in the world.”

Wang Zhaowen, spokesman for the Bank of China

Money Laundering is the process of disguising the source of large amounts of money generated from illegal activities. Money laundering has long been one of the key operations of organised crime. A large variety of methods are utilised by criminal organisations to make their illegally obtained funds appear to have originated from a legitimate source. It is a criminal offence of the highest order, punishable by severe penalties.

Money Laundering is an offense under the UAE laws and in line with international efforts, the UAE has taken steps to improve its Anti-Money Laundering (AML) defenses and to ensure that they are line with international standards for the combating of money laundering.

In the UAE, Federal Law No.20 of 2018 ("Law") provides the measures taken to combat money laundering and defines the activities that fall under money laundering. An independent “Financial Information Unity” was established within the Central Bank to investigate any suspected illicit financial activity exhibited by financial institutions and corporate establishments.

A few of the provisions provided under the Law have been outlined below.

The Article 2 of Federal Law No.20 of 2018 lays down the acts that constitute money laundering:

• Transferring or converting funds generated from crime or conducting a transaction to conceal or disguise its illegal source.

• Concealing or disguising the true nature, source or location of funds generated through crime.

• Acquiring, possessing or using proceeds upon receiving them.

• Assisting the perpetrator of the offense in escaping punishment.

Financial institutions, non financial businesses, and non-profit organisations are carefully monitored by the respective authorities to ensure that they are complying with the provisions of the Law.

The punishments for violating the Law differ depending on whether it was committed by an organisation or an individual.

Where the violation was committed by an organization, the penalties as per Article 14 are:

• A warning

• A fine between AED 50,000 and 5,000,000 for each violation

• A ban from working in the sector where the violation occurred for a period determined by the respective authorities

• The suspension of managers, Board of Directors, supervisory or executive management members who have proven to be responsible for the violation

• Cancellation of license

The respective authorities may request regular reports on the measures taken to correct these violations.

However, if the violation was committed by an individual, as per Article 22, the penalties will be imprisonment for a period of up to 10 years as well as a fine between AED 100,000 and 5,000,000.

Harsher penalties are in place for anyone perpetrating money laundering by abusing their professional influence, committing the crime through non-profit organisations or with the aid of organized crime groups. In such cases, the penalty will be temporary imprisonment and a fine between AED 300,000 and 10,000,000.

The legal framework for combating money laundering in the UAE has proven effective and has had a positive effect on its financial sectors.

For more information on this topic and any other queries relating to financial crimes in the UAE, contact a registered lawyer.

Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ.