Under article 8 of AML-CFT Decision, for all customer types, LFIs are required to understand the purpose for which the account or other financial services will be used, and the nature of the customer’s business. This step requires the LFI to collect information that allows it to create a profile of the customer and of the expected uses to which the customer will put the LFI’s products and services. This element of CDD will have important implications for the customer risk rating.

It is critical that LFIs have processes and controls in place to ensure that they are able to identify cash-intensive business customers. In line with a risk-based approach, LFIs should interview the customer, review the customer’s business license, request recent financial statements (audited if available), tax returns or additional information, search company databases and assess the primary business activity, products, and services offered by the customer to understand the full scope of the customer’s business.

If an LFI determines that a customer or prospective customer has materially misrepresented itself or its business, it should not onboard the customer and should exit the relationship if one has been established. In addition, the LFI should consider filing a Suspicious Transaction Report (STR), Suspicious Activity Report (SAR) or other report types to the UAE FIU as discussed in section 3.3.2 below. The LFI may also consider adding the customer, its beneficial owners, directors, and its managers to internal watchlists.

High-risk customers should be treated as high risk no matter the financial services they use. Even so, the risk to which the LFI may be exposed can vary based on the purpose of the account and the types of financial products and services the customer wishes to use. LFIs should fully understand the uses to which the cash-intensive business intends to put the account and the expected activity on the account, to the extent that it can generally predict activity on the account and identify activity that does not fit the profile. To that end, the LFI should seek to assess the expected volume, frequency, and nature of cash transactions that the customer intends to conduct through its account, as this will be an important risk factor for identifying money laundering and financing of terrorism and illegal organisations risks associated with the cash-intensive business. In addition, the LFI may wish to consider whether the expected volume of cash coming through the account is consistent with the declared sales income and whether the expected volume of cash appears reasonable compared to other similar cash-intensive customers of the LFI (i.e., operating as similar business types in similar markets).