1. Introduction
1.1. Purpose of the Guidance
Article 44.11 of the Cabinet Decision No. (10) of 2019 Concerning the Implementing Regulation of Decree Law No. (20) of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Illegal Organisations charges Supervisory Authorities with “providing Financial Institutions…with guidelines and feedback to enhance the effectiveness of implementation of the Crime-combatting measures.”
The purpose of this Guidance is to assist the understanding and effective performance by the United Arab Emirates Central Bank’s (“CBUAE”) licensed financial institutions (“LFIs”) of their statutory obligations under the legal and regulatory framework in force in the UAE. It should be read in conjunction with the CBUAE’s Procedures for Anti-Money Laundering and Combating the Financing of Terrorism and Illicit Organizations (issued by Notice No. 74/2019 dated 19/06/2019) and Guidelines on Anti-Money Laundering and Combating the Financing of Terrorism and Illicit Organizations for Financial Institutions (issued by Notice 79/2019 dated 27/06/2019) and any amendments or updates thereof.1 As such, while this Guidance neither constitutes additional legislation or regulation nor replaces or supersedes any legal or regulatory requirements or statutory obligations, it sets out the expectations of the CBUAE for LFIs to be able to demonstrate compliance with these requirements. In the event of a discrepancy between this Guidance and the legal or regulatory frameworks currently in force, the latter will prevail. This Guidance may be supplemented with additional separate guidance materials, such as outreach sessions and thematic reviews conducted by the Central Bank.
Furthermore, this Guidance takes into account standards and guidance2 issued by the Financial Action Task Force (“FATF”), industry best practices and red flag indicators. These are not exhaustive and do not set limitations on the measures to be taken by LFIs in order to meet their statutory obligations under the legal and regulatory framework currently in force. As such, LFIs should perform their own assessments of the manner in which they should meet their statutory obligations.
This Guidance comes into effect immediately upon its issuance by the CBUAE with LFIs expected to demonstrate compliance with its requirements within one month from its coming into effect.
1 Available at https://www.centralbank.ae/en/cbuae-amlcft.
2 FATF: Guidance for a Risk-Based Approach: Prepaid Cards, Mobile Payments and Internet-Based Payment Services, 2013, https://www.fatf-gafi.org/media/fatf/documents/recommendations/Guidance-RBA-NPPS.pdf, and Correspondent Banking Services, 2016, https://www.fatf-gafi.org/media/fatf/documents/reports/Guidance-Correspondent-Banking-Services.pdf
1.2. Applicability
Unless otherwise noted, this guidance applies to all natural and legal persons, which are licensed and/or supervised by the CBUAE, in the following categories:• National banks, branches of foreign banks, exchange houses, finance companies; and • Stored value facilities, retail payment service providers, and card schemes.
1.3. Legal Basis
This Guidance builds upon the provisions of the following laws:• Decree Federal Law No. 20 of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Illegal Organizations as amended by Decree Federal Law No. (26) of 2021 (“AML-CFT Law”). • Cabinet Decision No. (10) of 2019 concerning the Implementing Regulation of Decree Federal Law No. 20 of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Illegal Organizations as amended by Cabinet Decision No. (24) of 2022 (“AML-CFT Decision”). • Cabinet Decision No. (74) of 2020 Regarding Terrorism Lists Regulation and Implementation of United Nations Security Council (UNSC) Resolutions on the Suppression and Combating of Terrorism, Terrorist Financing, Countering the Proliferation of Weapons of Mass Destruction and its Financing and Relevant Resolution (“Cabinet Decision 74”).
1.4. Acronyms and Definitions
Card Scheme: a single set of rules, practices and standards that enable a holder of a payment instrument to effect the execution of card-based payment transactions within the UAE which is separated from any infrastructure of payment system that supports its operation, and includes the card scheme governing body. For the avoidance of doubt, a card scheme may be operated by a private or public sector entity.
Correspondent Banking Relationship: the relationship between a correspondent financial institution and a respondent one through a current account or any other type of account(s) or through a service related to such an account and includes a corresponding relationship established for the purpose of securities transactions or transfer of funds.
Nesting: defined by the FATF as the use of a bank’s correspondent relationship by a number of respondent banks through their relationships with the bank’s direct respondent bank to conduct transactions and obtain access to other financial services.
New Payment Products and Services (NPPS): defined by the FATF as new and innovative payment products and services that offer an alternative to traditional financial services.
Payment Sector: refers to different forms of payment that are transmitted and exchanged across various delivery channels, frequently utilizing digital platforms, systems, services and products.
PPS: Payment Products and Services.
Retail Payment Services: any of the following services: payment account issuance; payment instrument issuance; merchant acquiring; payment aggregation; domestic fund transfer; cross-border fund transfer; payment token; payment initiation; and payment account information.
Stored Value Facility (SVF): a facility (other than cash) for or in relation to which a customer, or another person on the customer’s behalf, pays a sum of money (including money’s worth such as values, reward points, crypto-assets or virtual assets) to the issuer, whether directly or indirectly, in exchange for: (a) the storage of the value of that money (including money’s worth such as values, reward points, crypto-assets or virtual assets) whether in whole or in part, on the facility; and (b) the relevant undertaking. SVF includes device based SVF and non-device based SVF.