Appendix 4: Supervisory Powers and Non-Compliance Charges

N 35/2018 STA

A.Supervisory Powers and Enforcement Actions

The Central Bank shall impose the following administrative sanctions on a Licensed Person who continues its operations in breach of various provisions/requirements of applicable Laws, Rules, Regulations, Notices and the Standards:

a)Issuance of warning letter;
b)Decline approvals of any kind;
c)Restrict the growth of the business by declining new branch or new product approvals;
d)Restrict the validity of the renewed license for a period less than one (1) year;
e)Decline to renew license(s);
f)Temporarily or permanently suspend one or more of the licensed activities such as remittance activity, WPS, banknotes export/import, etc.;
g)Limit the powers of the Board of Directors, Management or Managers or Owners including the appointment of a temporary observer;
h)Administrative sanctions including levying non-compliance charges (i.e. financial penalties or fines) as per Article 11.3 (b) of Federal Law No. (9) of 2014 regarding the amendment of some provisions in Federal Law Number (4) of 2002;
i)Temporary suspension of the license;
j)Revoke the license to carry out Exchange Business; and
k)Prohibit the concerned violating parties from working in the Exchange Business sector for a period to be defined by the Central Bank.

B.Non-Compliance Charges

The Central Bank shall impose non-compliance charges or fines, in accordance with Article 11.3 (b) of Federal Law No. (9) of 2014, on a Licensed Person when, based on the available facts and information, it is satisfied that the Licensed Person has failed to comply with the provisions of the Federal Law No. (9) of 2014, the Cabinet Resolution No. 38 of 2014 regarding the Executive Bylaws of Federal Law No. 4 of 2002, the Central Bank Regulation Concerning Procedures for AntiMoney Laundering (Ref No. 24/2000 issued on 14^th November 2000, i.e. “the AML/CFT Regulations”) and its Addendum (Notice No. 2922/2008 issued on 17^th June 2008, i.e. “the Addendum”) and any other amendments thereto. Such non-compliance charges are imposed in addition to the sanctions/penalties stated in Article (13), Article (14), Article (15) or Article (16) of Federal Law No. (9) of 2014. The non-compliance charges are stated in the below table:

No.	Description of the Non-Compliant Item	Non-Compliance Charge
1	Failure to carry out appropriate KYC process (i.e. CID/CDD/EDD/ongoing CDD) in accordance with Articles 2, 3 and 5.4 of the AML/CFT Regulations and Subject Nos. 1, 2, 4(b) and 4(c) of the Addendum.	Articles 3 and 5.4	AED 150,000
		Subject Nos. 1 & 4(c)	AED 200,000
		Subject No. 2	AED 100,000
		Subject No. 4(b)	AED 250,000
2	Failure to prohibit relationships with Shell Banks and Shell Companies (in accordance with Article 2 of the AML/CFT Regulations and Subject No. 5 of the Addendum).	AED 250,000
3	Failure to obtain the Letter of No Objection from the Central Bank prior to opening current accounts (i.e. Nostro/Remittance relationships) with banks and other financial institutions outside the UAE (Refer to Article 15.7 of the AML/CFT Regulations).	AED 150,000
4	Failure to appoint a Compliance Officer (Refer to Article 16.3 (a) of the AML/CFT Regulations).	AED 250,000
5	Failure to carry out a ‘fit and proper test’ on the Compliance Officer or any other employee who are relevant to AML/CFT compliance function (in accordance with Article 2 of the AML/CFT Regulations and Subject No. 10 of the Addendum).	AED 50,000
6	Failure to carry out an independent audit on AML/CFT Compliance function (Refer to Article 2 of the AML/CFT Regulations and Subject No. 10 of the Addendum).	AED 50,000
7	Failure to develop and implement appropriate AML/CFT internal control systems (Policies, Procedures, Systems and other Controls) to comply with the AML/CFT Regulations and the Addendum (Refer to Article 16.3 (b) of the AML/CFT Regulations).	AED 200,000
8	Failure to provide initial AML/CFT training to employees (Refer to Article 17 of the AML/CFT Regulations).	AED 100,000
9	Failure to comply with the record retention requirements (Refer to Articles 2, 18 and 21 of the AML/CFT Regulations).	AED 250,000
10	Failure to provide periodical/ongoing training to the Compliance Officer and other relevant employees for Continuous Professional Development (Refer to Article 2 of the AML/CFT Regulations and Subject No. 10 of the Addendum).	AED 50,000
11	Failure to introduce FPEP screening systems in accordance with Subject No. 4 (a) of the Addendum, Article 2 of the AML/CFT Regulations and Cabinet Resolution No. 38 of 2014 regarding the Executive Bylaws of Federal Law No. 4 of 2002.	AED 50,000
12	Failure to comply with any requirements of the AML/CFT Regulations and its Addendum including any amendments thereto, not listed above.	Any amount between AED 50,000 to AED 500,000 depending on the severity of the breach and at the discretion of the Central Bank.

The Licensed Person must note that the non-compliance charges or fines stated above shall be levied for each non-compliant item separately and therefore, the cumulative of such noncompliance charges for multiple violations by a Licensed Person may exceed AED 500,000.

The Central Bank shall impose other administrative sanctions on a Licensed Person for failing to comply with any provision of applicable Laws, Rules, Regulations, Notices and the Standards. Such administrative sanctions including non-compliance charges shall be determined in accordance with the prevailing Laws and Regulations and shall be published as and when it becomes available under a formal Notice from the Central Bank.

C.Imposing Administrative Sanctions and Right to Make Representation

1.Before imposing an administrative sanction, the Central Bank shall give the Licensed Person a written notice:
1. a)of the nature of the alleged non-compliance;
2. b)of the intention to impose an administrative sanction and the amount;
3. c)particulars of the intended administrative sanction; and
4. d)that the Licensed Person may, within a period specified in the notice, make representations in writing to the “Assistant Governor for Banking Supervision” as to why the administrative sanction should not be imposed.
2.After considering the representation from the Licensed Person, if any, the Central Bank shall inform the Licensed Person in writing about its final decision to impose an appropriate administrative sanction.
3.The Central Bank further reserves the right to impose non-compliance charges which are higher than those published in the above table. In cases where it may be required to determine such higher non-compliance charges which, in accordance with AML/CFT Laws and Regulations shall not be less than AED 50,000 and shall not exceed AED 500,000, the Central Bank will consider the following factors:
1. a)the nature, duration, seriousness and extent of the relevant non-compliance;
2. b)license category and type of business activities;
3. c)the risk grading of the Licensed Person awarded by the Central Bank;
4. d)whether the Licensed Person has previously failed to comply with such requirements; and
5. e)the effectiveness of the remedial measures taken by the Licensed Person to prevent a recurrence of such non-compliance.