Under Article 9.1 of the AML-CFT Decision, insurance operators are required to identify and verify the identities of all beneficial owners of any legal person customer, defined as all individuals who, individually or jointly, have a controlling ownership interest in the legal person of 25 percent or more. Where no individual meets this description, the operator is required to identify and verify the identity of the individual(s) holding the senior management position in the entity. This option should be used only as a last resort, however, and when the operator is confident that no one individual, or small group of individuals, exercises control over the customer.

Under Article 9.2 of the AML-CFT Decision, for legal arrangements, insurance operators must verify the identity of the settlor, the trustee(s), or anyone holding a similar position, the identity of the beneficiaries or class of beneficiaries, the identity of any other natural person exercising ultimate effective control over the legal arrangement and obtain sufficient information regarding the beneficial owner to enable verification of his/her identity at the time of payment, or at the time he/she intends to exercise his/her legally acquired rights. The beneficial owner of a legal person or arrangement must be an individual. Another legal person cannot be classified as the beneficial owner of a customer, no matter what percentage it owns. Insurance operators should continue tracing ownership all the way up the ownership chain until it identifies all individuals who own or control at least 25 percent of the operator’s customer. If the insurance operator has followed the steps described above and is still not confident that it has identified the individuals who truly own or control the customer, or when other high-risk factors are present, the operator should consider intensifying its efforts to identify the beneficial owners. The most common method of doing so for legal person is to identify additional beneficial owners below the 25 percent ownership threshold mandated by UAE law. This may involve identifying and verifying the identity of beneficial owners at the 10 percent or even the 5 percent level, as risk warrants. It may also involve requiring the customer to provide the names of all individuals who own or control any share in the customer—without requiring them to undergo CDD— in order to conduct sanctions screening or negative news checks.

Beneficial owners should generally be identified and verified prior to establishing a business relationship. However, in exceptional circumstances, pursuant to Article 4.3 of the AML-CFT Decision, where there is no ML/FT suspicion and ML/FT risks are assessed to be low, an operator may complete verification after establishing a business relationship, as set forth in section 3.3.3 below.

Please consult also the CBUAE’s AML/CFT Guidelines for Financial Institutions, sections 6.3.1 and 6.3.3, respectively, as well as the CBUAE’s Guidance for LFIs providing services to Legal Persons and Arrangements⁹ for further information.

⁹ Available at: https://www.centralbank.ae/en/cbuae-amlcft.