3.2. Legal Arrangements Under UAE Law
يسري تنفيذه من تاريخ 7/6/2021Two types of legal arrangements can be formed under UAE law:
| • | Trusts can be formed in the Mainland as well as in the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM). In a trust arrangement, the owner of certain funds, known as the settlor, places these funds under the control of a trustee for the interest of a beneficiary or for a specified purpose. These assets constitute funds that are independent of the trustee's own estate, and the rights to the trust assets remain in the name of the settlor or in the name of another person on behalf of the settlor. | |||
| • | Awqaf (singular waqf), also known as endowments, can be created on the Mainland. Awqaf are a form of legal arrangement created according to shari’a law. A waqf allows a property owner to endow certain assets (often real property, but also shares or other income-producing assets) for the benefit of family members or a charitable cause. The endower loses control and ownership of the assets, which are registered as endowed and managed by a supervisor or trustee. Many awqaf are directly managed by the General Authority for Islamic Affairs and Endowments, but others are privately superintended. | |||
Under AML-CFT Decision, Articles 9 and 37, trustees of legal arrangements, or persons holding analogous positions in other legal arrangements, are required to hold accurate and up-to-date information on the beneficial owners of the trust or other legal arrangement. For legal arrangements, the beneficial owners are defined as the settlor, the trustee, and the beneficiaries or identifiable class of beneficiaries, along with any other individual exercising ultimate effective control over the legal arrangement. Under Article 9 of AML-CFT Decision, LFIs must identify these individuals as the beneficial owners of their legal arrangement customers.
In both cases, it is important for financial institutions to be aware that these legal arrangements allow for an individual to legally hold and control funds that he or she does not own and does not have the right to benefit from. A trustee of a trust or waqf may open an account for trust funds under his or her own name, so that the account appears to belong to an individual rather than a legal arrangement. Although trustees are required to disclose their status, LFIs, as part of Customer Due Diligence (CDD), should take a proactive approach to identifying whether a customer is a trustee. This may include directly asking customers whether they are acting as trustees.