3.4. Transaction Monitoring and Suspicious Transaction Reporting
3.4.1. Transaction Monitoring
Under Article 16 of the AML-CFT Decision, insurance operators must monitor activity by all customers to identify behavior that is potentially suspicious and that may need to be the subject of an STR or SAR when conducting operations related to life insurance and other investment-related insurance products. Transactions may be suspicious simply in virtue of their individual characteristics (such as their value, source, destination, or use of intermediaries) or because, together with other transactions, they form a pattern that diverges from expected or historical transactional activity or may otherwise be indicative of illicit activity, including the evasion of reporting or recordkeeping requirements. When monitoring and evaluating transactions, the operator should take into account all information that it has collected as part of CDD, including the identities of beneficial owners. In addition, higher-risk customers should be subject to more stringent transaction monitoring, with lower thresholds for alerts and more intensive investigation.
Transaction monitoring can include manual monitoring processes and the use of automated and intelligence-led monitoring systems. In all cases, the appropriate type and degree of monitoring should appropriately match the ML/FT risks of the operator’s customers, products and services, delivery channels, and geographic exposure, and may therefore vary across an operator’s business lines or units, where applicable.
Transaction monitoring programs should also be calibrated to the size, nature, and complexity of each institution. Operators with a larger scale of operations are expected to have in place automated systems capable of handling the risks from an increased volume and variance of transactions. Operators utilizing automated systems should perform a typology assessment to design appropriate rule- or scenario-based automated monitoring capabilities and processes. While smaller operators may rely on transaction monitoring systems that are less automated, they should still ensure that these are appropriately executed to address the risks from their day-to-day transactional activity.
Please consult the CBUAE’s Guidance for Licensed Financial Institutions on Transaction Monitoring and Sanctions Screening for further information.
3.4.2. STR Reporting
As required by Article 15 of the AML-CFT Law and Article 17 of AML-CFT Decision, insurance operators must file without any delay an STR or SAR with the UAE FIU when they have reasonable grounds to suspect that a transaction, attempted transaction, or certain funds constitute, in whole or in part, regardless of the amount, the proceeds of crime, are related to a crime, or are intended to be used in a crime. STR/SAR filing is not simply a legal obligation; it is a critical element of the UAE’s effort to combat financial crime and protect the integrity of its financial system. STR/SAR filings are essential to assisting law enforcement authorities in detecting criminal actors and preventing the flow of illicit funds through the UAE financial system.
In addition to the requirement to file an STR when an operator suspects that a transaction or funds are linked to a crime, operators should consider filing an STR or SAR in the following situations involving higher-risk customers:
• A potential customer decides against purchasing financial services after learning about the operator’s CDD requirements; • A current customer cannot provide required information (including documentation) about its business or its beneficial owners; • A customer cannot adequately explain transactions, provide supporting documents such as invoices, or provide satisfactory information about its counterparty; • The operator is not confident, after completing CDD procedures, that it has in fact identified the individuals owning or controlling the customer. In such cases, the operator should not establish the business relationship, or continue an existing business relationship; or • Other situations that are suspicious or involve activity with no legitimate business or other lawful purpose.
Please consult the CBUAE’s Guidance for Licensed Financial Institutions on Suspicious Transaction Reporting12 for further information.
12 Available at: https://www.uaeiec.gov.ae/en-us/un-page.