1 Introduction
1.1 Purpose
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 CBUAE.
Furthermore, this Guidance takes into account standards and guidance 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.
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:
• Registered Hawala Providers (``RHP''); • National banks, branches of foreign banks; and • Exchange houses.
Key Definitions and AcronymsAML/CFT: Anti-Money Laundering and Combating the Financing of Terrorism and Illegal Organizations.
Beneficial owner: The natural person who owns or exercises effective ultimate control, directly or indirectly, over a client; or the natural person on whose behalf a transaction is being conducted; or the natural person who exercises effective ultimate control over a legal person or legal arrangement.
Beneficiary Hawala Provider: The beneficiary's Hawala Provider, or receiving Hawala Provider, that receives the funds or equivalent value from the Originating Hawala Provider.
CBUAE Regulations: Any resolution, regulation, circular, rule, instruction, standard or notice issued by the CBUAE.
Hawala Activity: The arrangements for transfer and receipt of funds or equivalent value and settlement through trade and cash.
Hawala Provider Certificate: The Certificate issued by the CBUAE for carrying on Hawala activity in the UAE.
Legal person: Any entities other than natural persons that can establish in their own right a permanent customer relationship with a financial institution or otherwise own property. This can include companies, bodies corporate, foundations, partnerships, or associations, along with similar entities.
Money or Value Transfer Service (MVTS): financial services that involve the acceptance of cash, cheques, other monetary instruments or other stores of value and the payment of a corresponding sum in cash or other form to a beneficiary by means of a communication, message, transfer, or through a clearing network to which the MVTS provider belongs.
Originating Hawala Provider: The originator's Hawala Provider, or sending Hawala Provider, that initiates and carries out the transfer of funds or equivalent value to the Beneficiary Hawala Provider.
Registered Hawala Provider: Any natural person holding a valid residency visa or Legal Person, who is registered in the CBUAE's Hawala Providers Register in accordance with the provisions of its Circular No. 24/2019, including its agents or a network of agents.
Registered Hawala Provider Agent: Any natural or legal person carrying out activity outside the UAE on behalf of a Registered Hawala Provider.
1.3 Legal Basis
This Guidance builds upon the provisions of the following laws and regulations:
• Decree Federal Law No. (20) of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Illegal Organizations (``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 (``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, Terrorists Financing & Proliferation of Weapons of Mass Destruction, and Related Resolutions (``Cabinet Decision 74''). • Registered Hawala Providers Regulation issued by the CBUAE (``Circular No. 24/2019'').
Under Articles 4 and 5 of Circular No. 24/2019, RHP and their customers and agents must strictly abide by all UAE laws, including civil laws, Commercial Companies' Law, federal laws on AML/CFT, and any Regulations and directions issued by the CBUAE (``the legal and regulatory framework in the UAE''). RHP may be guided by the FATF standards on AML/CFT and Proliferation and must abide by guidance issued by the CBUAE in this regard.
1.4 Organization of this Guidance
The FATF's Mutual Evaluation Report of the UAE issued in April 2020 stated that the MVTS sector, including the Hawala service providers, is weighted as highly important in terms of risk and materiality in the UAE. This Guidance is addressed to the i) RHP and ii) LFIs that provide accounts or financial services to RHP. Part I of this Guidance applies to both RHP and LFIs, whereas Part II applies specifically to RHP and Part III specifically to LFIs.