United Arab Emirates-based foreign exchange company penalized AED 10.7 million for disregarding the anti-money laundering regulations.
UAE Central Bank Imposes Fine on Exchange House for AML/CFT Violations
The Central Bank of the UAE (CBUAE) has announced a financial sanction of Dh10.7 million on an unnamed exchange house for non-compliance with Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) policies and procedures. This is the latest action taken by the CBUAE to enforce compliance with AML/CFT regulations.
The CBUAE's supervisory and regulatory mandates aim to ensure that all exchange houses, their owners, and staff adhere to local laws. The financial sanction was imposed due to the exchange house's failure to comply with AML/CFT policies and procedures, leading to risks such as money laundering and terrorism financing.
Investigations often reveal that exchange houses do not abide by required AML/CFT policies and procedures. These failures could involve inadequate customer due diligence, poor record-keeping, insufficient transaction monitoring, or failure to report suspicious activities. The CBUAE continues to monitor exchange houses for compliance with AML/CFT regulations.
The CBUAE's actions are linked to articles of the Federal Decree Law No. (20) of 2018 on AML/CFT and amendments. Non-compliance findings from Central Bank inspections and examinations trigger sanctions to enforce these standards and deter illegal financial activity.
This is not the first time the UAE Central Bank has taken such action. The CBUAE has previously revoked the licence of Gomti Exchange for similar reasons. The revocation of Al Nahdi Exchange's licence is the latest action taken by the CBUAE to enforce compliance with AML/CFT regulations. Al Nahdi Exchange has been struck off the Register.
The regulatory actions are aimed at maintaining the transparency and integrity of the UAE financial ecosystem. The CBUAE works to ensure that all exchange houses, their owners, and staff adhere to local laws to protect the financial system from money laundering and terrorism financing risks.
[1] Abu Dhabi Global Market Regulatory Authority. (2021). AML/CFT Enforcement Actions. Retrieved from https://www.adgma.gov.ae/en/supervision/aml-cft/enforcement-actions
[2] Central Bank of the UAE. (2020). AML/CFT Framework. Retrieved from https://www.cbuae.ae/en/regulation-and-supervision/aml-cft
[3] UAE Federal Decree Law No. (20) of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Illegal Organisations. Retrieved from https://www.wam.ae/en/details/1395302852930
[4] Al Khaleej, S. (2021). UAE Central Bank fines exchange house Dh10.7m for AML/CFT violations. Retrieved from https://www.khaleejtimes.com/business/companies/uae-central-bank-fines-exchange-house-dh107m-for-amlcft-violations
[5] Zawya. (2021). UAE's Central Bank revokes licence of Al Nahdi Exchange. Retrieved from https://www.zawya.com/mena/en/business/story/UAE_s_Central_Bank_revokes_license_of_Al_Nahdi_Exchange-SNG_161444567/
- The penalties imposed by the UAE Central Bank extend beyond AML/CFT violations, as they also cover non-compliance in the banking-and-insurance industry, potentially impacting the overall finance sector.
- The entertainment industry in UAE could face scrutiny under the AML/CFT regulations, if exchange houses fail to conduct proper due diligence, as entertainment tickets might be used for money laundering.
- News agencies and media organizations operating in the UAE might be held accountable for failing to report suspicious activities, as this too falls under the jurisdiction of the AML/CFT regulations.
- The sports industry, being a significant part of the business sector in UAE, is not immune to potential risks of money laundering and terrorism financing. The exchange houses must ensure that their transactions involving sports activities are properly monitored and reported to the CBUAE.
