National Anti Money Laundering and CombattingNationalFinancingAnti Money Laundering and Combatting Financing

of Terrorism and Financing of Illegal Organizations of

Committee
Terrorism and Financing of Illegal Organizations Committee

UNITED ARAB EMIRATES

MONEY LAUNDERING AND
TERRORIST FINANCING RISK
ASSESSMENT REPORT
Table of
Contents
Foreword 8 Chapter 4: National Risk Assessment Key Findings 45

10 4.1 Money Laundering 45

• ML Threats 13 45

• TF Assessment 20 • ML Threats 45

• Priority Actions 22 • Main Typologies 46

Chapter 1: Background and Context 24 • Other Key Observations 50

24 4.1.2 ML Vulnerabilities 51

25 4.1.3 Sectoral Risk Assessment 53

25 4.1.3.1 Financial Institutions 53

26 • Mainland 54

26 • Financial Freezones 58

28 4.1.3.2 Virtual Asset sector 61

Chapter 2: Overall UAE ML/TF/PF combating ability 30 • Conclusion and next steps 62

30 4.1.3.3 Designated Non-Financial Businesses and Professions 63

32 • DNFBPs under MOEc supervision 63

32 • Other potential activities under DNFBPs 65

33 • Conclusion and next steps 66

33 4.1.3.4 Legal Persons and Legal arrangements 66

Chapter 3: Risk Assessment Methodology 40 4.2 Terrorism Financing 68

40 4.2.1 TF risks in the UAE context 68

40 4.2.2 Non-Pro it Organisations 71

43 • Conclusion and next steps 72

44 Overall Conclusion 72
 Table of Acronyms
ADGM Abu Dhabi Global Market LEAs Law enforcement agencies
AML Anti-Money laundering MENA Middle East and North Africa
MENA FATF Middle East and North Africa Financial Action Task Force
Federal Decree-law No. (20) of 2018 on Anti-Money
AML/CFT LAW Laundering and Combating the Financing of Terrorism and ML Money Laundering
Financing of Illegal Organisations MOCD Ministry of Community Development
APG Asia/Pacific Group on Money Laundering MOEc Ministry of Economy
BNIs Bearer Negotiable Instruments MOF Ministry of Finance
CBUAE Central Bank of the U.A.E. MOJ Ministry of Justice
CDD Customer Due Diligence MOU Memorandum of Understanding
CFZ Commercial Free Zone MVTS Money or Value Transfer Service(s)
DFSA Dubai Financial Services Authority MSB Money Service Business
DNFBPs Designated non-financial Businesses professions  ational Committee for Anti Money Laundering and
N
NATIONAL
DMCC Dubai Multi-commodity Centre Combattin the Financing of Terrorism and Financing of
COMMITTEE
Illegal Organizations
DPMS Dealers of Precious Metals and Stones
DIFC Dubai International Financial Centre NER National Economic Register
EDD Enhanced due diligence NPO Non-Profit Organization
NRA National Risk Assessment
General Secritariat of the National Anti Money Laundering
GS-NAMLCFTC and Combatting Financing of Terrorism and Financing of OECD Organization for Economic Co-operation and Development
Illegal Organizations Committee(1) PEP Politically Exposed Person
FATF Financial Action Task Force PP Public Prosecution
FCA Federal Customs Authority R. Recommendation
FFZ/FFZs Financial Free Zone - Financial Free Zones RBA Risk-Based Approach
FIs Financial Institutions RHP Registered Hawala Provider
FSRA Financial Services Regulatory Authority SAR Suspicious Activity Report

Financing of Terrorism and replace any phrase of terrorism SCA Securities And Commodities Authority
FT
financeing into "Financing of Terrorism" for the whole document STR Suspicious Transaction Report
GCC Gulf Cooperation Council SWFs Sovereign Wealth Funds
GDP Gross Domestic Product TCSP Trust and Company Service Provider
HIGHER COMMITTEE Higher Committee overseeing National Strategy on AML/CFT UAE United Arab Emirates
IN Interpretive Note UAEFIU The UAE Financial Intelligence Unit
IO Immediate Outcome VA Virtual Asset
ISIC International Standard Industrial Classification VARA Dubai Virtual Assets Regulatory Authority
VASPs Virtual Asset Service Providers

(1) A
 ccording to the new amendment of the AML/CFT law, the Executive Office has elevated recently to The National Committee
with a general secretariat that has been empowered for broaden roles and responsibilities as a national coordinator.

6 7
 Recent initiatives have further strengthened
the regime, including updates to the legal and
regulatory framework, improved inter-agency
cooperation, and a more strategic use of
financial intelligence. Additionally, progress
has been made in areas such as risk-based
supervision, asset recovery, public-private
partnerships, and international cooperation,
all of which contribute to the UAE's efforts in
effectively addressing the evolving risks of
financial crime.

1.5 The UAE is a committed member of the FATF

and the MENAFATF. Additionally, it has served
as an observer to the APG since 2023. The
UAE also actively contributes to the efforts of
international organizations combating financial
crime, including the Egmont Group, reaffirming
its dedication to addressing the escalating
threats posed by financial crimes

1.6 T
 he UAE's efforts to combat AML/CFT/CPF, are
led by the Higher Committee for the National
Strategy on AML/CTF. This committee is co-
chaired by senior officials from key national
authorities. The General Secritary of NAMLCFTC
serves as the national coordinator, overseeing the

Foreword implementation and regular updates of policies

and strategies to address emerging risks.

1.7 A
 key component of our efforts is the National
1.1 As an international business, financial, and trading with ML/TF/PF in the UAE have become authorities coordinate and collaborate with Risk Assessment (NRA), developed by the
hub, the United Arab Emirates (UAE) is exposed increasingly complex. These factors have one another, as well as with the private sector, General Secritariat of the National Anti Money
to the risks of transnational Money Laundering expanded the opportunities for criminals to to address ML/TF risks. Effective international Laundering and Combatting Financing of
(ML), Terrorism Financing (TF), and Proliferation exploit vulnerabilities in financial systems, cooperation is crucial in responding to Terrorism and Financing of Illegal Organizations
Financing (PF). Criminals seek to exploit the making it more difficult to detect and prevent the growing complexity of illicit financial Committee (GS-NAMLCFTC). The NRA provides
UAE's economic openness, financial system, and illicit activities. Furthermore, advancements flows across borders. Strengthening these a comprehensive evaluation of the UAE's
business infrastructure to move illicit funds and in technology have created new avenues for partnerships is essential for improving efforts understanding of current and emerging money
assets. Therefore, it is essential for the UAE to transferring and concealing illicit funds and to detect and mitigate financial crime on a laundering and terrorist financing threats and
remain vigilant and proactive in safeguarding assets across borders with unprecedented global scale. vulnerabilities across various sectors. The
against the misuse of its financial and business speed and ease. In light of these developments, findings from the NRA help guide decision-
environments for such illegal activities. this National Risk Assessment (NRA) for Money 1.4 T
 he UAE is committed to continuously making, prioritizing risks and informing actions
Laundering and Terrorist Financing takes into enhancing its AML/CFT/CPF regime. Our for supervision, enforcement, and mitigation to
1.2 Due to the evolving global geopolitical account the evolving landscape of financial framework is fully aligned with international effectively tackle financial crime.
landscape, shifting macroeconomic conditions, crime and its growing challenges. standards and best practices, supported
and the rising use of sophisticated financial by robust laws and regulations, risk-based
The UAE National Anti Money Laundering and Combatting Financing
and business structures, the risks associated 1.3 T
 he evolving threat landscape impacts how supervision, and effective enforcement. of Terrorism and Financing of Illegal Organizations Committee.

8 9
 Executive Summary
Background and Context half of 2023, as reported by the Ministry of
Foreign Affairs.(4)
1. The UAE is located in Asia. It is situated in the
southeastern region of the Asian continent, and 4. T
 he UAE's emergence as a global financial
in the eastern part of the Arabian Peninsula. It center and major trading hub exposes it
overlooks the Arabian Gulf on the north and to inherent money laundering and terrorist
northwest. Its coastline stretches for 1,318 financing ML/TF risks, including the laundering
kilometres. It has a total land border of 867 of foreign proceeds of crime and trade-based
kilometres, out of which it shares 410 kilometres money laundering. Criminals may exploit the
with Sultanate of Oman and 457 kilometres country's economic openness, financial system,
with the Kingdom of Saudi Arabia Saudi Arabia. and business infrastructure to move illicit funds
The UAE enjoys a unique strategic location, and assets. As such, it is crucial for the UAE to
bordering the Gulf of Oman and overlooking the remain vigilant in addressing and safeguarding
southern approach to the Strait of Hormuz, a against these risks. The complexity of ML/
vital transit point for world oil.(2) TF risks has grown due to the evolving global
geopolitical environment, macroeconomic
2. The UAE is a constitutional federation shifts, and the increasing use of sophisticated
composed of seven emirates: Abu Dhabi financial and business structures. Additionally, 6. The UAE’s judicial system is based on civil law, competent authorities. The country has since
(the capital), Dubai, Sharjah, Ajman, Fujairah, technological advancements have created including its courts and prosecution services. updated key legal instruments, such as Federal
Umm Al-Quwain, and Ras Al-Khaimah. The new avenues for criminals to swiftly and easily The Constitution allows for a Federal judicial Law No. 20 of 2018 on AML/CFT, which has been
country operates under a federal government move illicit funds across borders. These factors system and also grants the seven Emirates of further enhanced and amended by Federal
structure with authority over key national are taken into account in the UAE's 2nd ML/TF the UAE the right to establish their Emirate-level Decree-Law No. 26 of 2021, as well as the
matters, including foreign affairs, defense and National Risk Assessment.. judicial systems. Three Emirates – Abu Dhabi, Cabinet Resolution No. (24) of 2022 amending
the Federal Armed Forces, national security, Dubai and Ras Al Khaimah – have opted to have some provisions of Cabinet Resolution No. (10)
federal finance (including taxes and currency), 5. The UAE has been an active member of the their local judicial system and thus have their of 2019 regarding the executive regulations of
major criminal legislation, and public health and Middle East and North Africa Financial Action local police departments, prosecution authorities, Federal Decree Law No. (20) of 2018 regarding
education. Task Force (MENAFATF) since 2004-2005, an and courts. It is worth noting that the emirate- combating money laundering crimes, combating
observer of the Asia/Pacific Group on Money level departments are connected to the federal the financing of terrorism, and financing illegal
3. The UAE serves as an international business, Laundering (APG) since July 2023, and a member system through a combination of constitutional organizations.
financial and trading hub regionally and globally. of the Egmont Group since June 5, 2002. It has provisions, institutional arrangements, and
It bridges Europe, Asia and the Middle East, signed and ratified several key international intergovernmental coordination. 8. The UAE's first ML/TF National Risk Assessment
facilitating financial and trade activity flows conventions, including the Vienna Convention (NRA) was published in 2018 and updated in
among these regions. The UAE is characterised against Illicit Traffic in Narcotic Drugs and 7. The UAE has adopted AML/CFT measures 2019. Additionally, supervisory authorities have
by its geographical location, which helps in the Psychotropic Substances, the United Nations under the 2018 AML/CFT Law and its By-Law/ developed dynamic sectoral risk assessment
conduct of international trade activities. As a Convention against Corruption, the Palermo Executive Regulation (Cabinet Decision No. 10 of models, which are regularly updated to identify
result, the UAE has some of the busiest ports Convention against Transnational Organized 2019), which came into force in November 2018 and address ML/TF risks across different
in the World. Furthermore, The World Trade Crime (ratified May 7, 2007), the Merida and January 2019, respectively. The law and sectors. These models produce sectoral risk
Organization) (WTO) has ranked the UAE as Convention against Corruption (ratified February regulation expand the preventative measures assessments, thematic reviews, and strategic
number 14th for total trade in terms of World 22, 2006), and the International Convention for and obligations and provide further powers to analysis reports. Building on the 2018/2019
Merchandise Trade Export and 18th for World the Suppression of the Financing of Terrorism.
Merchandise Trade Import in the same year.(3) Additionally, the UAE has concluded 193
(2) source: https://u.ae/en/about-the-uae/fact-sheet
The value of the UAE's non-oil foreign trade hit Double Taxation Agreements to promote tax
(3) Merchandise Trade - Trade Dashboard (wto.org)
a record Dh1.24 trillion ($337.6 billion) in the first transparency in line with its risk profile. (4) https://www.mofa.gov.ae/en/mediahub/news/2023/8/31/31-8-2023-uae-mohamed-bin-rashed

10 11
 ML Threats
NRA, the UAE conducted a risk assessment of and in-depth analysis of the major sectors in
legal persons and arrangements in 2022 and the country including the VASP sector, real
published a comprehensive strategic analysis estate sector, dealers in precious metals and
in March 2023, providing a detailed assessment stones (DPMS) sector, as well as developments
of the risks associated with legal persons in in various sectors like Hawaladars, detailed 13.As an international finance, trade, and logistics • Low and Medium-Low Threats: Five predicate
the country. assessments of threats like foreign corruption hub, the UAE faces ML threats from both offences classified as low-medium ML threats
and cross-border cash movements, and domestic and foreign predicate offences. include illegal arms trafficking, dishonesty that
National Coordination expanded coverage of legal entities operating Domestically, Notable threats include drug can take various forms such as identity theft,
in the UAE. trafficking, fraud, smuggling, counterfeiting, forgery, embezzlement, or false representation,
9. The UAE's 2nd NRA, coordinated by GS- and piracy of products. Externally, heavily extortion, illegal alcohol trafficking, and
NAMLCFTC, provides a consolidated view of 11. Following the 1st NRA, the UAE launched the characterized threats include, drug kidnapping. Other predicate offences, such as
the UAE’s understanding and assessment of 2020-2023 National AML/CFT/CPF Strategy, trafficking poses a high ML threat, while illegal gambling, illicit trafficking in stolen goods,
the prevailing and emerging ML threats and focusing on a system-wide approach to fraud, counterfeiting, tax evasion and foreign market manipulation, and murder, are identified
vulnerabilities that country faces, as well as the strengthen its AML/CFT/CPF framework. The corruption, and currency counterfeiting pose as low ML threats.
level of controls within each sector. More than UAE’s policies and initiatives continue to evolve, medium-high threats.
84 authorities contributed to the NRA, including ensuring that authorities and stakeholders stay Most Observed ML Typologies
federal, local, and private sector entities such vigilant to shifts in ML/TF risks, incorporating 14. The overall threat from ML is assessed as
as financial institutions (FIs), designated non- these insights into the operations of medium-high. The UAE is exposed to ML 15. T
 hird-Party Money Laundering: Unlike situations
financial businesses and professions (DNFBPs) government, law enforcement, and regulated threats from various predicate offences, both where a criminal launders their own illicit
and virtual asset service providers (VASPs). sectors. This ongoing awareness is central domestic and international, necessitating a proceeds, third-party ML involves an illicit actor
The report shown here reflects the joint effort to combatting financial crime and guiding comprehensive and robust AML/CFT framework. who helps launder the funds for a crime in
across all involved entities in the UAE actions against illicit financial flows identified • High Threats: Fraud and drug trafficking are which they were not involved. These third-party
in the updated risk assessment, which reflects significant ML threats in the UAE. Criminals use money launderers may often be professionals
World Bank Methodology changes since the 2018/2019 NRA. sophisticated methods, including social media, who use their financial, accounting, and legal
dark web markets, and innovative smuggling skills to launder illicit proceeds. Third-party ML
10. In conducting the second NRA, the UAE Priority Areas: techniques, to launder proceeds through cash poses a significant threat to the UAE's financial
has adopted and implemented the World and bank accounts of associates. integrity, often involving the misuse of legal
Bank methodology. The process, which built 12. The UAE’s focus remains on targeting the more entities to obscure illicit fund origins.
upon the first NRA, included extensive data complex forms of financial crime – i.e., involving • Medium-High Threats: Counterfeiting and piracy
collection and analysis from 2019 to 2023, abuse of legal persons, foreign predicate of products remain significant international 16. A
 buse of Bank Accounts: Bank accounts are
examining a significantly larger number of offenses, trade-based money laundering, threats. Smuggling, particularly of cash and an essential, common, and central feature
ML/TF cases. The assessment involved three professional money laundering, and organized precious metals, is another major concern. to the financial system. The abuse of bank
stages: risk identification and data collection, crime. In addition, the UAE also looks toward Main sources of smuggled goods include five accounts represents a significant portion of
analysis of identified risks, and evaluation to the future considering those risks posed by jurisdictions identified as high-risk countries. ML cases, with fraud, electronic fraud, and
determine priorities for addressing the risks. virtual assets and rapidly advancing forms of Also, Tax Evasion and foreign corruption, and drug trafficking being key threats. International
Series of stakeholder workshops were held to cyber-crime, and the need for appropriate currency counterfeiting pose medium-high transfers are the most common method used.
discuss figures and the AML/CFT framework, mitigation through legislation, regulation, threats. Foreign corruption remains a significant
and effectively analyze and identify trends supervision and investigation. ML threat, as evidenced by numerous mutual 17. Abuse of Legal Persons: Criminals seek to
and potential risk and ensure compliance legal assistance (MLA) requests and complex and hide their ownership and the source of illicit
with evolving AML/CFT regulations and best sophisticated case structures. proceeds by whatever means possible, often
practices. The final findings, which included an seeking to use legal persons to do so. The
expanded and nuanced assessment of threats • Medium Threats: Human trafficking, robbery, abuse of legal persons may involve complex
and vulnerabilities, are presented to the Higher and theft present medium-level ML threats. structures to obscure ultimate beneficial
Committee overseeing the National Strategy Unlicensed money exchange services, currency owners (UBOs), including the use of front and
on Anti-Money Laundering and Countering counterfeiting, and forgery-related offences are shell entities to advance all manner of criminal
the Financing of Terrorism, as part of the relatively low but still noteworthy. Environmental schemes, including fraud, drug trafficking,
process.. The NRA focused on ML/TF threats crimes also pose medium ML threats. and TBML.

12 13
 18. A
 buse of Real Estate Sector: Criminals often international standards, effective supervisory
use the real estate sector to obfuscate the regimes, and laws for asset freezing and
The key findings of the NRA are summarized in the Infographic below:
proceeds of crime as the purchase of real confiscation. However, gaps remain, particularly
estate allows for the movement of large in implementing rapid measures for seizing
amounts of funds in a single transaction. assets and addressing DNFBP compliance.
Fraud: Fraudulent proceeds are Smuggling: Significant ML risk
often laundered and facilitated due to high-value transactions, ML cases involving the real estate sector Domestic cooperation and international
through third parties, including Criminals use DPMS to convert
corporate and individual mules, illicit funds into valuable assets primarily relate to fraud and drug trafficking. collaboration are bolstered by robust regulatory
and nominees. that can be moved across
borders with relative ease. Common methods include using unknown frameworks and cooperation mechanisms,
funds for property purchases and though procedural delays challenge
Foreign Corruption: Foreign Drugs-Trafficking: Laundering manipulating property prices, often linked to international coordination. Key infrastructures,
corruption yields illicit gains that
are laundered a cross-border
ML Key proceeds from drug trafficking,
often involving complex organized crime groups. like the customs and identification systems,
financial systems and luxury
assets.
Threats networks and sophisticated
techniques. are well-regulated, but specific improvements
Other Key Observations are needed, such as licensing systems for cash
couriers and identity verification in certain
Counterfeiting and piracy
Tax Evasion: Tax evasion
of products: These activities
generates substantial illicit 19. Foreign Predicate Offences: ML investigations scenarios. Efforts to ensure the reliability of
generate significant illicit
funds that are often laundered
proceeds that require laundering,
through complex financial involving foreign predicate offenses highlight beneficial ownership registries and independent
often through complex networks
networks.
and trade-based schemes the importance of international cooperation. auditing underscore UAE’s commitment,
The UAE engages in extensive information although additional resources and refined
sharing and collaboration with foreign oversight mechanisms are critical to achieving
counterparts to combat these threats. full efficacy across its AML/CFT/CPF initiatives.

Organized Crime: These groups

Foreign Predicate Offenses:
large economy involves high
use complex global networks
involving multiple jurisdictions to
20. V
 irtual Assets/Virtual Asset Service Providers: Sectoral risk Assessment
volumes of inward and outward
launder proceeds from crimes cryptocurrencies pose significant ML threats
cash flows, with many high-risk ML
such as drug trafficking, fraud,
cases linked to foreign jurisdictions.
smuggling, and tax evasion. due to their ability to conceal transaction • Financial Institutions:
origins and identities. Criminals use techniques
Typologies like mixers to obscure the source of funds. 24. U
 AE banks – both domestic and foreign –
and trends are the backbone of the financial industry,
21. Complex Money Laundering Techniques providing retail and corporate services to
Third-party Money Laundering: (Organized Crime): the UAE faces significant members of the private and public sectors.
Trade-based Money Laundering: Many cases involve the abuse of
TBML is a predominant threat, the structure of legal entities, where global ML risks involving professional launderers
involving large volumes of existing companies are approached
financial transactions with or set up from scratch to conceal and foreign organized crime groups, who use 25. M
 L threat is rated in the range of Medium-
international trading partners. the origins of illegitimate funds.
complex networks across multiple jurisdictions. High to High.

22. Free Trade Zones Threats: Free Trade 26. Banking Sector: The overall Medium-High risk
Zones, while established to attract trade rating for the Banking sector is consistent
Banking Sector: The UAE's
Exchange Houses & Hawaladar: and investment, are vulnerable to ML crimes. with the characteristics of the sector in the
Typically, Involvement in cash border
banking sector is attractive to movements, layering through currency
criminals due to its size, openness, exchange, and third-party laundering. Criminals exploit these zones for activities such UAE. The banking sector’s inherent risk rating
and extensive cross-border Sectors exploited by individual mules and
networks. shell/front entities due to the large foreign as smuggling, drug trafficking, and tax evasion. score is High due to multiple factors such as
resident population.
dealing with high-risk industries (real estate,
ML Vulnerabilities dealers in precious stones, virtual assets,
Medium-High
trade finance industries). Further, the banking
& High Risk
23.The UAE’s assessment of vulnerabilities in sector is associated with high-risk customers
Sectors
its AML/CFT/CPF framework highlights both such as politically exposed persons, non-
DPMS and Real Estate Sector: Virtual Assets / Virtual Asset Service strengths and areas needing enhancement. The resident customers, and customers dealing
Involves the use of unknown Providers (VASPs): Cryptocurrencies
sources of funds, third parties, pose significant ML threats due to their country demonstrates a strong commitment with high-risk jurisdictions within the UAE’s
and manipulation of property anonymous and decentralized nature and
prices, In addition to Concealment also Facilitate the rapid movement of to combating financial crimes through a banking services. The sector also engages
of funds and beneficial owners. funds across jurisdictions, complicating.
comprehensive policy framework aligned with with its customers through digital channels,

14 15
 provides check cashing facilities, and provides 30. Controls around delivery channels transfers and these transfers move funds faster
payment processing services. The banking demonstrated improvements since 2019 through and could have features that make tracking the
industry is exposed to Money Transport and the enhancements to transaction monitoring source and final destination difficult;
Cash Controller Networks, Proxy Networks, and internal controls via various channels such
Money Mule Networks and Digital Money and as ATM cash deposit machines, electronic • Banknotes Shipments: Exchange Houses are
Virtual Currency Networks. More recently, banking services, electronic payments like wire exporting and importing banknotes to/from
the banking sector is exposed to fraud risks transfers, remittances, and prepaid cards. foreign jurisdictions where no transaction limits
such as Impersonation fraud, Business Email are applied and, in these cases, tracking the
Compromise (BEC) and pig butchering scams. 31. G
 eographic risk in terms of identifying higher sources or purposes of underlying transactions
risk customers, transactions, and jurisdictions will be practically challenging;
27. Within the control environment, the UAE has also showed improvements. Controls and risk
made special provisions for AML requirements assessments were enhanced to accurately • Remittance Arrangements: Exchange Houses
in the banking sector. Since 2021, the CBUAE identify, classify, and monitor such trends. are mostly using the services provided by
in particular has published more than 85 These mechanisms led to suspicious activity remittance service providers operating 35. Insurance Sector: The overall Medium risk rating
Guidances, Circulars, and Notices on AML/ reporting to the Financial Intelligence Unit in foreign jurisdictions and some of these for the Insurance sector is consistent with the
CFT related topics. These topics include in terms of ML/TF risks associated with foreign jurisdictions may be operating with characteristics of the sector in the UAE. The
risk assessment, customer due diligence customers and transactions being associated and inadequate regulatory framework and insurance sector’s inherent risk rating score is
measures, ongoing monitoring of transactions, with higher risk geography. ineffective controls; Medium, factoring the limited avenues by which
sanction screening, and reporting suspicious the sector can be abused for ML purposes, the
transactions and activities to the UAEFIU. In 32. Exchange House Sector: The overall Medium- • Third Party Transactions: Exchange Houses same is reflected in the risk rating.
addition, the UAE introduced a number of High risk rating for the Exchange House are processing third party transactions and
reporting requirements to ensure reports are in sector is consistent with the characteristics these transactions may become complex as 36. T
 he critical aspects of the sector that factor
line with the UAE’s typologies and risks. of the sector in the UAE. The Exchange the actual customer and/or beneficial owner into the ML risk assessment include the
House sector’s inherent risk rating score of funds may sometimes be hidden resulting in following:
28. The CBUAE noted improvements to the is High and is attributed to the Exchange serious transparency issues; • Provision of life insurance products.
banking control framework as compared to Business covering a wide range of business • Ability to settle insurance premium in cash.
2019. The results showed an improved AML/ activities that includes money changing, • Large Number of Transactions: Exchange • Understanding the insured party in terms of
CFT culture and a better understanding of risk. cross border money transfers, and cross Houses are processing large number of KYC and reputational risk (through adequate
Regarding customer risk, the banking industry border banknotes shipments, and the sector transactions on a daily basis, sometimes name-screening tools).
demonstrated enhancements to AML/CFT being highly vulnerable to ML risks, including through its multiple branches, and hence
such as enhanced on boarding controls and because of the potential for large amounts segregating the illegitimate transactions 37. The risk assessment considers TFS and
detailed risk assessments which supported of cash to be received from customers for for onward reporting to Regulators and FIUs Fraud as areas where the risk is higher due to
the identification of higher risk customers. The processing their transactions that could be becomes difficult; and prevalent insurance scams, involvement of the
banking sector also enhanced risk-based KYC/ misused for moving funds of illegitimate origin Insurance company is commercial insurance
CDD procedures and monitoring tools to monitor or for illegitimate purposes. • New Technologies: Products and services products (particularly maritime), and the usage
higher risk customers and activities. Training and related to Exchange Business based on new of insurance products by sanctioned parties to
expansion to AML/CFT resources were observed. 33. T
 he ML related vulnerabilities can be financial technologies can expose the Exchange route value to related parties.
associated with the following key areas: Business into money laundering risks as such
29. The CBUAE noticed a better understanding • Cash Transactions: Exchange Houses are products may sometimes result in anonymity. 38. The control effectiveness assessment in
of products and services risk in the banking receiving large volume of cash, the source of the insurance sector suggests that the
industry, through the identification and which is not always traceable, for processing 34. Overall, Exchange Business can be used controls need to be strengthened further.
mitigation controls to ML/TF risks associated transactions and hence attract criminals during any stage of money laundering such as This outcome is appropriately reflected in the
with higher risk products. The outcomes of the to legitimize their ill-gotten funds, including placement, layering or integration due to the effectiveness rating of “Partially Effective”
NRA, SRA and other typologies were utilized in through structuring; excess usage of cash, speed of transactions, from the risk assessment model used.
these assessments. Monitoring tools were also cross border funds movement, anonymity,
utilized to scrutinize transactions associated • Money Transfers: Exchange Houses are complexity, third party involvement, absence of 39. Registered Hawala Provider (RHP) Sector:
with higher risk products. processing international and domestic money transaction limits in some products, etc. The overall High-risk rating for the Registered

16 17
 Hawala Provider sector is consistent with the to Medium-High due to the diverse ML/ MVTS entities operating within the freezone, the 51. In the UAE, the DNFBPs sector is extensive,
characteristics of the sector in the UAE. The TF risks, with different sub-sectors such as MVTS sector faces Medium-High risks due to encompassing approximately 16,000 firms
RHP sector’s inherent risk rating is High due brokers, investment managers, advisors and the nature of their activities. regulated by four supervisory authorities. Most
to multiple factors such as dealing with high- companies dealing in forex showing varied risk of these firms (96%) operate in the mainland
risk industries (real estate, dealers in precious levels. Effective control measures and tight • Dubai International Financial Centre (DIFC): and commercial free zones under the Ministry
stones). Further the RHP sector is associated regulatory oversight are in place to mitigate The banking sector is split into commercial of Economy (MOEc), while the Ministry of
with high-risk customers such as politically these risks. For example, brokers and dealers banking and credit providers, both showing Justice supervises 2% representing lawyers
exposed persons, non-resident customers. in forex have Medium-High to High inherent Medium risk ratings. The securities sector's & notaries. The Dubai Financial Services
Regarding mitigating measures, certain areas vulnerability mainly due to high volume of vulnerability varies across sub-sectors, with Authority (DFSA) and the ADGM Financial
require further enhancements and effectiveness transactions, however, effective controls result effective AML controls in place. The sector's Services Regulatory Authority (FSRA) oversee
in the sector, including Risk Assessment, CDD/ in having Medium-High residual risks, while offerings include brokerage, wealth management, the remaining 2% in the FFZs.
KYC and Customer Risk Assessment, enhanced Investment managers and advisory companies crowdfunding, and advisory services.
CDD, monitoring and reporting framework, have Medium residual risks due to low inherent
STR reporting, TFS-related controls, record vulnerability and effective controls. Virtual Asset Service Providers Sector(5)
keeping. Hence, the control assessment of the
sector is part of their supervisory intervention Financial Free Zones 48. The UAE positions itself as a leader in the approximately
and understanding of the sector. The control
assessment is ‘Partially Effective’. 44. T
 he UAE has two independent FFZs within the
digital economy by embracing the potential of
Virtual Assets (VAs) to drive economic growth 16,000
firms regulated by
jurisdiction. and attract international investments.
four supervisory
40. Based on the residual risk, an inherent risk authorities
rating of ‘High’ combined with a control 45. Established in 2004, the Dubai International 49. The UAE is assessed to have a high level
effectiveness rating of ‘Partially Effective’ Financial Centre (DIFC) is a global financial centre of residual risk ML/TF as it relates to virtual
yields a residual risk rating of ‘High’ for the in the Middle East, Africa, and South Asia (MEASA) assets. The UAE faces significant threats,
Registered Hawala Providers. As it stands, the region based in Dubai. It hosts over 2,000 including cyberattacks that involve the use
residual risk rating for this sector remains the registered companies including FIs and DNFBPs. of virtual assets, regulatory gaps specific to 52. DPMS Sector: The DPMS sector is particularly
same with the UAE NRA due to high inherent virtual assets and VASPs, and geographical significant, contributing substantially to non-oil
risk and partially effective controls. 46. A
 DGM is an international financial centre and risks. To combat these risks, the UAE has trade, with the majority (99.4%) supervised by the
free zone located in the Emirate of Abu Dhabi. established a robust regulatory framework MOEc. This sector is considered medium-high risk
41. Finance Companies Sector: The overall ADGM was established pursuant to Federal with enhanced KYC/AML processes, for ML due to its cash-intensive nature and data
‘Medium’ risk rating for the Finance Companies Law No. (8) of 2004, Federal Decree No. (15) of international sanctions compliance, and strong discrepancies that hinder effective supervision,
sector is consistent with the characteristics of 2013, Cabinet Resolution No. (4) of 2013, and information-sharing mechanisms that has although there is no evidence of misuse for TF.
the sector in the UAE. The finance company Abu Dhabi Law No. (4) of 2013. ADGM has its been implemented in collaboration with LEAs In order to establish and implement controls and
sector in the UAE is relatively small, compared own civil and commercial legal regime, which including systematic dashboard and unified mitigate risks, DPMS must adhere to AML/TF
to other mainstream financial sectors directly applies English common law within the portal for sharing information developed regulations and requirements, including reporting
operating in the country and the exposure of defined geographical area of the free zone. for enforcement, joint investigations, and STRs, cash threshold reporting obligations,
the sector to high-risk customers, products, ADGM also has its own independent registrar, supervisory actions. and implementing the Responsible Sourcing
geographies and delivery channels is minimal. financial services regulator, and courts. policy. The DPMS sector operating in the FFZ
50. F
 uture improvements focus on enhancing constitute to 6% of the total population. It is to
42. B
 ased on the residual risk table provided in 47. M
 L threat is rated in the range of Medium to regulations, continuing to strengthen note that there are no refineries operate in the
the Methodology section, an inherent risk Medium-High. international cooperation, and bolstering data FFZ and these are solely retailers of precious
rating of Medium, combined with a control • Abu Dhabi Global Market (ADGM): The absence protection standards to ensure the security metals and stones.
effectiveness rating of Partially Effective, of cash transactions significantly reduces and integrity of its financial systems.
yields a residual risk rating of Medium for the the overall AML risks within the freezone. The 53. R
 eal Estates Brokers & Agents: The real estate
Finance Companies sector. banking sector demonstrates strong compliance Designated Non-Financial Businesses sector is another crucial DNFBP, contributing
with AML/CFT/CPF requirements. The Securities and Professions significantly to the UAE's economy and
43. Securities Sector: The securities sector is sector is also considered to have a high level of
assigned a residual risk rating of Medium AML controls. Although are a limited number of (5) incl. all categories across Financial Services covered in this document, that may be interacting with/facilitated using Virtual Assets

18 19
 attracting substantial local and foreign 57. The newly introduced General Commercial Non-Profit Organizations can be incorporated in both mainland and
investment. About 99.8% of real estate Agents Gaming Regulatory Authority will oversee gaming Free Zones, underscores their importance in
are in the mainland and commercial free zones, activities, though no casinos have been licensed 61. A
 t the preliminary stage of the assessment, 1024 economic growth, with Dubai and Abu Dhabi
under the MOEc's supervision. This sector is during the period of the national risk assessment. licensed and operational non-profit organizations hosting 73% of approximately 828,000 legal
classified as high risk for ML, primarily due to (NPOs) were identified in the UAE, with 154 entities. A recent risk assessment revealed
cash transactions and involvement in luxury 58. The UAE assesses its residual risk level categorized as the subset more exposed to a Medium-High money laundering (ML) risk
properties, though it has not been misused for associated with Terrorism Financing as terrorist financing (TF) risks according to the level for legal persons and arrangements,
TF. In the FFZs, real estate activity is minimal, Medium-High. This assessment is based on a FATF definition. These 154 NPOs were further mainly due to vulnerabilities like complex
with residual risks assessed as medium-low. classified into six sub-categories: charitable, transactions obscuring beneficial ownership
The sector's inherent vulnerability score is humanitarian, health, education, environment, and nominee arrangements. To mitigate these
medium-high, while the quality of general AML
controls is rated medium. TF Assessment and general/cultural/sport. Although there
is no evidence of TF exploitation within the
risks, regulatory and non-regulatory measures
are being strengthened, including enhanced
UAE's NPO sector, several factors contribute supervision, streamlined registrars, and
54. C
 orporate Service Providers (CSPs) Sector: comprehensive analysis of the TF Threat and to its vulnerability. These include cross-border awareness programs for compliance, which
CSPs are primarily concentrated in Dubai and TF Vulnerability across domestic, outgoing, activities, operations in conflict zones with active have resulted in higher-quality suspicious
Sharjah, operating largely in commercial free incoming, and transit perspectives. The UAE terrorist threats, the transfer of large sums to activity reports submitted to the Financial
zones and the mainland. The CSP sector is faces a complex terrorist threat landscape, with high-risk countries, and reliance on irregular Intelligence Unit (FIU).
classified as medium risk for ML due to the a medium domestic threat level and rising cross- seasonal workers. The UAE’s strategic location,
potential for concealing beneficial ownership and border threats, particularly from conflict zones. diverse demographics, and significant role in
transferring funds offshore. While the sector has Despite no domestic terrorist attacks in 2023 global humanitarian aid also heighten these risks.
not been misused for TF, the UAE is enhancing and effective counter-terrorism measures, the Consequently, the TF threat level for the NPO
measures to improve transparency in beneficial UAE remains vigilant against external threats. sector is assessed as Medium.
ownership. In FFZs, CSPs are limited to corporate
services, and their residual risk is assessed as 59. T
 errorist financing in the UAE involves various 62. D
 espite these challenges, the UAE has
medium, with medium scores for both inherent channels, including donations (sent abroad), taken precautionary measures to address
vulnerability and quality of AML controls. commercial enterprises, real estate, and the vulnerabilities in the NPO sector. These
informal financial networks. The UAE's status as measures include aligning and amending
55. Audit and Accounting Sector: The audit and a major finance and trade hub, with prominent legislation governing the sector, as provided
accounting sector, essential to regulating financial centres in Dubai and Abu Dhabi and in the Federal Decree-Law No. 50 of 2023 on
the UAE’s business environment, operates significant re-export operations, exposes the Regulation of Public Benefit Organizations.
predominantly in commercial free zones it to elevated TF risks. Strategic goods and The law aims to unify licensing requirements,
and the mainland, particularly in Dubai, Abu services, trade relationships with terrorism- coordinate roles among regulatory authorities,
Dhabi, and Sharjah. This sector is classified as affected nations, and extensive aid programs establish a central database, and define
medium-low risk for ML, having no significant present high TF threats. The UAE continues oversight responsibilities. Furthermore, clear
misuse cases related to ML or TF. However, to enhance its scrutiny of financial channels, procedures and regulations have been set
vulnerabilities exist, especially if practitioners particularly in sectors like real estate and non- to combat ML and TF. Efforts are ongoing to
neglect regulatory responsibilities or profit organizations. issue regulatory decisions related to sanctions
intentionally engage in ML activities. In FFZs, and administrative measures. A national team
the audit and accounting sector is small, with 60. The UAE has established a comprehensive has been formed to gather data and assess
residual risks assessed as medium-low and framework for financial transparency and sector risks comprehensively. Overall, the
medium scores for both inherent vulnerability beneficial ownership information, supporting vulnerability of NPOs to TF exploitation is rated
and quality of AML controls. investigations and mitigating risks associated as Medium, with both threat and vulnerability
with TF. Efforts include enforcing due diligence, assessed at this level.
56. Law firms & Notaries Sector: The legal sector identifying clients using unlicensed virtual asset
also poses medium-low risk for ML, particularly services providers, and aligning with global Legal Person and Arrangement
in real estate transactions, with similar standards through international treaties, legislative
vulnerability and control ratings. measures, and proactive financial monitoring. 63. T
 he UAE’s approach to legal persons, which

20 21
 Priority Actions
64. Based on the NRA process, it is clear that the UAE has demonstrated a strong commitment to
combating money laundering and terrorism financing, as evidenced by its robust legal framework,
effective national cooperation mechanisms, and strong supervisory, law enforcement and judicial
systems. That said, there is room for enhancement in some areas to further enhance its capabilities and
contribute to the global fight against financial crime.

Continue to sustain and enhance the production and use of financial

1 Enhance and unify understanding of risks with respect to UAE’s risk profile: 5 intelligence to investigate ML cases, prosecute, convict, and confiscate
Ensure the UAE’s risk understanding is further deepened and unified. while assets: The UAE should demonstrate that it is proactive and capable to
coordination between the public and private sectors is enhanced to better produce high-quality financial intelligence to successfully investigate and
identify emerging risks and raise awareness at the interagency level and prosecute even the most complex cases. This is linked to more informed
within the private sector. analysts and investigators, wide-ranging international, and effective use of
financial intelligence.

Continue to sustain and enhance TF investigations, reporting, and

2 Sustain and enhance international cooperation and strategic partnerships: 6 implementation of TFS: Awareness among the public and private sectors
regarding sanctions evasion typologies and risks, along with their obligations
The UAE better leverages international cooperation at all levels and enters
arising from relevant UAE legislation, is maintained. Communication with FIs,
into additional strategic and operational partnerships to enhance detection
VASPs and DNFBPs on TF, continues, and the number of STRs, cases
and disruption of cross-border ML/TF; and emerges as a regional and global
generated, and potentially freezing measures imposed. increases. Cooperation
leader in the fight against financial crime.
and exchange of information among various stakeholders, including MOCD,
continues to be improved.

3 Sustain and enhance supervisory and enforcement efforts for FIs, DNFBPs, 7
Continue to update the legal and regulatory framework to ensure
and VASPs, prioritizing higher risk sectors: The UAE should maintain a robust
compliance with global standards: The UAE should maintain its
supervisory framework, and overall levels of compliance are improved by
comprehensive legislative and regulatory framework that complies with
all sectors, resulting in the existing risks being mitigated effectively and
global standards, and which continues to serve as a key risk mitigant.
proportionate and dissuasive penalties levied in line with risk.

Further strengthening domestic coordination and cooperation and enhance

Continue unifying and harmonizing the UAE’s Company Registration and
4 8 mechanisms for public-private engagement: Channels for information
BO framework: The UAE should ensure a harmonized approach to company
sharing and cooperation between competent authorities are further
registration and the maintenance of basic and beneficial ownership data
standardized and aligned leading to improved threat identification, detection,
for all legal entities established in the UAE, resulting in a greater level of
and disruption of financial crime; a greater risk-awareness emerges within
transparency and timely access to accurate basic and BO data for legal
the private sector, especially among DNFBPs; and this leads to increased and
persons and arrangements.
higher quality reporting of suspicions, especially from high-risk sectors.

22 23
 such as Oman, Saudi Arabia, Iran, and Qatar, of the country. For example, legal consultants
with specific agreements and delimitations are subject to specific licensing and
CHAPTER
that define these relationships in accordance regulatory requirements in different Emirates
BACKGROUND AND with United Nations Convention on the Law in comparison to lawyers. Furthermore, some
CONTEXT of the Sea (UNCLOS) principles. Also, the AML/CFT obligations for licensing authorities in
UAE's neighbors have experienced political relation to DNFBPs are relatively newly enacted
instability or conflict in recent years with the and are still being implemented.
potential for nationals of those countries to

Introduction: come to the UAE for employment. Most such

inherent vulnerabilities that need to be
persons are semi-skilled, unskilled, and blue-
considered as part of a national inherent risk
collar workers, and contribute positively to the
9,516,871 population in 2023
CHAPTER

65. The UAE was last assessed for compliance assessment. These are described below:
economy and society. However, their level of
with the FATF’s 40 recommendations in 2019-
awareness of applicable AML/CFT obligations, 200 nationalities
2020. Since then, considerable improvements 1.1 Geographical Position
in the legislative and regulatory framework including restrictions over movement of cash

have taken place and the regulatory oversight and its declaration at the borders, is minimal.
69. The UAE is located in the eastern part of the
of entities that should be compliant with the These factors require increased vigilance and
Arab world, on a mostly desert stretch of
revised 2012 FATF recommendations, has scrutiny at borders to combat cases that may
land that is surrounded by the Arabian Gulf
been enhanced. The UAE was assessed jointly potentially lead to instances of ML/TF.
and the Arabian Sea. Its coastline is 1,318
by the FATF and the MENAFATF, and fully kilometres long. It enjoys a unique strategic
1.2 Population:
CHAPTER

addressed its International Cooperation Review location, bordering the Gulf of Oman and
Group (ICRG) Action Plan between February overlooking the southern approach to the
2022 and January 2024. 71. In 2023, the UAE had a population of almost
Strait of Hormuz, which is a vital transit point
9,516,871 according to the World Bank.(6) 2,893,385 6,547,744
for world oil. It has a total land border of 867 females in 2022 males in 2022
66. Given the Country’s quarterly reporting kilometres, of which it shares 410 kilometres
responsibilities to the FATF’s ICRG over with Oman and 457 kilometres with Saudi
72. T
 here were 6,547,744 males in 2022, as compared 2,853,108 6,512,037
to 6,512,037 in 2021, and 2,893,385 females in females in 2022 males in 2021
the past two years, stakeholders regularly Arabia. The total land area of the UAE is
reviewed and examined their progress in 2022, as compared to 2,853,108 in 2021.(7)
83,600 square kilometres.
several key areas touching on supervision,
international cooperation, the use of financial 73. T
 here are more than 200 nationalities living and 75. Due to the strategic priority of the UAE
70. The neighbouring countries, which share
CHAPTER

intelligence, transparency, and TFS compliance. working in the UAE. The expatriate community government in terms of leading the UAE’s
land borders with UAE, also have a sizable
This was complemented by examining outnumbers the population of UAE nationals. economy away from dependence on oil
diverse population with the potential to move
feedback from the ICRG Joint Group’s Indians form the largest foreign community in to a more robust and diversified base,
across borders and engage in cross-border
Assessment Team, which ultimately noted the UAE, followed by Pakistanis, Bangladeshis, the government has created 8 Mainland
commercial activity. Additionally, the UAE has
that the process of implementing the required other Asians, Europeans, and Africans. (8)
Authorities, 28 Commercial Free Zones
maritime boundaries with neighboring states
cross-cutting reforms is fully in place and and 2 FFZs which have their independent

being sustained and supported by a high- 1.3 Federal Structure supervisory authorities. The FFZs are the Dubai

level commitment to implement and continue International Financial Centre (DIFC) and the
km
UAE coastline 74. The UAE follows a federal government Abu Dhabi Global Market (ADGM), both of which
improving the UAE’s AML/CFT/CPF framework. 1,318
structure, which imparts considerable are based on Common Law principles and

67. The UAE is currently in the preparation stage for autonomy in terms of commercial legislation at have participants mostly from global financial
Total land area

km
Total land border
867 the Emirate level. This is evident in the creation institutions.
of the UAE

83,600

the 5th round of the mutual evaluation process

of different supervisory authorities over
km2

that will be conducted jointly by the FATF and

the MENAFATF during the period 2025-2027 km vulnerable financial, DNFBP and VASPs sectors 76. The companies based in the Mainland ,
Border with Oman
using the FATF Fifth Round Methodology.
410
(6) https://data.worldbank.org/country/united-arab-emirates?view=chart and https://opendata.fcsc.gov.ae/@federal-competitiveness-and-
km
68. In view of its economic activities, and strategic Border with KSA statistics-center/uae-population-estimates-by-gender-agegroup-year/r/Population%20by%20age%20group%20and%20Gender
457 (7) https://www.dubai-online.com/essential/uae-population-and-demographics/
geographic location, the UAE displays certain (8) Statistics by Subject (fcsc.gov.ae)

24 25
 Financial and Commercial Free Zones, including 81. The judicial system in the UAE is based on growth and diversification. Major economic the UAE’s financial sector. Sovereign wealth
some DNFBPs, have different legal structures, Prosecution and Litigation. The Federal judicial development indicators demonstrate the funds (SWFs) in the UAE are ranked among the
registration, and compliance requirements system in the UAE is under the Ministry of stability of the UAE’s financial ecosystem and top SWFs by total assets in the region by the
Justice (MOJ) and has jurisdiction over the the resilience of the national economy. Sovereign Wealth Fund Institute.(10)
77. The UAE is also assessed to have a high four Emirates, which are Sharjah, Ajman,
level of risk exposure to ML/TF within the Umm Al Quwain and Fujairah. In addition, • High Financial Solvency: The financial reserves • Most Attractive Investment Hubs: The
virtual assets sector. This encompasses a Abu Dhabi, Dubai and Ras Al Khaimah have of the UAE continue to grow exponentially, investment attractiveness of the UAE witnessed
spectrum of risks across services like virtual an independent domestic judicial system according to the financial stability report of a steady increase over the past years. With its
asset custodians, exchanges, and brokers. and thus have their own Prosecutions and the Central Bank of the UAE, which reflects ability to attract substantial investments, the
The primary threats include cyberattacks Litigation since the UAE's Constitution grants the country’s robust banking system and country enhanced its cumulative foreign direct
using blockchain, the use of virtual assets the Emirates the right to establish their own high financial solvency, ensuring its ability to investment inflows and became one of the
by international criminal networks, regulatory judicial system. However, the Constitution overcome sudden shifts in the financial and most preferred investment destinations across
gaps allowing for manipulation by unregulated stipulates that the Federal judicial system and economic landscape. the world. According to the United Nations
VASPs, and geographical risks from simplified the UAE Union Supreme Court shall have the Conference on Trade and Development, the UAE
cross-border transactions. Additionally, jurisdiction in matters that affect the interests • Steady Growth of GDP: The UAE’s real GDP was the world’s 19th biggest recipient of foreign
infrastructure risks such as malware and data of the Federation. continues to witness steady growth. According direct investment in 2022. It was also ranked
theft pose significant challenges to the virtual to the World Bank, the UAE economy is the most attractive country for investments
asset infrastructure. 82. In relation to the Federal judicial system, estimated to accelerate with the increase in West Asia, Middle East and North Africa
judicial verdicts issued by the Court of First in oil prices and production, and the strong regions. Today, the UAE is looking to attract
1.4 Legal and Judicial System Instance may be challenged by the Federal non-oil sector performance serving as major more investments, promote its investment
Court of Appeal having jurisdiction in the contributors to its economic progress. (9)
environment, provide greater incentives to
78. The Federal Police in the UAE is part of the concerned Emirate. Judicial verdicts may investors, and raise its ranking in international
Ministry of Interior; however, Abu Dhabi, Dubai, be further challenged before the Federal • Leading Sovereign Wealth Funds: Sovereign indices related to the attractiveness of the
Sharjah, and Ras Al Khaimah have independent Supreme Court. wealth funds play a crucial role in stabilising business and investment environment.(11)
local police departments. The Police
Departments in the Emirates of Ajman, Umm Al 83. In relation to the three Emirates that have their
Quwain and Fujairah is related to the Ministry of own judicial system, judicial verdicts issued by
Interior. The role of the police in each emirate is the Court of First Instance may be challenged
to receive reports of crimes, maintain security, before the Court of Appeal. Judicial verdicts
investigate and collect evidence of crimes and may be further challenged before the Court of
criminal reports, and take statements from Cassation in these three Emirates, by virtue of
victims, witnesses and accused persons. considering it as a local verdict.

79. The Public Prosecution in each Emirate 84. In December 2022, the MOJ established
judicially investigates these crimes. The PP a Federal Prosecution for Economic Crimes
charges accusations and refers Criminal Cases and Money Laundering within each Major
to the competent Courts. With regard to Prosecution. This institutional reform should
crimes against state security and terrorism, the enhance judicial authorities’ capabilities to
State Security Prosecution is the competent prosecute and guarantee convictions in
Authority to investigate such incidents, and high-risk ML activities.
the Federal Supreme Court is the competent
authority to consider and adjudicate them. 1.5 Economy:

80. The procedures of arrest and evidence 85. T

 he UAE maintains its status as one of the
gathering by the police, investigations by PP most competitive and highly advanced (9) h  ttps://thedocs.worldbank.org/en/doc/65cf93926fdb3ea23b72f277fc249a72-0500042021/related/mpo-are.pdf#:~:text=URL%3A%20
https%3A%2F%2Fsiteproxy.ruqli.workers.dev%3A443%2Fhttps%2Fthedocs.worldbank.org%2Fen%2Fdoc%2F65cf93926fdb3ea23b72f277fc249a72
and trials in regards to ML/TF crimes are ruled economy in the world while leveraging
(10) https://www.swfinstitute.org/fund-rankings/sovereign-wealth-fund
by the Federal Decree by Law No. (38) of 2022. innovative strategies to boost economic (11) https://economymiddleeast.com/news/unctad-uae-ranks-first-regionally-19th-globally-in-attracting-fdi/

26 27
 •Highly Diversified Economy: Through the UAE’s administrative penalties that contribute to around

828,000
economic diversification efforts, the country enhancing compliance with the laws. Dealing

70%
has made significant progress to reduce its with cash economic activities that are not
reliance on oil and shift towards a competitive traditionally registered is one of the challenges
economy driven by knowledge and innovation. facing the UAE. However, the country has companies registered in
Currently, non-oil sectors account for 70% of established strict procedures and controls to the UAE as of the end of
the total GDP. regulate these activities, including the disclosure December 2023
non-oil
of cash transactions and the implementation
sectors of the
• Five-year Federal Budget: The UAE’s total GDP of requirements to combat money laundering.
90. As a service-based economy and major
federal budget from 2022-2026, which has Also, digital transformation, financial inclusion
business hub for the region, the UAE financial
a total value of AED 290 billion, is the largest and the introduction of the Value Added Tax
sector is one of the significant components
spending budget in the country's history. The have helped to formalize some economic
of the country’s GDP, economy and society.
budget aims to prioritise social development, activities and reduce opportunities for cash-

19
Dubai’s growth as a global financial hub
government services upgrade, implementation th based operations. On the other hand, the UAE is
received further recognition from prestigious
of federal projects, and economic development. keen to encourage the transition from informal
international indices. The spring 2023 edition of
economic activities to formal ones. Within this
the Global Financial Centres Index categorised
• Global Credit Rating: The UAE’s strong credit framework, several measures have been taken,
the city as one of only ten financial centres in
ratings from internationally recognised agencies such as licensing economic activities that take
biggest recipient of the world that is a global leader with broad and
reflect the creditworthiness of the federal foreign direct investment place through social media and e-commerce
deep capabilities.(12)
government. The robust credit profile of the in the world-2022 and stimulating small and medium enterprises
UAE stems from its high GDP per capita, strong and businesswomen. To encourage transition
91. The UAE financial services sector is a major
international relations, innovative policies to the formal sector. the UAE has streamlined
regional hub that attracts investments from
to enhance sustainable development and business registration procedures, invested in
AED across the world and regional markets that
contributing factors that impact the UAE’s ability infrastructures and enhanced education and
to withstand economic and financial challenges.
290
billion
training programs.
seek political stability and economic growth.

92. Locally, financial services are offered to the

• Promising Economic Sectors: Key economic 89. It is noteworthy that the information
vast majority of the UAE population, from High-
sectors in the UAE are witnessing a steady infrastructure in the UAE is an important factor
Net-Worth Individuals (HNWIs) who are offered
growth in the flow of investments, and federal budget from in supporting the transparency of the economy.
2022-2026 elite private banking and wealth management
several national companies are entering The MOEc adopted the National Economic
solutions, to the middle class, which is more
into partnerships with foreign firms. The Register (NER) linked to business establishment
than half of the population, and low income
country seeks to attract further investments 87. It is noted that informal economic activities and licensing systems, which includes a
labour and unskilled workers who seek access
into promising sectors such as advanced in the UAE constitute a small percentage, strong database that includes around 828,000
to basic and specific financial products such
technology, artificial intelligence, research not exceeding 5%, and this is due to the companies registered in the UAE as of the end
as money transfers.
and development, and digital economy, effectiveness of national legislation that limits of December 2023. Furthermore, the UAE has
which stimulate innovation and improve the these activities. The UAE is characterized established an audit list of entities rejected by
performance of the economy. by strict laws and regulations that enhance registrars to ensure that these entities are not
transparency and contribute to the formalization re-established in registrars within the UAE. The
The spring 2023 edition of the
1.6 Economic Legislation of economic activities, which reflects the National Economic Register portal is enhanced to Global Financial Centres Index
country’s commitment to the standards of the include a comprehensive audit list management categorised Dubai as one of only
86. In light of global economic developments, International Standard Industrial Classification system. The new functional capabilities allow all ten financial centres in the world
the importance of economic activities and of all Economic Activities (ISIC4), global directory registrars to add entities’ and individuals’ names that is a global leader with broad
their diverse impacts on national economies that covers various economic sectors. to the list including the rationale. and deep capabilities
is highlighted. In this context, the UAE can be
seen as a prominent example in dealing with 88. In addition, the UAE stands out as a model for
economic challenges, especially with regard to effectively implementing laws and regulations,
(12) https://www.difc.ae/whats-on/news/difcs-h1-2023-performance-strengthens-dubais-position-global-finance-and-innovation-hub?trk=article-
informal economic activities. as economic legislation includes deterrent ssr-frontend-pulse_little-text-block

28 29
 CHAPTER and Related Predicate Crimes and Combatting the The UAEFIU examines and analyses those
Financing of Terrorism and (8) The Sub- Committee reports and disseminate them to the competent
OVERALL UAE ML/TF/PF on Public-Private Partnership for Counter Money authorities spontaneously or upon request.
Laundering and Terrorism Financing.
COMBATING ABILITY • The Federal Police in the UAE is part of the
Ministry of Interior and includes the police
HIGHER COMMITTEE department of the Emirates of Ajman, Umm
Al Quwain and Fujairah, which have opted for
93. This section outlines and analyses factors the implementation of the AML/CFT policies and
the Federal System. Abu Dhabi, Dubai and
affecting the UAE’s ability to combat ML/TF strategies under a risk-based and multiagency
Ras Al Khaimah have their own local police
activities. It examines the AML/CFT/CPF legal approach. The EO-AMLCFT is responsible for
CHAPTER

NAMLCFTC
NAMLCFTC GENERAL SECRETARIAT departments and have autonomy over structure,
and institutional frameworks, internal and coordinating the Government’s efforts to deliver of NAMLCFTFC
recruitment and the policing of any local
international cooperation, and the prosecution AML/CFT policies, strategies and legislative
regulations, but are linked to the MOI in terms
and judicial process. initiatives, and monitors the overall effectiveness Supervisory Investigative
Authorities Authorities of operating a unified IT system and delivering
of UAE’s AML/CFT regime and compliance with SUB COMMITTEE SUB COMMITTEE
against key strategies and goals. The police
2.1 Institutional Framework the FATF Recommendations and facilitates
are responsible for ML investigations within the
cooperation among stakeholders.
jurisdiction of each Emirate and the role of the
94. The UAE’s institutional framework for AML/ NRA TF
SUB COMMITTEE SUB COMMITTEE
police in each Emirate is to receive reports of
CFT involves a range of following ministries, • National Anti-Money Laundering and Combatting
crimes, to maintain security, to investigate and
law enforcement authorities, supervisory Financing of Terrorism and Financing of Illegal
collect evidence of crimes and criminal reports,
CHAPTER

authorities, and other authorities at both local Organizations Committee (NAMLCFTC): The Technical Companies
Compliance registrar and to take statements from the victims,
and federal level: NAMLCFTC is the primary body for policy making SUB COMMITTEE SUB COMMITTEE
witnesses and accused persons.
and issuing regulations to combat ML/TF in the
• The Higher Committee Overseeing National UAE. The NAMLCFTC is empowered to prepare
International Public Private • The Federal PP prosecutes all crimes, including
Strategy on Anti-Money Laundering and and develop a national strategy to combat Cooperation Partnership
SUB COMMITTEE SUB COMMITTEE ML, in the Emirates of Sharjah, Ajman, Umm Al
Countering Financing of Terrorism:(13) The Higher financial crime and propose related regulations,
Quwain and Fujairah, while Abu Dhabi, Dubai and
Committee was established in 2020 pursuant policies, and procedures in co-ordination with the
Ras Al Khaimah each use their own PP to pursue
to Cabinet Resolution No. 08/11 of 2020. Its competent authorities. The NAMLCFTC determines
• The Ministry of Finance (MOF) was established ML cases. All PPs (PPs) are linked to the MOJ,
responsibilities include studying, monitoring and and assesses the risks of crime on national level,
under Federal Decree No. (2) of 1971 to assume which provides strategic oversight of justice
evaluating strategies, determining the requirements and facilitates the exchange of information and
responsibility for implementing all financial matters, and supports international cooperation
that must be followed, supervising the mutual co-ordination among the various agencies. The
policies related to economic development in with the PPs.
evaluation process, and proposing draft laws. NAMLCFTC sub-committees include:(1) The Sub-
the country, foremost of which is preparing and
Committee for National RiskAssessment of ML/
allocating the federal budget, managing the • The Supreme Council on National Security
• The GS-NAMLCFTC of Anti-Money Laundering TF and Illegal Organizations Financing Risks (2) The
government’s financial situation, and providing coordinates with relevant authorities in regard
and Counter Terrorism Financing: (14) Is the Sub-Committee for Technical Compliance – 3) The
services to the government and business to national risks and sets strategy and direction
national coordinator that was established Sub-Committee of Companies Registrars; (4) The
sectors, as well as individuals. for the UAE’s security-related actions. It is
pursuant to Cabinet Resolution No. 10 of 2021. Sub-Committee for Supervisory Authorities (5)
responsible for designating domestic terrorist
Among its responsibilities, the EO-AMLCFT is The Sub-Committee for Money Laundering Crimes
• The Ministry of Community Development organisations under the UAE’s TFS regime.
responsible to oversee the implementation of Investigative Authorities (6) The Sub-Committee
(MOCD) is a federal competent authority that is
the National AML/CFT/CPF Strategy and related for Combatting the Financing of Terrorism and
responsible for the regulations of the NPO sector • The Committee for Combatting Terrorism is
National Action Plans and monitor and assess the Financing of Illegal Organizations and the
at the UAE Level. a high-level government body responsible for
any risks related to AML/CFT, financing illegal Financing of Proliferation (7) The Sub-Committee
coordinating and overseeing the country's
organizations, and financing proliferation. The for Managing and Follow-up of International Co-
• The UAE Financial Intelligence Unit (UAEFIU) efforts to prevent and combat terrorism
EO-AMLCFT spearheads measures to enhance operation Requests Related to Money Laundering
is an independent unit within the UAE Central
Bank that is the exclusive recipient of STRs and • The Federal Tax Authority (FTA), is the
(13) It is worth noting that the role of the Higher Committee has been consolidated by adding it to the amended AML/CFT law in July 2024.
information relating to predicate offences and government entity responsible for the
(14) According to the new amendment of the AML/CFT law, the Executive Office has elevated recently to The National Committee with a general
secretariat that has been empowered for broaden roles and responsibilities as a national coordinator. their proceeds from all FIs, DNFBPs, and VASPs. administration, collection and enforcement of

30 31
 federal taxes, was established in 2016 pursuant supervises banks, insurance companies and within the DIFC for AML/CFT compliance. 2.5 AML/CFT/CPF Legal Framework:
to the Federal Decree-Law 13 of 2016. related professionals, MVTS providers, and
finance companies in the mainland and CFZs. • The Financial Services Regulatory Authority 95. The UAE AML/CFT/CPF legal framework has
• The UAE Accountability Authority (UAEAA) is (FSRA) licenses and supervises the DNFBPs that high convergence with international standards,
the supreme institution responsible for financial • The Securities and Commodities Authority operate within the ADGM for AML/CFT compliance. including the pertinent Articles of the Vienna
audit and accounting in the federal government (SCA) licenses and supervises securities and Convention, the Palermo Convention, the
of UAE, reporting directly to the President of the commodities derivatives companies, including • The Land Departments or municipality of Terrorist Financing Convention, relevant
UAE. Its primary objective is to foster integrity, brokerages, advisors, listed companies, each Emirate and CFZs is responsible for the United Nations Security Council Resolutions
transparency, and accountability within the Investment Managers, Fund Managers, registration, organization, and promotion of real- (UNSCRs) and the FATF Recommendations.
United Arab Emirates. To this end, the UAEAA custodians, Securities Consulting (Research and estate investments. As per MENAFATF follow up report, UAE is
holds a critical role in safeguarding public Financial planning) and the three domestic stock compliant / largely compliant with 39 of FATF
funds by diligently monitoring the financial and exchanges in the mainland. 2.4 VASPs licensing authorities and recommendations out of 40. The UAE is
operational activities of the federal entities supervisory authorities amending the legal framework to be in line
across the UAE. • The Dubai Financial Services Authority (DFSA) with the new amendments adopted by FATF.
licenses and supervises financial institutions that • The Central Bank of the UAE is the jurisdiction in
• The UAE Cyber Security Council is a government operate within the DIFC for AML/CFT compliance. charge of Virtual assets for payment purposes, • Money Laundering Offences
body responsible for overseeing and including stored value facilities.
coordinating cybersecurity efforts in the UAE. It • The Financial Services Regulatory Authority 96. ML offences are prescribed under (AML/
plays a crucial role in promoting cybersecurity (FSRA) licenses and supervises financial • The Securities and Commodities Authority CFT Law, Art. 2) and applies an ‘all crimes
awareness, developing national cybersecurity institutions that operate within the ADGM for (SCA) issues regulations governing virtual asset approach’ to the ML offence, i.e. dealing in
strategies, and protecting the country's critical AML/CFT compliance. transactions, supervising and monitoring the the proceeds of any felony or misdemeanour
infrastructure from cyber threats. activities of virtual assets, their service providers, constitutes ML, and a felony is any crime with
2.3 DNFBP licensing authorities and and their transactions in the mainland. The SCA a minimum imprisonment of three years and
• The Executive Office for Control and Non- supervisory authorities has the mandate to supervise the Virtual Assets a misdemeanour is any crime with a minimum
Proliferation (EOCN) was established in the UAE sector in the mainland except Dubai, where the imprisonment term of one month (Penal Code,
in 2009 as a body responsible for implementing • The Ministry of Economy (MOEc) licenses and sector is supervised by the VARA. Art. 28-29). The UAE has criminalised all the
the provisions of Federal Decree Law No. (43) regulates accountants and auditors in the mainland designated categories of predicate offences
of 2021 on the Commodities Subject to Non- UAE and CFZs. In addition, pursuant to executive • The Virtual Assets Regulatory Authority (VARA) set out in the FATF Glossary, including tax
Proliferation. This is for the aim of preventing decrees following the new AML/CFT law and by- regulates and licenses providers of virtual asset evasion (Federal Law No. 7 of 2017 on Tax
the illegal and unauthorized circulation of dual law, the MOEc is the DNFBP supervisor for auditors services in Emirate of Dubai, in accordance Procedures, Art. 26). While the tax evasion
use goods that contribute to the production or and accountants, trust and company service with the conditions, procedures, and controls offence is broad, it refers to the evasion of
development of weapons of mass destruction, providers, dealers in precious metals and stones, approved by it, and supervising and monitoring national taxes, which at present in the UAE only
along with their associated technology and and real estate agents in the mainland and CFZs. them to ensure their compliance with the covers value-added tax (Federal Decree-Law
means of delivery. EOCN also coordinates and provisions of the law, the decisions issued under No. (8) of 2017 on Value Added Tax).
supervises the application of targeted financial • The Ministry of Justice (MOJ) is the designated it, and the legislation in force in the Emirate.
sanctions relating to terrorist lists system, as supervisor for Law Firms and other legal • Terrorism Financing Offence
well as the implementation of Security Council professionals throughout the mainland, in • The Financial Services Regulatory Authority of
resolutions on the prevention and suppression accordance with Cabinet Decision No. 54/1 of ADGM licenses and supervises VASPs ensuring 97. Article 29, of Federal Law No. 7 of 2014 “On
of terrorism, its financing, the cessation of 2019 passed on 8 January 2019, and amended they adhere to international best practices and Combating Terrorism Offences” creates TF
arms proliferation and financing, in addition to by Cabinet Decision No. 28/4 of 2019 on 21 April regulations. The FSRA has issued a number of offenses that extend to both terrorist acts
other relevant resolutions in coordination with 2019. Recently, legal consultancy has been placed Financial Services Permissions to virtual asset and provision or collection of funds to terrorist
competent stakeholders. under the supervision of MOJ in accordance with multilateral trading facilities (MTFs), custodians organizations or individuals. “Terrorist offence”
Federal Decree Law No. (34) of 2022. This law has and other intermediaries. covers any criminal offence committed for
2.2 Financial Sector Supervisory been in effect since January 2, 2023. a “terrorist purpose” (further defined as
authorities • The Dubai Financial Services Authority (DFSA) intending to bring about, directly or indirectly,
• The Dubai Financial Services Authority (DFSA) licenses and supervises the VASPs that operate a “terrorist result” – e.g. inciting fear, causing
 he UAE Central Bank (UAECB) licenses and
•T licenses and supervises the DNFBPs that operate within the DIFC for AML/CFT compliance. death or bodily injury, inflicting substantial

32 33
 damage to property, or aiming to influence implementation of Security Council resolutions Follow up report of the UAE and upgraded including CDD measures and record-keeping
a government or international organization. related to prevention and suppression of recommendations 6-7 to “compliant.” on requirements.
This is in line with Article 2.1(b) of the TF terrorism and its financing, and preventing and November 2021.
convention. With respect to Article 2.1(a) of the stopping proliferation and its financing. • Currency and Bearer Negotiable Instruments
TF convention, provisions cover acts listed in • Suspicious Transaction Reporting
the Annex to the TF Convention only if done 99. According to Article (1) of the same resolution, 105. The UAE has implemented a cash declaration
“for a terrorist purpose". Proportionate and local lists are defined as lists of terrorism 102. FIs, DNFBPs, and VASPs are required to report system for incoming and outgoing cross-
dissuasive criminal sanctions should apply issued by the Cabinet. The term “listed” means all suspicious transactions, regardless of the border transportation of currencies,
to natural persons convicted of TF. A breach persons and entities listed by the Cabinet in amount of the transaction (AML/CFT Law, bearer negotiable instruments (BNIs), and
of Article 29 or 30 of the Terrorism Law is the local lists. Classification criteria in Article 3 26/2021). “Suspicious transaction” is defined to precious metals and stones (AML/CFT Law,
punishable by life imprisonment or temporary are commensurate with the criteria mentioned include transactions related to funds for which Art. 8; Central Bank Regulation Regarding
imprisonment for no less than 10 years. Article in Resolution 1373 and includes any person there are reasonable grounds to believe that Declaration of Currencies, Negotiable
53 ensures that any penalties will not lapse or organization, as well as any organization they are earned from any misdemeanour or Bearer Financial Instruments, Precious
or be reduced, and that no person convicted owned or controlled by a terrorist person or felony or related to the financing of terrorism Metals & Stones in Possession of Travelers
of a terrorist offence will be eligible for early organization, directly or indirectly, and any person or of illegal organisations, whether committed Entering or Leaving the UAE 2019 (2019 Cash
release. Also, sanctions are available for legal or organization that acts on behalf of or at the or attempted (AML/CFT Law, 26/2021). A Declaration Regulation)). Therefore, the UAE
persons. There are both monetary penalties direction of any terrorist person or organization. range of disciplinary and financial sanctions has measures in place to detect the physical
and the potential for a court to rule on are available to the supervisory authorities cross-border transportation of currency and
dissolution of the legal person. 100. A
 ccording to Article (1) of the Cabinet including the ability to impose a range of bearer negotiable instruments. Competent
Resolution No. 74 of 2020, the "relevant penalties on FIs, DNFBPs, and VASPs up to and authorities also have the legal authority to
• Targeted financial sanctions related to Security Council resolutions" include "all current including cancellation of its licence (AML/CFT stop or restrain currency or BNIs that are
terrorism, terrorist financing and proliferation and future Security Council resolutions related Law, 26/2021). suspected to be related to TF, ML or predicate
to stopping the proliferation and its financing, offences, or that are falsely declared or
98. The UAE issued Cabinet Resolution No. 74 including resolution 2231 (2015) and any • Customer Due Diligence and Record-Keeping disclosed. Persons transporting currency, BNIs
of 2020 replacing Resolution No. 20 of 2019 subsequent decisions.” The aforementioned Requirements and precious metals and stones in relation to
concerning the system of terrorist list and the resolution includes binding procedures, as ML or TF may be subject to penalties for the
Article 15 thereof stipulates that any person 103. The AMLCFT Law supports the prevention ML or TF offences and can also be referred
must, without delay and without prior notice, and detection of ML/TF activities by requiring to law enforcement authorities (LEAs) and
freeze funds according to the sanctions list FIs, DNFBPs and VASPs to conduct CDD the public prosecutor for failing to declare
and local lists (not limited to those that can on their customers and keep records for a on the third occasion (2019 Cash Declaration
be used in an agreement related to terrorism specified period. Effective implementation of Regulation, Art. 8(c)). They can also be subject
and its financing), and the freeze includes CDD rules is aided by a number of AML/CFT to civil and criminal forfeiture as they fall within
the Funds, completely controlled, in whole Guidelines, which are published under the the definition of ‘funds.’
or partially, directly or indirectly owned by Cabinet-Decision-No.24 of 2022 concerning
the Listed, or funds owned or controlled, in the implementing regulation of Decree Law • Transparency and Beneficial ownership
whole or partially, directly or indirectly by a No.26 of 2021 on AML/CFT law by respective Information
person or organization acting on behalf of supervisory Authorities and may be taken
the listed, or operating at its directions, and into consideration in any court proceedings 106. C
 abinet Decision (109) of 2023 (“the
the funds acquired or resulting from the under the AML/CFT Law. FIs, DNFBPs, Regulation Decision”) revolutionised the UAE’s
funds referred to. The same article stipulates and VASPs, including their management company registration system by setting out
that it is prohibited for any person (natural or employees, are subject to criminal or registration requirements on the basis of
or legal) to make funds available or provide supervisory sanctions for breaches of the the UAE AML/CFT Law that apply equally to
financial services, in whole or in part, directly or AMLCFT Law requirements. all company registries in the UAE, including
indirectly, to any listed person or organization, mainland & CFZ. The Regulation Decision
except with permission from the Office. 104. In 2021, the UAE amended the AML/CFT Law aligned the beneficial ownership (BO)
to introduce a licensing regime for VASPs regime across the country and mandated
101. The MENAFATF adopted the 1st Enhanced and subject them to AML/CFT obligations that each Registrar implements equivalent

34 35
 measures to ensure the collection and UBO information by collecting supporting ml and relevant predicates (art. 26(1)(a)). for all the PP Offices (PPOs) across the
accuracy of information. The Regulated documents during registration, renewal and UAE. Furthermore, the UAE authorities have
Decision requires all Registrars to obtain and amendment, in line with the previously issued 113. T
 he UAE has measures that enable its focused outbound MLA requests on matters
record all basic information required by FATF AML/CFT Guidance for Registrars. competent authorities to identify, trace related trade-based money laundering, third
Recommendation 24.3. Individual registries and evaluate property that is subject to party money laundering, foreign predicate
are required to verify information collected • Non-Profit Organizations confiscation through the broad powers of offences, including international facilitators,
from legal entities and will not issue a license to the PP and the competent court to identify, as set out by the UAE national action plan and
a company if those requirements are not met. 110. Based on the findings of the previous NRA track, or evaluate suspicious funds, proceeds commensurate with the UAE’s risk profile.
considering NPOs sector to be high, the of crime and instrumentalities or, property of
107. In addition to introducing consistency in basic UAE chose to apply an in-depth analysis equivalent value (AM/CFT law, Art. 5(2) & 7(1)). 118. The UAE has continued to prioritize and establish
information collection, the Regulation Decision of NPOs that fall within the FATF definition Competent authorities carry out provisional a sustained increase in international cooperation,
also harmonised and overhauled the BO of an NPO. The main objective is to assess measures, to freeze, seize or restrain property including outbound MLA and extradition
framework in the UAE, including mainland & terrorism financing risks affecting the sector that is subject to confiscation to preserve the requests, to facilitate investigations and
CFZ. The requirement to obtain and maintain a by reviewing the legal and regulatory property and prevent its transfer or disposal prosecutions in line with its risk profile. Statistics
consistent set of information on BO of all legal framework, identifying TF threats and prior to a decision on confiscation or forfeiture for the period 2019-2023 have shown that the
persons applies across the entire UAE for all vulnerabilities, identifying the subset of NPOs as freezing and seizing. UAE is continuing to enhance the international
types of legal persons. All legal persons are at risk, identifying NPOs according to type and cooperation and exchange of information with
obligated to prepare and file an UBO register, features and priority recommended actions. 114. T
 he UAE has mechanisms in place to manage jurisdictions identified by the NRA as high risk.
Nominee Director register (if applicable) and and, where necessary, dispose of frozen,
a Shareholder register with the relevant 111. The UAE assessed and identified a subset seized, and confiscated property. This 119. As a result of these enhancements, the MOJ
authority within sixty days or by the date the of NPOs that fall within the FATF definition includes the ability to appoint any person was able to set a new culture within the
entity is established. These registers also and assessed their TF risks. The MOCD to take possession, manage, and deal with public prosecutor and judicial community
contain helpful information such as accurate and local supervisory authorities of NPOs the property (AML/CFT Law, Art. 5 (7), Art. 48; to seek judicial international cooperation by
contact details, which could assist LEAs in understand their risks and adopted action Federal Law 35 of 1992, Art 85-87). sending MLAs during their ML investigations—
their investigations. plans to mitigate such risks within the thus allowing UAE authorities to further
context of the UAE. The country possesses 115. T
 he UAE is on the process to amend relevant harness the information and intelligence
108. Overall, access to beneficial and shareholder a robust legislative and regulatory framework articles to be in line with new FATF amendments received from international counterparts
ownership information is possible for concerning the formation and regulation regarding confiscation and asset recovery. to build stronger prosecutions. The primary
competent authorities in the UAE through of the non-profit sector. Among other goal of outgoing MLA requests is to obtain
numerous channels, including information laws, Federal Decree-Law No. (50) of 2023 • International Cooperation various types of information and assistance,
required to be held by legal persons regarding the regulation of NPOs, was issued such as financial and beneficial ownership
themselves; BO information held by Registrars; on 02 October 2023. The decree included 116. T
 he UAE recognizes that effective information, seizure or freezing of funds
information required to be collected and registering and licensing obligations, and international cooperation is essential in or assets, location of individuals or items,
held by FIs and DNFBPs, and BO information provides focused, proportionate and risk- combating financial crimes and tracing crime statements, and criminal records.
available via the NER. based measures, without unduly disrupting or proceeds, and uncovering the identity and
discouraging legitimate NPO activities. background of criminals as ML/TF often 120. M
 echanisms are in place for providing
109. The UAE is in the process of centralising involve transnational crimes. As a member assistance to other jurisdictions, including
the BO information through the NER. It is • Restraint and Confiscation/Forfeiture of Crime of MENAFATF, Egmont, INTERPOL, observer MLA, extradition, financial intelligence
important to note that all BO data is directly Proceeds and Terrorist Property at APG, and other relevant international exchange, and cooperation among LEAs and
available from the Registrars and is provided organizations, the UAE participates actively in financial regulators. Incoming international
to competent authorities through the MOEc 112. The UAE has conviction and non-conviction- global efforts to combat ML/TF/PF. cooperation requests are initially received by
upon request within 24 hours. Once the based measures enabling it to confiscate the Ministry of Foreign Affairs-International
technical integration is complete, the UAE will property whether held by criminal defendants, 117. T
 he MOJ developed its National Manual Cooperation, passed on to the MOJ’s
have achieved having a full and up to date BO or by third parties (AML Act, Art. 26(2)). of AML, and adopted a dedicated RBA International Cooperation team for review
register. Information submitted by companies laundered property can be confiscated prioritisation matrix, and continues conducting of procedural and treaty requirements. They
should be manually verified at the Registrar upon conviction (art. 26(1)(a)), proceeds of or regularly training sessions for all illicit finance are then distributed to relevant PPs (Federal,
level. All UAE Registrars collect and verify the instrumentalities used or intended for use in stakeholders, and increased human resources Dubai, Abu Dhabi and RAK PPs) to execute.

36 37
 121. Below is a diagram describing the stages of processing request for extradition: 122. The
 UAE also has Procedures for Handling Requests for International Judicial cooperation addressed
from Foreign Authorities to the Judicial Authorities of the State. Below is a diagram describing
stages of processing requests for judicial assistance:

1 Stages of Processing
Requesting State's
Interpol (Issuance of Request for Extradition Stages of Processing Requests for
International
Circular)
Judicial Assistance Received from Foreign States

2 13
Requesting State's Office of Minister of
Requesting State's Judicial Authority
Judicial Authority Justice (issuance of Requesting State's
(Preparation of Request Decision approving or or Competent Authority
Central Authority
for Extradition) disapproving Extradition) (Preparation of Request for

3 12
Requesting Central Authority of the
State (Ministry of Justice - Requesting State's
State's Central Requesting State's
Authority International Cooperation Ministry of Foreign
Central Authority
Department) Affairs

4 14 11
Interpol in the State
Requesting State's
Coordination with Competent PP (Attorney Requesting State's Diplomatic Mission of
Ministry of Foreign
interpol of the General Office) Ministry of Foreign the Requesting State in the
Affairs
Requesting State to fix
Affairs Requested State
a date for Extradition

5 10
Diplomatic Mission of the Union Supreme
Diplomatic Mission
Requesting State in the Court Ministry of Foreign Affairs &
(Embassy) of the
Requested State (Cassation) International
Requesting State

6 9
Ministry of Foreign
Competent
Affairs & International Ministry of Foreign Affairs & Central Authority of the State
Appellate Court
Cooperation International Cooperation (Ministry of Justice - International
in the State
of the State of the State Cooperation Department)

7 8
Competent Judicial
Central Authority
Authority (Public Central Authority of the State Competent Judicial
of the State (Ministry
Prosecution at the (Ministry of Justice - International Authonty (the Attorney
of Justice)
Attorney General Office) Cooperation Department) General Office)

38 39
 CHAPTER national ML/TF risk
assessment process
RISK ASSESSMENT National
(Source: World Bank)
METHODOLOGY ML RISK

123. The National Risk Assessment methodology is demonstrated a high-level commitment to

a comprehensive framework designed to help better understand its ML and TF risks, which is National ML National ML
agencies and the national coordinator assess the rooted in the first NRA and the UAE’s ongoing THREAT VULNERABILITY
CHAPTER

country vulnerabilities to money laundering and efforts to identify and assess risks, including
terrorist financing. It is a self-assessment process other extensive analysis, data and intelligence
that involves collecting data, analysing risks, and collection and engagement work among the NATIONAL COMBATING VULNERABILITY
developing strategies to mitigate those risks. LEAs, regulators, and private entities. ABILITY of SECTORS

3.1 Overview of the UAE National risk 125. Building from this important work, in
assessment processes: conducting the second NRA the UAE ML RISK
Threat to Vulnerability of
adopted the World Bank methodology SECT. 1
SECTOR 1 SECTOR 1
124. The UAE NRA lays a solid foundation for the and referred to the FATF Guidance papers
UAE AML/CFT/CPF regime. Following the including the FATF Guidance on National
adoption of the first NRA report in 2018 and its Money Laundering and Terrorist Financing
Threat to ML RISK Vulnerability of
update in 2019, the country conducted eight Risk Assessment(15), and FATF Terrorist
SECTOR 2 SECT. 2 SECTOR 2
sectoral assessments which further assessed Financing Risk Assessment Guidance(16) , and
risks and are reflected in the updated NRA. FATF Guidance on PF Risk Assessment and
The complementary assessments included Mitigation issued in June 2021.(17)
topics related to sectors that were classified Threat to ML RISK Vulnerability of
as high-risk according to the results of the 126. T
 he scope of the assessment is expanded SECTOR 3 SECT. 3 SECTOR 3
first NRA and the general context of the UAE, to cover PF risk assessment (in a separate
including focuses on the banking sector, report) which will help the formulation of the
the money or value transfer services sector, UAE’s national CPF strategies to counter
Threat to ML RISK Vulnerability of
and the DPMS sector. The assessments proliferation finance. In-depth analysis of the
SECTOR ... SECT... SECTOR ...
aligned with and considered the main risks key developments in the financial and non-
facing the country and included a more financial sectors including the Virtual Asset
detailed assessment of those risks, including sector as well as the enhancement of the
proceeds of foreign crimes and money Hawaladar and TCSP sector are also included
laundering crimes by a professional party, in the 2nd NRA.
the use of cash in DNFBPs, and high-value
National
real estate. Also in furtherance of its ongoing 3.2 The World Bank methodology
TF RISK
assessment of risks, the UAE completed a
number of strategic analyses associated 127. The World Bank Tool enables jurisdictions
with high risks and undertook many studies to identify the main drivers of ML/TF risks
by the supervisory authorities. The UAE has through a methodological process based National TF National TF
been commended by the FATF for having on the understanding of the causal relations THREAT VULNERABILITY

(15) https://www.fatf-gafi.org/en/publications/Methodsandtrends/Nationalmoneylaunderingandterroristfinancingriskassessment.html TERRORISM THREAT

(16) https://www.fatf-gafi.org/en/publications/Methodsandtrends/Terrorist-financing-risk-assessment-guidance.html
ASSESSMENT
(17) https://www.fatf-gafi.org/en/publications/Financingofproliferation/Proliferation-financing-risk-assessment-mitigation.html

40 41
 among risk factors and variables relating to variables” at the territory-wide or sectoral level. 3.3 The UAE Risk Assessment 134. The assessment process included extensive
the regulatory, institutional, and economic Governance: information-gathering and scoping through
environment. In essence, the ML/TF risk 130. T
 he ML risk of a jurisdiction is the combination record reviews, data and statistical examination,
of a jurisdiction comprises “threats” and of threats and vulnerabilities at the territory 133. The GS-NAMLCFTC coordinated this 2nd literature reviews (on typologies studies, ME
“vulnerabilities”. Threats refer to the scale and level, which is a function of threats and NRA exercise with inputs and engagement reports etc.), as well as engagement with
characteristics (or patterns) of the generation, vulnerabilities of individual sectors, as well from 84 Authorities that included federal and regulators, LEAs, and stakeholders in the private
inflows, and outflows of the proceeds of crime as the jurisdiction’s AML controls, which local Authorities in addition to the Private sector. Similar to the 1st NRA that adopted a
or funds linked with terrorism. determine the jurisdiction’s ability to combat sector spanning FIs, DNFBPs and VASPs. The three-year timeframe for data collection and
ML activities. GS-NAMLCFTC oversaw the NRA exercise, analysis, the 2nd NRA covered data spanning
128. For ML, this points to an assessment of the monitored the progress, and evaluated the from 2019 to 2023, though the quantitative
internal and external threats, including the 131. T
 he TF risk of a jurisdiction is an outcome of findings of the NRA. To reflect the expanded foundation for the current round has been
predicate offences that generate crime TF threats and vulnerabilities, and jurisdiction’s scope of the UAE’s regulatory regime substantially expanded.
proceeds, the total size of the crime proceeds, CFT controls, which determine the and the enhanced focus of 2nd NRA, the
the sectors in which proceeds are invested jurisdiction’s ability to combat TF activities. members formed multi-disciplinary teams 135. The 2nd NRA comprised three stages. The
and laundered, and other relevant factors. with experienced practitioners to conduct the First stage involved the collection of relevant
132. T
 he Ratings (low, medium-low, medium, assessment for the sectors under their purview. data according to the WB methodology via
129. For TF, threats point to the direction of TF medium-high and high) are assigned to ML/TF stakeholders working groups (e.g. LEA data,
funds, and the sources and channels used. threats and vulnerabilities, based on available Intelligence information, Expertise judgments
Vulnerabilities refer to weaknesses or gaps qualitative and quantitative information, to and surveys to the private sector). Also, the
General Secritariat of NAMLCFTC
in a jurisdiction’s defences against ML/TF, generate results that can be represented GS-NAMLCFTC developed questionnaires that
measured with respect to relevant “input graphically on a risk-level heat map. was submitted to all FI and DNFBP sectors.
The Second stage involved an analysis of

ML/TF Risk Level ML

all proceeds generating crimes (e.g., figures
relating to local and foreign predicates,
ML/TF Risk Level (Source: World Bank) Vulnerability
including investigation, prosecution,
confiscation, and formal and informal co-
High M M MH H H operation), having regard to updates and
FI’s and enhancements that have been made to the
VASP UAE’s AML/CFT regime specific to its legal,
Medium supervisory, regulatory and law enforcement
M M MH MH H Sectors
High
ML / TF Threat

framework. A Stakeholders Workshop was held

to discuss the updated enforcement figures
Medium ML M M MH MH Non-financial
and AML/CFT framework, wherein the interim
findings were also agreed upon amongst
sector
concerned stakeholders. The interim findings
Medium “DNFBPs”
ML ML M M M were then reported to the Higher Committee,
Low
along with risk mitigation measures proposed
to address relevant ML/TF/PF risks. During
Low L ML ML M M Legal Persons
the Third stage, A Stakeholders Workshop
TF Threat &
and Legal
Vulnerability was held to discuss the updated enforcement
Arrangements
Medium Medium figures and AML/CFT framework, wherein
Low Medium High the interim findings were also agreed upon
Low High
amongst concerned stakeholders, the
Non-profit assessment was updated having regard to the
ML / TF Vulnerability ML Threat organization enhanced mitigation measures implemented.
“NPOs” The findings were consolidated and reported
L Low ML Medium Low M Medium MH Medium High H High
to the Higher Committee in 2024.

42 43
 136. The 2nd NRA updates the ML/TF threats and International, Local, Mainland & commercial

CHAPTER
vulnerabilities from both the National level and and financial Freezones.
sectoral level. The UAE has enhanced this NRA
NATIONAL RISK
in a number of ways, including by undertaking 139. T
 he objectives of the Private Sector
a more in-depth and nuanced assessment on Engagement involved the following: ASSESSMENT
the following aspects: • Validation of the findings of the national risk
assessment.
• Focused assessment of PF threats, vulnerabilities • Input on the vulnerabilities and threats.
and risks in the UAE in a separate report; • Analysis and assessment of questions on 142. This section provides a comprehensive outlook to strengthen its AML/CFT framework. For
• In-depth analysis on the VASP sectors; risks and mitigating measures. of the UAE's exposure to ML/TF risks and the instance, in 2021 the UAE has set up the
• Highlights of the latest developments • Consideration of themes and outputs from potential consequences of these threats. Executive Office(18) of Anti-Money Laundering
in various sectors (e.g. DPMS, Real Estate, the NRA questionnaire. and Counter Terrorism Financing that aims
Hawaladar); 143. The key findings of the report highlight to coordinate efforts among the seven
• Detailed and focused assessment of threats 140. T
 he engagement process saw participation that (1) the UAE has demonstrated a strong emirates and ensure consistent standards
related to foreign corruption, foreign tax from over 8500 surveys responses from the commitment to combating ML/TF, as evidenced and harmonization across the UAE as it
evasion, cross-border cash movements, and private sector, covering various DNFBPs, FIs, by its robust legal framework, effective pertains to combatting ML/TF/PF. It serves
trade-based ML and emerging threats in the VASP & NPOs. national cooperation mechanisms, and strong as national coordinator and the operational
region such as wildlife trafficking and human supervisory, law enforcement and judicial lead for AML/CCFT/CPF efforts in the UAE
trafficking; and 141. In addition to the surveys, the GS-NAMLCFTC systems. (2) there is room for enhancement in and aims to ensure that the reforms designed
• Expanded coverage of legal persons and conducted a series of in-person interviews some areas to further enhance the country’s to strengthen the UAE’s anti-financial crime
legal arrangements to include all forms of legal to delve deeper into the findings. These capabilities and contribute to the global fight system are effectively implemented.
persons and legal arrangements operating in interviews took place over a ten-day period against financial crime.
the UAE including relevant foreign companies beginning on February 7, 2024. During this • ML Threats
and foreign legal arrangements. period, a total of 116 in-person interviews were 4.1 Money Laundering
conducted with various stakeholder groups. 146. A
 s a robust economy and an international
3.4 Private Sector Engagement 4.1.1 Threats and Typologies finance, trade and logistic hub, the UAE is
exposed to ML threats arising from both
137. The NRA process ensured extensive 144. The UAE’s ability to combat ML/TF is assessed domestic and foreign predicate offences.
engagement with the private sector, this as “high”, characterised by high-level political Domestically, Drug Trafficking, Fraud,
engagement was crucial for building a commitment, robust legal framework, rigorous Smuggling, Counterfeiting and Piracy of
comprehensive understanding of the UAE's law enforcement with LEAs of high capability Products crimes pose high and medium-
ML/TF risks and included a variety of activities and integrity, effective use of financial high ML threats, respectively, to the UAE.
such as surveys and interviews. intelligence, strong domestic coordination Regarding foreign predicate offences, Drug
among public sector and partnership with Trafficking poses a high ML threat while
138. P
 rivate sector involvement is essential in private sector, fair and efficient prosecution Fraud, Counterfeiting and Piracy of Products,
building a complete picture of the UAE ML/TF and judicial process, and robust international tax evasion and foreign corruption and
risks and will benefit the assessment process cooperation mechanisms Counterfeiting currency pose medium-high
in a number of ways – including as a source ML threats.
of information and by having representatives 145. G
 iven the cross-sectoral nature of ML/
participating directly in some aspects of TF matters and in response to global 147. The majority of the predicate offenses were
the process. Contributors from the private developments in AML/CFT, as well as domestic, and some originated outside the
sector provided essential input to the experience gained during International UAE. This distribution aligns with the cross-
national-level ML/TF risk assessment process. Cooperation Review Group (“ICRG”) border elements frequently observed in
It is important to highlight the contributors process, the UAE has taken several steps specific predicate offenses.
appointment criteria from private sector,
including to ensure representation from all
(18) GS-NAMLCFTC| General Secritariat of the National Anti Money Laundering and Combatting Financing of Terrorism and Financing of Illegal
manner of institutions, including Large, Small, Organizations Committee

44 45
 148. High Threat: Fraud and drug trafficking are Unlicensed money exchange services,
major ML threats in the UAE. Criminals use currency counterfeiting and forgery- Moreover, value was moved through • Value was moved to a foreign jurisdiction
sophisticated methods, including social media, related offenses remain relatively low. While international trade with no apparent economic through international wiring relative to over-
dark web markets, and innovative smuggling domestic corruption is minimal. additionally, or commercial justification. The Federal Tax invoiced products imported.
techniques, to launder proceeds through environmental crimes, especially illegal Authority (FTA) filed a report concerning a
cash and bank accounts of associates. wildlife trafficking, continue to pose a general trading company (A), which is licensed All individuals were arrested, assets of equivalent
medium ML threat. to trade in mobile phones, mobile phone value were seized. The individuals were
hardware and accessories, on the grounds imprisoned for 3 to 4 years, a total fine of AED
151. L
 ow and Medium Low Threat: Five predicate of tax fraud through underreporting. The 32 million (approx. USD 9 million) was imposed,
Case study (1): drug trafficking scheme’s modus operandi was through restitution of AED 3.3 million (approx. USD
offenses were classified as low-medium ML
threats: illegal arms trafficking, dishonesty, submitting intentionally falsified sale invoices 898,000) to FTA, confiscation of AED 3.3 million
In 2023, seven individuals and four legal
extortion, illegal alcohol trafficking, and and underreporting sale value to the FTA. The (approx. USD 898,000) and license revocation.
persons were prosecuted and convicted for
kidnapping. Additionally, other predicate FTA was able to detect the anomaly when the
their role in a Trade Based Money Laundering
offenses such as illegal gambling, illicit secondary company (B) submitted a request to Moreover, a standalone investigation was
scheme involving around AED 104.6 million
trafficking in stolen goods, market refund the payable taxes to export the products launched against the professional money
(USD 29 millions). The investigation revealed
manipulation, and murder were identified as purchased from company (A). An investigation launderer (individual), who was providing
that proceeds generated from drug
low money laundering threats, contributing to was initiated by the FTA and managers of both professional services to multiple persons
trafficking committed in a foreign jurisdiction
a negligible percentage of ML cases. company (A) and (B) were questioned. (natural and legal) to launder the proceeds
were internationally wired throughout the
generated mostly from VAT fraud, valued
previous two years to several bank accounts
• Main Typologies The UAEFIU, through the Federal taskforce, at AED 74.03 million (approx. USD 20
in the UAE. The funds were then withdrawn
conducted an operational analysis on all the million). While standalone investigations
in cash and used to purchase second-hand
152. Third-party money laundering poses a financial records of both companies & beneficial were launched pursuant to each individual
luxury vehicles, which were then shipped
significant threat to the UAE's financial integrity, owners and accessed information from all instance of VAT fraud, the professional money
to a foreign jurisdiction. The scheme was
with over a third of ML cases from December reporting entities in the UAE on the financial launderer was prosecuted considering all
uncovered when a Customs inspector
2021 to October 2023 identified as involving statements, bank account opening forms and predicate offence cases, convicted and
suspected under-invoicing of the vehicles
third parties. This often involves the misuse of CDD documentation as well as their remittance imprisoned for 7 years, a fine of AED 10 million,
relative to their fair market price in addition
legal entities to obscure illicit fund origins. TBML reports, among others. In addition, the UAE confiscation of assets seized in value of
to inconsistencies across invoices during an
was a prevalent typology, utilizing techniques Custom authority analyzed records of imports, AED 74.03 million (approx. USD 20 million) and
export attempt.
like under/over-invoicing and fake invoices to exports, declarations of cash and precious deportation were also imposed.
disguise illicit funds as legitimate revenue. metals and stones. The judicial investigation
The individuals were imprisoned for 7 to 10
established that the accused company (A):
years, a total fine of AED 71.5 million (USD 20
153. F
 rom 2019 to 2023, the vast majority of all
million) was imposed, followed by confiscation
• Falsified tax invoices over the reporting tax suspicious reports from regulated FIs came
of AED 104.6 million (USD 29 million) and license
Case study (2): TBML and PML periods between January 9th, 2021, and from the banking sector, highlighting the
revocation for concerned legal persons. need for continued vigilance. This includes
February 28th, 2022.
In Q1 of 2023, three individuals and two legal • The company did not pay their taxable sale fraud, electronic fraud, and drug trafficking,
In Q1 of 2023, three individuals and two legal invoices with company (B) of approx. AED with international transfers being the most
149. Medium-High Threat: Counterfeiting and persons were investigated for conspiring in a 66 million (Approx. USD 18 million), which was common method.
piracy of products tax evasion and foreign TBML scheme, which was conducted by the found to be around AED 3.3 mil.
corruption remain significant international Federal taskforce in the UAE. The financial • The company conducted the same illicit 154. T
 he abuse of legal persons involves complex
threats, despite domestic decline. investigation, which was in parallel to a practice and colluded with other companies. structures to obscure ultimate beneficial
domestic VAT fraud of AED 3.3 million (approx. • The company moved the illicit proceeds owners (UBOs) and includes the use of front
150. Medium Threat: Human trafficking in the UAE USD 898,000), revealed that involved persons through cash withdrawals and were later and shell entities for fraud, drug trafficking,
has increased, with a rise in ML cases and under- and over-invoiced domestic sales and concealed through other suspected and TBML. From December 2021 to October
an increase in seizures and confiscations. international exports through a professional companies, based on the initial financial 2023, several hundred cases related to the
Robbery and theft, primarily involving money launderer. intelligence provided by the UAE FIU. abuse of legal persons were disseminated by
cars and businesses, have decreased. the UAEFIU to LEAs.

46 47
 generate substantial illicit proceeds. These
Case study (3): TBML and complex Facial Recognition Software through public funds are then laundered to disguise their multiple foreign jurisdictions to conceal their
structures CCTV was critical in uncovering events of illegal origin and to integrate them into the illicit nature. Since 2021, a covert operation
cash withdrawals, purchases and export, and legitimate economy. carried out by the Police, which was initiated
Nine individuals and four legal persons were persons involved. based on a police-to-police cooperation,
prosecuted and convicted for an AED 61.8 revealed that 2 foreign natural persons, who
million (approx. USD 17,000,000) TBML scheme. Evidence provided by UAE Customs through Case study (4): Drugs stashed on didn’t participate in the predicate offence,
This investigation revealed that millions of its exports-related databases and others, in container ship laundered the proceeds of foreign predicate
dirhams generated through drug trafficking its capacity within the taskforce, established offences committed by a foreign PEP (suspect
committed in a foreign jurisdiction were that the purchased vehicles were immediately In July 2022, the Police and UAE Customs 3) through complex transactions involving
moved to the UAE to four shell companies exported through the legal persons to several collected intelligence that a cargo ship shell companies which were set up in several
through the formal banking system under the consignees in a foreign jurisdiction. departing a port in a foreign jurisdiction emirates and free zones. The PEP incurred 8%
cover of consultancy services, and eventually had one of its containers stashed with of the proceeds as fees for said services.
used to purchase luxury vehicles, then Building on the intelligence, arrest and search methamphetamine; through the informal
exported to a foreign jurisdiction. warrants were issued and all individuals were cooperation channels via RELO, the UAE The Taskforces, which includes the UAEFIU,
arrested, premises searched, and assets were authorities notified counterparts about analyzed all bank accounts and identifying
An incoming informal international seized in the form of cash, electronic devices, the shipment, and they organized a special all possible leads to the source of funds,
cooperation request to UAE Customs shed gold, vehicles, and real estate. operation to seize and search the cargo their destination and beneficial owner.
light on several bank accounts in the UAE that ship upon arrival. Moreover, the counterpart The typology involved ‘transit’ accounts’
were linked to drug trafficking investigations The individuals were imprisoned for 3 to 8 authorities boarded the ship and over X Kg where internationally wired funds would be
in a foreign jurisdiction, and that several years, a total fine of AED 62 million (approx. of methamphetamine valued at nearly X mil deposited into said accounts, followed by
shipments of vehicles are potentially involved. USD 17,000,000) was imposed on all persons, USD was seized. The resulting joint operation multiple and rapid transactions to several
Upon analysis of export and re-export confiscation of assets seized in value of and informal international cooperation bank accounts, complex payments were
databases, among others, the FIU harnessed AED 61.8 million (approx. USD 17,000,000), led to the second biggest drug bust ever used to purchase assets including manager
financial information from all FIs and DNFBPs, deportation and license revocation. made in the history of this country. The cheques, while some funds were wired to
and open sources, which led to identifying outgoing dissemination was based on other foreign jurisdictions.
and tracing the proceeds of criminality intelligence intercepted from a regional
to multiple accounts. In addition, the FIU 155. T
 he abuse of Real Estate sector: From 2020 known OCG specialized in the smuggling of It was revealed that that the suspects
established that international wirings were to 2023, the UAEFIU received over 2,000 Real methamphetamine in the Asian region. each had entered the country using three
made in effect of consultancy fees and Estate Activity Reports (REARs) and several different passports, while the BO held an
commercial letters of credit. Complex hundred suspicious activity reports. Common additional diplomatic passport. Individuals
transactions were then linked to multiple methods include using unknown funds used the different passports across multiple
outlets. Moreover, information from the for property purchases and manipulating Case study (5): Fraud and corruption registrars to license several legal persons
National Economic Registrar database and property prices, often linked to organized committed in a foreign jurisdiction and to open several bank accounts. The
Unified National Platform on involved legal crime groups. Residential properties are and moved to the UAE through different passports were used to avoid linking
persons established that they were in fact frequently involved. complex transactions individuals as BOs of shareholders of the legal
shell companies. Access to ICP databases persons and tracking their assets, in addition
demonstrated that the legal persons were 156. C
 omplex Money Laundering Techniques Three individuals and eleven legal persons to avoid detection as a PEP or being an
abused by orchestrating international trade. (Organized Crime): The UAE faces significant were prosecuted and convicted for an associate thereof, across different registrars
global ML risks involving professional AED 163 million (approx. USD 44,300,000) in the UAE and different FIs. This provided
In parallel to the FIUs analysis, Authorities launderers and organized crime groups. These ML scheme. This investigation revealed for additional complexity as inquiries across
identified the controllers and mules involved groups use complex networks across multiple that millions of dirhams generated through stakeholders had to be conducted by the
by utilizing multiple investigative techniques, jurisdictions to launder proceeds from crimes fraud and corruption committed in a foreign Taskforces multiple times pertaining to each
such as wiretapping, remote device such as drug trafficking, fraud, smuggling, jurisdiction were moved to the UAE through credential upon uncovering the facts.
monitoring, GPS tracking, controlled delivery, foreign corruption, and tax evasion. The the formal banking system, used to purchase
and undercover operations. The Live analysis of cases related to organized crime assets in the UAE and wired to UAE Customs and Federal Tax Authority,
offenses shows that these criminal activities

48 49
 them nearly untraceable. The ease of cross- UAE Customs conduct periodic and surprise
established that no domestic or international Case study (6): foreign predicate border transfer and instant asset conversion checks on companies based inside the Free
trade was commenced through the legal offence make cryptocurrencies appealing for illicit Trade Zones to ensure their compliance with
persons involved in the investigation. The lack activities, often bypassing the traditional the UAE Customs requirements. While Free
of imports, exports, declarations, and VAT UAE FIU received a spontaneous deposit phase of ML Trade Zones are established to attract trade
refund forms/requests were evident of such. dissemination from a foreign FIU regarding and investment, they are vulnerable to ML
several foreign suspects being under crimes. There were a number of ML cases
The individuals were imprisoned for 3 to 6 investigation for corruption and bribery, which Case study (7): P/3PML including that involved the use of companies which
years, a total fine of AED 82 million (approx. was led by several authorities internationally. international facilitators-VASPs are located within Free Trade Zones. The
USD 22,300,000) was imposed on all persons, Upon receiving the information, the FIU criminals established shell companies without
confiscation of assets seized in value of conducted a financial analysis of the data In July of 2023, eleven individuals and 4 legal real business operations or assets with the
AED 163 million (approx. USD 44,300,000), and sent multiple requests for information entities were investigated for operating aim of receiving and sending funds from/
deportation and license revocation. domestically and to foreign FIUs. The financial unlicensed VASPs. In addition, the lack of to the country. FTZs offer an environment
intelligence obtained from 11 FIs and 134 a compliance function was exploited by for business setup due to several factors
financial accounts on four natural persons ill-actors to move, convert, and conceal ill- including unified and streamlined procedures
and eight legal persons was analysed and a gotten proceeds of criminality. All persons and tax benefits. These factors can
• Other Key Observations
freezing order was issued. were detained, investigated, all assets were inadvertently facilitate the establishment
The PP issued a warrant against the foreign seized, and are prosecuted. of shell companies. However, to significantly
157. Foreign Predicate Offences: From December
suspects for laundering the proceeds of a reduce the risk of shell companies being
2021 to October 2023, 25% of initiated ML
foreign predicate offence, and an extension Through deploying 164 officers on the ground, established and used for illicit activities,
investigations involved foreign predicate
of the freeze order was warranted. Total a large-scale sting operation, which was the UAE developed controls, policies and
offenses. Key methods include smuggling cash
assets effectively traced, identified and conducted simultaneously in 9 locations, procedures to prevent their establishment
and gold, using cash couriers, and exploiting
frozen amounted to AED 44,118,901 (USD yielded the arrest of all individuals involved, and misuse including Enhanced Due
the banking system. About 50% of ML cases
12,000,000) seizure of AED 18,883,508 (approx. 5M USD) Diligence, enhanced corporate governance,
were driven by crucial intelligence from
in cash, Vas (mostly USDT) valued at AED strong supervision framework and effective
abroad, highlighting the UAE's emphasis on
59,217,580 (approx. 16M USD) and 11 additional cooperation.
international cooperation. During this period,
unpaid ‘tokens’ and ‘vouchers’, 2 crypto ATM
UAE LEAs sent 2,257 international information 158. VA and VASPs: Cryptocurrencies pose
machines, multiple laptops, phones, luxury 4.1.2 ML Vulnerabilities:
requests through INTERPOL, GCC Police, and significant threats due to their ability to
watches, documents, and over 278 large files
agreements with 110 foreign counterparts. The conceal transaction origins and identities,
of unofficial invoices and ledgers. 160. T
 he assessment of vulnerabilities in the
Federal Customs Authority sent 76 information however, the ML offences related to the
In August 2023, the ML Court convicted all UAE reveals both strengths and areas for
requests on issues like ML/FT involving cash abuse of VA represent less than 2% of
subjects, applied fines (which ranged from improvement:
and gold. The UAEFIU made 700 requests to cases. Criminals use techniques like mixers
AED 200,000 to 5M (approx. from 55,000 to -A
 ML/CFT/CPF Policy Framework: The UAE is
foreign FIUs. to obscure the source of funds, making
1.4M USD) and confiscated all seized assets. strongly committed to fighting financial crime.
The UAE’s AML/CFT/CPF Policy Framework
includes complying with international AML/
From December 2021
to October 2023 159. Commercial Free Zone (CFZ) Threats: There CFT/CPF standards and initiatives of global
less than are a total of 38 Free Zones in the UAE as of application as a key objective. In furtherance

2%
December 2023, of which 28 are commercial of this objective, the UAE conducted its
and 8 mainland. These Free Trade Zones 1st NRA in 2018, updated it during 2019 and
50% 25% aim to facilitate businesses trade without conducted eight sectoral risk assessments in
customs duties and Goods and Services Tax. the period of (2021-2022).(19)

of ML cases of initiated ML
(19) The eight complementary assessments included topics related to sectors that were classified as high-risk according to the results of the
were driven investigations
NRA and the general context of the UAE, represented in the banking sector, the money or value transfer services sector, and the DPMS
by crucial involved foreign of ML offences sector. The assessments also included the vast majority of the main risks facing the country according to the National Risk Assessment,
intelligence predicate cases are related to which included more details about assessing the risks of proceeds of foreign money laundering crimes by a professional party, assessing the
from abroad offenses the abuse of VA risks of using cash in DNFBPs, including those related to high-value real estat

50 51
 - AML/CFT/CPF Supervisory Regime: AML/CFT/ include electronic declaration systems and financial crimes effectively. Stringent penalties - Capacity of AML/CFT/CPF Agencies: To better
CPF supervisory authorities for FIs, DNFBPs, efficient cooperation among institutions. However, for AML/CFT/CPF violations and the role of the allocate resources and apply a risk based
and VASP are empowered under UAE laws and the UAE lacks sufficient licensing systems for cash UAEFIU underscore the country's dedication approach and considering the increase in
regulations to conduct risk-based supervision couriers, and work is underway on a project being to maintaining financial probity via advancing workload, it is important to continue evaluating
in addition to levying sanctions and referring led by UAE Customs to verify the declarations of the LEA's investigations through providing the the need for additional resources for different
potential criminal activity to LEAs, ensuring that cash couriers to exchange houses, banks or legal necessary information (e.g. financial statements authorities including LEAs, supervisory
institutions comply with their AML/CFT/CPF persons through the declaration system using an of the inflows and outflows related). authorities, UAE Customs and UAEFIU.
obligations and address identified weaknesses independent mechanism.
promptly. Laws and regulations also require FIs, - Tax Enforcement: The UAE has a robust legal
NATIONAL ML L ML M MH H
DNFBPs and VASPs to undertake regular ML/ - Domestic Cooperation: A number of framework and initiatives to ensure tax compliance. CRITERIA
TF/PF risk assessments to inform the design enhancements have been made to improve Improved coordination is needed in information
Accessibility to Reliable Information
of their AML/CFT/CPF programs. FIs carry out domestic cooperation including strengthened exchange between tax and customs authorities. and Evidence

their risk assessments while DNFBPs still require regulatory framework, enhanced supervisory National Money Laundering
improvements given that DNFBPs are more cooperation, increased information sharing - Independent Audit: While the UAE has significant Combating Ability

recently subject to AML/CFT/CPF compliance. between the private sector, LEAs, and other legislative contributions supporting independent National Money Laundering
Vulnerability
relevant stakeholders to detect suspicious auditing, there is a need for broader application
- Capacity and Powers to Freeze, Seize, and activities and develop investigations and of these laws and improved monitoring for Overall Sectoral Money Laundering
Vulnerability
Confiscate Assets related to ML/TF/PF activity: prosecution. The UAE demonstrates robust effective implementation.
Regarding carrying out rapid measures, such as collaboration mechanisms between federal and
Quality of Adjudication
seizing or freezing proceeds of crime, to prevent local entities, governed by comprehensive laws - Reliable Identification Infrastructure: The UAE
the transfer or disposal of the proceeds, there and bilateral MOUs. However, cooperation in has established a secure national identification Quality of Asset Forfeiture
Framework
are challenges in terms of implementation when tracking, identifying, seizing and freezing funds system with initiatives aimed at enhancing
the holder of the funds changes, especially in a timely manner requires more improvements identification processes. However, challenges
Quality of CDD Framework
when the funds are transferred from one to ensure perpetrators are not able to hide or exist in verifying the identity of individuals in
account to another. Also, there is a need to smuggle the proceeds of crime. certain limited contexts.
Quality of Criminal Investigation
amend national legal framework to include new - International Cooperation: The UAE has a
FATF requirements to enable the confiscation of broad legal basis for providing international - Basic and Beneficial Ownership Registries: UAE Quality of Criminal Prosecution
criminal property and property of corresponding cooperation in relation to ML. The UAE engages is consolidating registrars in the country, and
Quality of Cross-border Controls on
value after a person is convicted and without in MLA and informal cooperation, although the UAE has established an effective National Cash and Similar Instruments

requiring a criminal conviction. challenges, such as delays and procedural Economic Register to collect and maintain basic
Quality of Customs Controls on
issues, exist, encumbering the UAE’s efforts to and beneficial ownership information for legal Cash and Similar Instruments

- Judges, Prosecutors, Investigators with effectively engage in international cooperation. persons registered in the country, and to ensure
Reliability of Financial Records/
Integrity and Independence. From a legislative Efforts to establish joint investigation teams that this information is accurate and up to date. Books

standpoint, there are laws regulating the work and reduce reliance on diplomatic channels are However, there is a need to assess if resources
of judges, prosecutors, investigators. From a necessary for improvement. across registrars (in the mainland, FFZs and
technical standpoint, a follow-up is carried out CFZs) are sufficient to conduct on-site and 4.1.3 Sectoral Risk Assessment:
by technical regulatory bodies and offices that - Formalization Level of the Economy: The UAE off-site inspections of legal persons to verify
monitor their technical compliance and the exhibits a low level of informal economic activity, beneficial ownership information. 4.1.3.1 Financial Institutions
efficiency of their investigations and impartiality, supported by stringent legislation and effective
each according to their mandate, whether enforcement. Efforts to promote formalization 161. The risk assessment of FIs ensured the
they are a law enforcement officer, or a Public include licensing initiatives, but challenges The UAE has identification of threats and vulnerabilities
established a
Prosecutor responsible for the investigation. persist in sectors reliant on cash particularly in concerning this sector, as well as overall
secure national
DPMS and real estate sectors. identification system compliance, enhancement of internal controls,
with initiatives
- Customs Regime Concerning Cash and Similar aimed at enhancing efficient resource allocation, improved
Instruments: The UAE has robust regulations - Financial Integrity: The UAE demonstrates identification transaction monitoring and reporting, reputation
processes
mandating declaration of such items, supported a comprehensive legal framework and management, and international cooperation.
by penalties for non-compliance. Strengths international cooperation efforts to combat The consideration of all these elements

52 53
 collectively contribute to a more effective and risk rating score is High due to multiple factors measures on risk assessments, customer reporting to the Financial Intelligence Unit
resilient global financial system capable to such as dealing with high-risk industries (real due diligence measures, ongoing monitoring in terms of ML/TF risks associated with
mitigate and manage risks while preventing estate, dealers in precious stones, virtual of transactions, sanction screening customers and transactions being associated
money laundering and terrorist financing. assets, trade finance industries). Further requirements and reporting suspicious with higher risk geography.
the banking sector is associated with high transactions/activities to the UAEFIU. In
162. The present risk assessment in 2024 for FIs risk customers such as politically exposed addition, the UAE introduced a number of - Exchange House Sector:
in the UAE also compared the risk ratings persons, non-resident customers, customers reporting requirements to ensure reports are
of various financial sectors against their dealing with high-risk jurisdictions within in line with the UAE’s typologies and risks. 171. The overall Medium-High risk rating for the
previous assessments in 2019 and 2021. This the UAE’s banking services. The sector also Exchange House sector is consistent with the
assessment evaluates the inherent risks, engages with its customers through the use 167. T
 he CBUAE noted improvements to the characteristics of the sector in the UAE. The
the effectiveness of the control measures of digital channels, check cashing facilities, banking control framework as compared to Exchange House sector’s inherent risk rating
implemented by these sectors over the years, and provide payment processing services. 2019. The results showed an improved AML/ score is High and this can be attributed to
and their corresponding residual risk. The banking industry is exposed to Money CFT culture and a better understanding of the Exchange Business covering wide range
Transport and Cash Controller Networks, risk. Customer risk in the banking industry of business activities that includes money
163. Considering the distinctive features of the Proxy Networks, Money Mule Networks and demonstrated enhancements to AML/CFT on changing, cross border money transfers,
UAE as global financial hub the analysis of Digital Money and Virtual Currency Networks. boarding controls, detailed risk assessments cross border banknotes shipments, etc, and it
threats and vulnerabilities in the financial More recently, the banking sector is exposed which supported the identification of higher risk being highly vulnerable to ML risks since huge
sector showed several inter-connected to fraud risks such as Impersonation fraud, customers. The banking sector also enhanced amount of cash can easily be received from
factors, such as non-resident customers, Business Email Compromise (BEC) and pig risk-based KYC/CDD procedures and monitoring customers for processing their transactions
high-risk customers, high-risk jurisdictions, butchering scams. tools to monitor higher risk customers and and hence may be misused for moving
high-risk businesses, and the use of third activities. Training and expansion to AML/CFT funds of illegitimate origin or for illegitimate
parties to hide ultimate beneficial ownership 166. W
 ithin the control environment, the UAE resources were observed. purposes.
(BO). Trade-based money laundering (TBML) has made special provisions for AML
and the use of complex and anonymous requirements in the banking sector. Since 168. T
 he CBUAE noticed a better understanding 172. T
 he ML related vulnerabilities can be
transactions also pose significant risks. 2021, the CBUAE in particular has published of products and services risk in the banking associated with the following key areas:
The sector also faces challenges related to more than 85 Circulars and Notices on industry, through the identification and • Cash Transactions: Exchange Houses are
foreign politically exposed persons (PEPs), AML/CFT related topics. This includes the mitigation controls to ML/TF risks associated receiving large volume of cash, the source of
high net worth individuals, non-face-to-face requirement to implement prescribed with higher risk products. The outcomes which is not always traceable, for processing
interactions, and nesting. of the NRA, SRA and other typologies were transactions and hence attract criminals
utilized in these assessments. Monitoring tools to legitimize their ill-gotten funds through
164. Despite these risks, were also utilized to scrutinize transactions structuring;
awareness and associated with higher risk products. • Money Transfers: Exchange Houses are
implementation of processing international/domestic money
mitigation measures are 169. Controls around Delivery Channels transfers and these transfers move funds
strong within the sector, demonstrated improvements since 2019 through faster across countries maintaining anonymity
especially by banks. the enhancements to transaction monitoring and hence tracking the source and final
and internal controls via various channels such destination is difficult;
• Mainland: as ATM cash deposit machines, electronic • Banknotes Shipments: Exchange Houses are
banking services, electronic payments like wire exporting and importing banknotes to/from
- Banking Sector transfers, remittances, and prepaid cards. foreign jurisdictions where no transaction
limits are applied and, in these cases, tracking
165. The overall Medium-High 170. G
 eographic risk in terms of identifying higher the sources or purposes of underlying
risk rating for the Banking risk customers, transactions and jurisdictions transactions will practically be challenging;
sector is consistent with also showed improvements. Controls and risk • Remittance Arrangements: Exchange Houses
the characteristics of the assessments were enhanced to accurately are mostly using the services provided by
sector in the UAE. The identify, classify, and monitor such trends. remittance service providers operating
banking sector’s inherent These mechanisms led to suspicious activity in foreign jurisdictions and some of these

54 55
 foreign jurisdictions - Registered Hawala Provider Sector: yields a residual risk rating of Medium for the
may be operating Finance Companies sector.
with inadequate 178. T
 he overall High-risk rating for the Registered
regulatory Hawala Provider sector is consistent with - Securities Sector:
framework/controls; the characteristics of the sector in the UAE.
• Third Party The RHP sector’s inherent risk rating score is 182. T
 his sector comprises of the FIs which
Transactions: High due to multiple factors such as dealing perform the different functions involved in
Exchange Houses with high-risk industries (real estate, dealers trading securities and commodities contracts.
are processing third in precious stones). Further the RHP sector
party transactions is associated with high risk customers such 183. Below is the Securities Categories Residual
and these as politically exposed persons, non-resident Risk Level
transactions may customers. The sector business-wide Risk
become complex Assessment, CDD/KYC and Customer Risk
Table 1: Securities Sector Residual Risk Level
as the actual Assessment, enhanced CDD, monitoring and
Sub sector Residual Risk
customer/beneficial reporting framework, STR reporting, TFS-
Market Institutions and
owner of funds related controls, record keeping also requires Medium High
Brokers
may sometimes further enhancements and effectiveness. Investment Management Medium
be hidden Hence, the control assessment of the sector
Forex Companies Medium High
resulting in serious is part of their supervisory intervention and
Advisors and Promoters Medium
transparency the sector in the UAE. The insurance sector’s understanding of the sector. The control
issues; inherent risk rating score is Medium; factoring assessment is ‘Partially Effective’.
• Large Number of Transactions: Exchange the limited avenues by which the sector can be 184. The securities sector maintains a risk rating of
Houses are processing large number of abused for ML purposes, the same is reflected 179. Based on the residual risk, an inherent risk Medium to Medium -high. The overall rating of
transactions on a daily basis, sometimes in the risk rating. rating of ‘High’ combined with a control mainland is based on the sector size, nature of
through its multiple branches, and hence effectiveness rating of ‘Partially Effective’ business, classification of clients including PEPs,
segregating the illegitimate transactions 175. F
 ew critical areas factor into the ML risk yields a residual risk rating of ‘High’ for the increasing number of clients and transactions,
for onward reporting to Regulators and FIUs assessment which are the following: Registered Hawala Providers. As it stands, the robustness of policies and procedures and
becomes difficult; and • Provision of life insurance products. residual risk rating for this sector remains the effectiveness of compliance function.
• New Technologies: Products and services • Ability to settle insurance premium in cash. same with the UAE NRA due to high inherent
related to Exchange Business based on new • Understanding the insured party in terms of risk and partially effective controls. 185. M
 arket Institutions and Brokers form the core
financial technologies can expose the Exchange KYC and reputational risk (through adequate of the securities sector and together they
Business into money laundering risks as such name-screening tools). - Finance Companies Sector: contribute towards the full trading volume on
products may sometimes result in anonymity. the exchanges.
176. The risk assessment shift when tackling TFS 180. T
 he overall ‘Medium’ risk rating for the
173. Overall, Exchange Business can be used and Fraud areas where the risk is higher due to Finance Companies sector is consistent 186. Investment Management sector is the main
during any stage of money laundering prevalent insurance scams, involvement of the with the characteristics of the sector in the choice for investments and savings by
such as placement, layering or integration Insurance company is commercial insurance UAE. The finance company sector in the investors, especially since large population is
due to the excess usage of cash, speed products (particularly maritime), and the usage UAE is relatively small, compared to other foreign citizens, they use funds domiciled in
of transactions, cross border funds of insurance products by sanctioned parties mainstream financial sectors operating in the their home countries to park their savings.
movement, anonymity, complexity, third party to route value to related parties. country and the exposure of the sector to Owing to following global standards and
involvement, absence of transaction limits in high-risk customers, products, geographies comprising mostly international firms, the sub-
some products, etc. 177. The control effectiveness assessment in and delivery channels is minimal. sector gets the medium residual risk rating.
the insurance sector suggests that the
- Insurance Sector: controls need to be strengthened further. 181. B
 ased on the residual risk table provided in 187. Advisory companies do not perform fund-based
This outcome is appropriately reflected in the the Methodology section, an inherent risk activity and are more into research and financial
174. T
 he overall Medium risk rating for the Insurance effectiveness rating of “Partially Effective” rating of Medium, combined with a control planning, hence low in importance from an AML
sector is consistent with the characteristics of from the risk assessment model used. effectiveness rating of Partially Effective, perspective and is the least risky sub-sector.

56 57
 188. Forex trading companies are relatively newly (FSRA) is responsible for the regulation of which may be described as more limited in related entities. Therefore, the risk of ML/
licensed. Trading volumes are high, investors financial services and related activities scope. the banking sector demonstrates TF within the insurance sector in ADGM is
are short term, competition is high, which in and from ADGM, with its statutory a strong compliance to adhering to AML/ assessed to be Low.
will lead to the companies receiving greater objectives stated in the Financial Services CFT requirements by implementing robust
supervisory attention and allocation of and Markets Regulations 2015. The FSRA controls and risk mitigation measures. These - Securities:
resources. is also the competent authority in ADGM and other factors contribute to the Medium-
responsible for overseeing AML/CFT and risk rating. 194. The securities sector within the ADGM
• Financial Freezones: TFS compliance of FIs. A distinguishing stands out as the largest sector in terms of
feature of the ADGM financial system is the - Money or Value Service Providers the number of licensed entities operating
- Abu Dhabi Global Market (ADGM) absence of cash transactions, significantly within it. In line with Abu Dhabi's goals to
reducing overall AML risks and promoting a 192. Although the number of FIs licensed to establish itself as a leading global capital
189. ADGM is an international financial centre and more secure and transparent environment engage in Money or Value Transfer Services market hub in the region, ADGM remains
free zone located in the Emirate of Abu Dhabi. across all sectors evaluated in this report. (MVTS) activities may be relatively low when committed to further develop and enhance
ADGM was established pursuant to Federal compared to other sectors in the ADGM or this sector. Due to the diverse range of
Law No. (8) of 2004, Federal Decree No. (15) of - Banking the broader UAE MVT sector , this sector is business models in this sector, licensed
2013, Cabinet Resolution No. (4) of 2013, and the largest in the ADGM in terms of customer entities are categorised into four sub-
Abu Dhabi Law No. (4) of 2013. ADGM has its 191. The banking sector in ADGM predominantly base. This is primarily due to the number of sectors based on their business activities:
own civil and commercial legal regime, which consists of wholesale banking entities, financial institutions within this category are asset and wealth managers, financial
directly applies English common law within the offering a range of financial services authorised to deal with individual customers. advisors and arrangers, dealers and
defined geographical area of the free zone. primarily tailored to large corporations For the MVT sector, the control effectiveness brokers, and custodians. This categorisation
ADGM also has its own independent registrar, and institutional clients, with some limited is deemed as partially ineffective. This is allows for a more accurate assessment
financial services regulator, and courts. presence of private banking services. mainly due to deficiencies and breaches and understanding of the distinct risks
The range of offerings in this sector is of AML requirements identified by ADGM. associated with each sub-sector's activities.
190. The Financial Services Regulatory Authority relatively narrow and straightforward, Several key factors are present, including
the diverse customer base, extensive 195. T
 he overall risk assessment of the securities
geographical exposure, a wide array of sector in the ADGM is rated as Medium.
service offerings, a history of previous This rating is derived from a comprehensive
supervision and regulatory actions, the rapid analysis that includes three critical
pace of transactions, remote and non-face- components: the threat assessment, the
to-face customer onboarding methods, vulnerability assessment, and the control
and the increasing reliance on advanced assessment. Each of these components
technology. The overall risk rating of the MVT has been assessed across the various
sector is deemed to be Medium High. sub-sectors within the securities sector,
contributing to the overall risk profile of the
- Insurance Companies sector. The following table highlights the
overall rating of the various sub-sectors within
193. The insurance sector of ADGM mainly the securities sector:
consists of Captive Insurance Firms
and brokers, focusing predominantly on
reinsurance. According to the recent Table 2: Residual risk / sub sector
assessment of AML/CFT and TFS controls Sub sector Residual Risk
within the ADGM's insurance sector, the Asset and wealth
Medium
controls are largely effective. The firms managers
under this sector are primarily formed to Financial Advisors and
Low
Arrangers
offer reinsurance coverage for their group
Dealers and Brokers Medium - High
or affiliated entities. To date, all captives in
Custodian Medium
ADGM have been set up by UAE government

58 59
 - Insurance Companies sector’s quality of general AML controls score
has been assessed as Medium-High.
201. The insurance sector in the DIFC is subject
to a Federal Law restriction that limits the 205. However, given the individual characteristics
carrying out of insurance in the UAE to of each sub-sector, the DFSA’s assessment
reinsurance. As a result, insurance companies considered the inherent vulnerability, control
that are based in the DIFC are limited to assessment and residual risk of each sub-sector.
interacting with other life insurance and non- The outcome of this assessment is as follows:
life insurance companies operating in the
UAE. The residual risk rating stands at Medium
– Low. Based on the DFSA assessment, the Table 3: Residual risk / sub sector
insurance sector inherent vulnerability score Sub sector Residual Risk
has been assessed as Medium-Low. The Brokerage Medium
sector’s quality of general AML controls has Wealth management Medium
been assessed as Medium-High. Crowdfunding Medium
Advisory & Arranging Medium - Low
- Money of Value Service Providers Representative office Low

202. In April 2020, the DFSA expanded its

- Dealers and Brokers: (DIFC) is an international financial center
permitted financial services activities by 4.1.3.2 Virtual Assets sector:(20)
based in Dubai. It hosts over 2,000 registered
introducing a comprehensive Money Services
196. The dealers and brokers sub-sector in companies including financial and non-
regime. It is key to note that money services 206. T
 he UAE has an advanced technology
ADGM is characterised by a wide range of financial firms.
firms operating or who will be operating in or infrastructure that support the growth of
products and services, including products
from the DIFC are restricted from accepting financial innovation and technology. While
that might be considered risky in terms 199. The Dubai Financial Services Authority (DFSA)
cash and all money has to come from the relevant authorities recognize the risks
of AML/CFT. The sector's offerings are is responsible for the regulation of financial
regulated institutions (e.g. banks). associated with Virtual Assets (VAs), they
particularly appealing to clients involved services and related activities in and from
have worked on understanding the sector
in various activities, such as the physical Dubai International Financial Centre (DIFC). It is
203. T
 he money services sector in the DIFC residual and mitigate the risks given the global
dealing and trading of precious metals like the competent authority in DIFC responsible
risk rating stands at Medium. Based on the developments and increased role of these
gold, that present certain elevated ML/TF for overseeing AML/CFT and TFS compliance
DFSA assessment, the money services sector innovative financial instruments in fostering
risks. For the Dealers and Brokers sector, the of FIs.
inherent vulnerability score has been assessed economic growth and enhancing the
control effectiveness is deemed as partially
as Medium. The sector’s quality of general AML efficiency of the financial sector.
ineffective. The overall ML/TF risk for the - Banking
controls score has been assessed as Medium.
dealers/brokers sector in ADGM is deemed
207. T
 he UAE is assessed to have a high level
to be Medium-high. 200. The banking sector in the DIFC residual risk
- Securities: of risk exposure to ML/TF within the virtual
rating stands at Medium. The DIFC does
assets sector. This encompasses a spectrum
- Custodian not currently have any start-up domestic
204. T
 he securities sector in the DIFC is significant of risks across services like virtual asset
deposit-taking institutions and all authorised
in size in terms on the number of FIs. Given custodians, exchanges, and brokers. The
197. A review of AML/CFT and TFS controls in deposit-taking institutions are either
its size, the DFSA divided the sector into primary threats include cyberattacks on
custodian sub-sector revealed that many Branches or Subsidiaries of an established
five sub-sectors being brokerage, wealth blockchain networks, the use of virtual
licensed entities have implemented strong bank domiciled in a foreign jurisdiction. In
management, crowdfunding, Advisory & assets by international criminal networks,
measures to combat financial crime. The addition, the use of cash does not exist in the
Arranging and Representative office. The regulatory gaps reducing the effectiveness of
overall risk rating for the custodian sector is DIFC nor does the sector offer retail banking
overall residual risk stands at Medium. The supervision activities, and geographical risks
assessed to be Medium. services. Based on the DFSA assessment, the
Securities sector inherent vulnerability score from simplified cross-border transactions.
banking sector inherent vulnerability score
has been assessed as Medium-High and the Additionally, infrastructure risks related to
- Dubai International Financial Center (DIFC) has been assessed as Medium-High and the
sector’s quality of general AML controls score
198. The Dubai International Financial Centre has been assessed as Medium-High. (20) incl. all categories across Financial Services covered in this document, that may be interacting with/facilitated using Virtual Assets

60 61
 smart contracts (such as malware and data 211. The UAE has implemented comprehensive issue guidance and guidelines based on the 4.1.3.3 Designated Non-Financial Businesses and
theft) pose significant challenges to the mitigation measures to address ML/TF outcomes of sectoral risk assessments. These Professions:
virtual asset technology. Below is a table risks. These measures include a risk-based documents provide clarity on regulatory
indicating categories and number of licensed supervisory plan, thematic reviews on expectations and help regulated sectors 219. In the UAE, the Designated Non-Financial
VASPs in the UAE: emerging risks, workshops and outreaches, benefit from further guidance on AML/CFT Businesses and Professions sector is large and
guidance and guidelines on key areas, and requirements and best practices. diverse, with around 16,000 firms supervised
a robust feedback mechanism through the by four supervisory authorities, the vast
Table 4: the number of licensed VASPS
UAE FIU. 216. S
 everal recommendations have been made majority of which are operating in the mainland
in the UAE
VA Entity Category No. to enhance the UAE’s AML/CFT framework. and commercial free zones, where 96% of the

Application Acknowledgment Issued 133 212. Supervisory authorities in the UAE adopt a These include continue to improve the total DNFBPs population are supervised by

VA Proprietary trading NoC 164 risk-based approach to allocate resources supervisory authorities’ understanding of the Ministry of Economy (MOEc) and 2% by
Distributed Ledger Technology NoC [DLT] 115 and attention according to identified risks. ML/TF risk, introducing national-level training the Ministry of Justice (MOJ). The number of
UAE Licensed VASP’s 23 This approach allows for the development for supervisory authorities and the private DNFBPs operating in the financial-free zones
Representative office Low and implementation of supervisory sector, and reviewing the statutory AML/CFT accounts for around 2% of the total population
strategies that are informed by the risk framework to align with FATF standards. Other supervised by the DIFC and the ADGM.
assessment process, ensuring that high- recommendations focus on improving data
208. To mitigate these risks, the UAE has risk areas receive appropriate focus and collection for monitoring fraud risk, tailoring the • DNFBPs under MOEc supervision:
implemented robust regulatory frameworks intervention. supervisory approach to higher-risk sectors,
through various cabinet resolutions and and enhancing communication with the industry - Dealers of Precious Metals and Stones:
supervisory authorities’ mandates. Enhanced 213. T
 he supervisory authorities conduct thematic through feedback, trend analysis, and detailed
KYC/AML processes, stringent compliance reviews to address emerging risk themes guidance on AML red flags and risk factors. 220. T
 he Dealers of Precious Metals and Stones
with international sanctions, and robust identified through the risk assessment sector is the largest contributor to the non-
information sharing mechanisms are in exercise. These reviews cover critical topics 217. The UAEFIU further enhanced up its oil trade of the country and is considered
place to combat these threats. Moreover, such as sanctions screening, TFS, TBML, feedback mechanisms to improve the the largest sector among DNFBPs operating
there is a focus on investor protection cash management, legal persons and quality of suspicious transaction reports in the UAE. The vast majority of these
through awareness programs and bolstering arrangements, and countermeasures on high- (STRs). Since 2020, the UAEFIU has been businesses (around 99.4%) operate in the
technology and cybersecurity infrastructure. risk jurisdictions. The aim is to understand providing quarterly feedback to reporting mainland and commercial free zones and are
and evaluate the risk mitigation strategies of entities, identifying common shortfalls supervised by the MOEc. DPMS in FFZs fall
209. Improvements for the future include sectors exposed to these emerging risks. and clarifying expectations. The UAEFIU under the supervision of FSRA and DFSA and
enhancing regulation and compliance to also publishes Trends & Typology reports is mainly retail shops.
address emerging risks, strengthening KYC/ 214. A
 ll Supervisory Authorities actively engages to raise awareness about financial crime
AML procedures, fostering international with the financial sector through workshops typologies and best practices. Automated 221. T
 he DPMS sector in the UAE is classified as
cooperation to combat cross-border and outreach sessions to enhance filtering criteria validate submitted Medium-high risk for ML. The sector is more
threats, and enforcing stringent data knowledge and understanding of emerging reports, and ongoing communication with vulnerable to ML in the mainland and commercial
protection standards to safeguard customer risks and AML/CFT (anti-money laundering reporting entities ensures clarifications and free zones due to the cash-intensive nature of
information. By addressing these areas, the and counter-financing of terrorism) improvements. Additionally, the FIU monitors transactions, De-risking implemented by some
UAE can strengthen its defenses against developments. In 2023, over 37 outreach reporting levels and communicates with FIs, non-standardized registration. On the other
the misuse of virtual assets and improve the sessions were conducted within CBUAE, supervisory authorities to address any hand, there are no evidence showing that the
security and integrity of its financial systems. reaching more than 35,000 participants from deficiencies in reporting. sector has been abused for TF.
the private sector. These sessions cover
• Conclusion and next steps: various topics, including risk-based approach, 218. G
 iven the factors that characterize the 222. T
 he DPMS sector in the FFZs is relatively small
AML/CFT requirements, and TFS compliance, UAE's financial system and its global compared to the mainland and is comprised
210. Overall, the diverse nature of ML/TF leveraging best practices from different interconnectedness, the FIU has further mainly of retail sellers to the public. Given
vulnerabilities across the UAE financial sectors agencies and supervisory authorities. strengthened its cooperation and exchange these characteristics of DPMS, the residual
necessitates ongoing vigilance, enhanced of information with foreign FIUs, especially risk of the DPMS sector in FFZ is assessed
regulatory frameworks, and robust compliance 215. To strengthen the sector’s understanding and with strategically important FIUs, according to as Medium. The DPMS sector's inherent
measures to effectively mitigate these risks. promote transparency, supervisory authorities a risk-based approach. vulnerability score has been assessed

62 63
 as medium-high, and the sector’s quality entrepreneurs. the vast majority of the sector and the mainland, around 85 % of the total corporate structures or trusts.
of general AML controls score has been (around 97.2%) operates in the commercial population are operating in Dubai, Abu Dhabi,
assessed as Medium. free zones and the mainland, with 70% and Sharjah. 234. The legal sector residual risk in the Free
concentrated in Dubai and Sharjah. There are Zones is assessed as medium–low. The
- Real Estates Brokers and Agents: no trust services providers in the mainland 230. In the UAE, the Audit and Accounting Sector sector's inherent vulnerability score is
and the trust service providers in the FFZ are is classified as Medium-Low for ML since medium, and its quality of AML controls score
223. The real estate sector significantly regulated entities and are not classified under there are no evidence showing that the is Medium.
contributes to the UAE's economy, and the DNFBP criteria. sector has been abused for ML, or any
considered an attractive sector for local and predicate offences to ML. However, several - Notaries:
foreign investments, especially in Dubai. It is 227. In the UAE, the CSP sector is classified as vulnerabilities still exist within the services
the second largest sector among DNFBPs Medium risk for ML. The services provided they provide, suggesting keeping this sector • There are no cases indicating that the Notaries
operating in the UAE. the vast majority of by the Corporate Service Providers can be under ongoing monitoring. sector in the UAE have been misused for any of
the sector (around 99.8%) operates in the abused to facilitate the concealment of the ML or TF, and they are not allowed by the law
mainland and commercial free zones, and beneficial ownership or the transfer of funds 231. T
 he Audit and Accounting sector in the (Federal Decree Law No. 20 of 2022 Regulating
supervised by the MOEc. The sector under to offshore locations. The UAE is aware of Free Zones is relatively small compared to the Notary Profession) to prepare for or carry
ADGM supervision is considered small and the challenges related to transparency in the mainland. Its residual risk is assessed out transactions for their clients concerning
has minimal vulnerability to ML/TF. The real beneficial ownership and has implemented, as Medium-low. The sector's inherent activities mentioned in recommendation 22
estate sector in the DIFC is not active. and continues to implement, enhanced vulnerability score has been assessed as by FATF. As a result, Notaries are not classified
measures to safeguard against misuse of Medium, and its quality of AML controls score under DNFBPs in the country. DNFBPs under
224. In the UAE, the Real Estate sector is classified the system. On the other hand, there are no has been assessed as Medium. GCGRA supervision:
as High risk for ML due to its susceptibility to evidence showing that the sector has been
exploitation by criminals, particularly those abused for TF. DNFBPs under MOJ supervision: • Other Potential Sectors Under DNFBPs:
involved in the drug trade. The sector is
more vulnerable to ML in the mainland and 228. The CSP sector in the FFZ is relatively small - Lawyers and Legal Professionals Sector - Commercial Gaming Activities:
commercial free zones due to the cash- compared to the mainland and is limited to
intensive nature of transactions, especially corporate services. Trust service providers’ 232. The MOJ is the designated supervisor for 235. T
 he UAE introduced a new regulatory body
within the high value of luxury properties. activities fall under the financial services Lawyers and Legal Professionals throughout called the General Commercial Gaming
on the other hand, the sector has not been regime (conduct and prudential obligations the UAE however, Both ADGM and DIFC Regulatory Authority (GCGRA) in September
misused for terrorist financing. apply) and, therefore, are not classified as signed delegation agreements to supervise 2023, which is responsible for regulating,
DNFBP. The residual risk of the CSP sector the legal sector on behalf of MOJ in FFZ. licensing, and supervising commercial gaming
225. T
 he real estate sector in the free zones is is assessed as Medium. The CSP sector Around 67 % operating in the mainland and activities in the UAE. Still, at the time of the
relatively small compared to the mainland. inherent vulnerability score has been the rest in the FFZs. report, it was not clear whether there is any
Although companies have registered in FFZ, assessed as Medium and the sector’s quality licence issued for Casinos, also the sector
there has been limited to no activity in the of general AML controls score has been 233. In the UAE, the Law Firms and Legal is not yet classified as DNFBPs in the AML/
real estate sector during the assessment assessed as Medium-High. Consultations Sector is classified as CFT Law. Hence, the Casino sector was not
period. Nevertheless, the residual risk of the Medium-Low risk for ML since there are no evaluated in this report.
real estate sector is assessed as Medium- - The Audit and Accounts Sector: evidence showing that the sector has been
low. The real estate sector's inherent abused for ML, or any predicate offences 236. T
 he UAE needs to develop and implement a
vulnerability score has been assessed 229. The UAE's audit and accounting sector to ML. However, several vulnerabilities still robust regulatory and supervisory framework
as Medium-High, and the sector’s quality is experiencing substantial growth, given exist, suggesting keeping this sector under for Casinos activities in line with the FATF
of general AML controls score has been its pivotal role in regulating the country’s ongoing monitoring, for example in the standards and global best practices in
assessed as Medium. business sector and developing the case of Lawyers involved in real estate fighting financial crimes.
corporate governance system in order transactions may facilitate ML by helping
- Corporate Service Providers: to provide a safe and attractive business clients purchase properties with illegally - Luxury items and goods:
environment for investments. the vast obtained funds and concealing beneficial
226. The UAE has become a business hub majority of the sector (around 97.6%) ownership through nominee arrangements 237. T
 here is evidence showing that the market of
attracting many international companies and operates in the commercial free zones or shell companies by setting up complex luxury items and goods, especially the luxury

64 65
 automobile and yacht sectors, have been and real estate brokers and agents as 245. The UAE conducted a comprehensive
abused in some ML cases. These findings areas with heightened exposure to money assessment of the risks associated with all the authority:
suggested the enhancement of monitoring laundering and terrorism financing risks. types of legal entities in the UAE. The focus • Compliance team proposed to reject
measures. However, further analysis and The relevant supervisory authorities should of risk assessment was the exposure to ML the entity formation to the Compliance
evidence are needed to consider whether intensify their supervision efforts, placing a threats of each type of legal person and Committee which approved the request, and
this typology could be considered as an greater emphasis on these sectors due to the arrangement created in UAE, and to identify the registration was formally rejected.
emerging trend and whether these activities significant risks they pose. their vulnerabilities for ML potential abuse. • All relevant names were added to the
and sectors should be brought under the internal Audit list.
AML/CFT framework. 242. Furthermore, as part of the country’s 246. The overall ML risk rating of the Legal • All relevant names were added to the
preventive and proactive stance, the UAE Persons and Arrangements is Medium-High. National Economic Register Audit list.
• Conclusion and next steps: established the General Commercial Gaming The most observed typology is the possible
Regulatory Authority (GCGRA) in September abuse for ML purposes involving complex
238. DNFBPs play an important role in the 2023. This body is tasked with regulating, operations and transactions to conceal
UAE’s economy and are exposed to risks, licensing, and supervising commercial gaming ultimate beneficial ownership and use of
therefore necessitating coverage under a activities. Although there are currently no nominee arrangements.
Case study (9): Basic and Beneficial
robust regulatory regime and supervisory casinos or online gambling platforms in the Ownership information
framework to ensure compliance with UAE, the creation of a clear institutional and 247. These vulnerabilities suggested the
AML/CFT requirements. Recognizing legal framework is seen as a prudent step in In August 2023, a freezone was carrying
implementation of several regulatory and
their significance and risks, the UAE has managing potential future risks associated out due diligence procedures as part of
non-regulatory measures, including the
categorized DNFBPs as a fully regulated with this industry. onboarding of an investment management
enhancement of the legal framework, the
sector under AML/CFT laws, a move that company during which the compliance
enhancement of the supervision and regulation,
highlights the Country’s commitment to 243. In conclusion, the UAE’s efforts to regulate team discovered adverse media against
including off- and on-site inspection, the
mitigating financial crime. The MOEc and DNFBPs underscore its dedication to the shareholders’ names. Based on ID
rationalization and reduction of the number
the MOJ have emerged as the principal maintaining a secure and compliant documents provided, the match was verified
or registrars, promotion of awareness and
regulators and supervisory authorities, business environment. By intensifying to be a true match. The shareholder/UBO
compliance among the registrars, including
ensuring that DNFBPs are aligned with supervision, increasing sectoral awareness, and their father were also shareholders of a
reporting duties, and others. These measures
national and international compliance and implementing forward-thinking financial institution in a foreign jurisdiction
also generated an increase quality suspicious
standards. initiatives like the GCGRA, the UAE is and had previously been charged with
activity report to the FIU involving the ultimate
ensuring that both existing and emerging reportedly violating banking law and forgery
beneficial ownership of legal entities.
239. The DNFBP supervisory authorities should risks are effectively mitigated. As the of documents in relation to irregularities
enhance awareness regarding the risks of regulatory landscape continues to evolve, in transactions concerning the capital
money laundering and terrorist financing by further steps will undoubtedly be taken to increase of that financial institution. Other
Case study (8): Basic and
holding more meetings and trainings with fortify the country’s position as a leader in shareholders in company X were all family
Beneficial Ownership information
sector representatives and collaborating global AML/CFT efforts. members who were also reported in the
more with the sector through the public- news to have been potentially involved in the
In September 2023, a registrar received a
private sector partnerships community. • Legal Persons and legal arrangements: scheme. The following actions were taken by
registration request for a legal entity that
the authority:
would operate as a general trading and • Compliance team proposed to reject
240. T
 he DNFBP supervisory authorities should 244. In the UAE, legal persons can be incorporated
continue to spread awareness about their in the mainland in each Emirate and in e-commerce company. During compliance the entity formation to the Compliance
understanding of the obligations outlined both the commercial and Free Zones. screening checks, a potential match was Committee which approved the request, and
in the law and the bylaw, with a particular The registrars in the UAE are divided in found against the UBO, who had allegedly the registration was formally rejected.
focus on raising the quality and quantity of Mainland, FFZ and CFZ. Legal persons and been sentenced to seven years of • All relevant names were added to the
SARs/STRs. arrangements play a fundamental role in the imprisonment for drug trafficking. Based on internal Audit list.
economy growth and considered as very the documents provided, the compliance • All relevant names were added to the
241. The NRA identified certain industries within diverse and large sector with around 828k team confirmed the individual to be a true National Economic Register Audit list.
the DNFBP sector as particularly vulnerable legal persons were 73% are in the Emirates of match. The following actions were taken by • Rejection was reported to the UAEFIU.
to financial crime. The NRA flagged DPMS Dubai and Abu Dhabi.

66 67
 249. T
 he assessment also incorporates multiple global transshipment hub highlight the UAE's include identifying clients consistently
Case study (10): Basic and perspectives of TF risk - domestic, influence in international finance and logistics. seeking services from unlicensed providers,
Beneficial Ownership information outgoing, incoming, and transit to ensure a This prominence, however, exposes the UAE contributing to a robust regulatory and
thorough examination of both threats and to elevated risks of TF activities, as these monitoring strategy. No cases of abuse have
In September 2023, a registrar received an vulnerabilities. financial and trade channels can be exploited been identified in the Virtual Assets/Virtual
online request to incorporate a company for illicit purposes. The substantial growth Asset Service Providers (VA/VASPs) and

with the intended business activity of 250. The UAE faces a complex terrorist threat in re-export operations underscores the crowdfunding sectors.
landscape, with a medium domestic threat need for vigilant monitoring and regulation to
engineering consultancy. As part of customer
level and an escalating cross-border threat. prevent misuse by terrorist organizations. 257. In line with international efforts, the UAE has
due diligence, the compliance conducted
The UAE's proactive intelligence and counter- ratified key treaties and implemented the
initial screening and uncovered and verified a
terrorism measures have been effective, 253. A
 dditionally, the provision of strategic goods United Nations resolutions, encompassing
positive match to the UBO, who was a national
contributing to its high safety ranking on the and services presents a high TF threat. financial, arms, and travel bans to combat
Global Terrorism Index. However, the persistent Despite stringent regulatory measures, the illegal activities. Domestically, deterrent
and resident of a foreign jurisdiction.
risk from external actors, particularly in conflict use of unregulated money transfer services legislation enhances supervisory and
Screening results revealed that he was a PEP
zones, necessitates continued vigilance and and the manipulation of the trade sector for monitoring activities, while the UAEFIU has
with several recent allegations of bribery and
robust defensive strategies. TF purposes persist. increased its intelligence output on terrorist
corruption. Further investigation conducted
financing. Proportionate sanctions for
by the Registrar disclosed an arrest in March 254. The UAE must continue to enhance its financial violations and extensive training
251. Terrorist financing activities pose a Medium-
2023 for financial misconduct which caused high risk within the UAE, with funds being scrutiny of financial channels, particularly workshops for employees underscore the
“significant damage to the State Treasury” in channelled through various means, including in sectors like real estate and non-profit, to UAE's commitment to financial security.
the jurisdiction of origin. donations (sent abroad), informal financial mitigate these threats. The evolving tactics Rigorous monitoring and prompt reporting of
networks. From 2019 to 2023, there were of terrorist financiers necessitate a dynamic suspicious activities further support these
The following actions were taken by the some reported cases of terrorist financing, and robust counter-financing strategy to measures, highlighting the UAE's dedication
authority: highlighting the ongoing challenge. The protect the nation's financial integrity to maintaining financial integrity and aligning
• Compliance team proposed to reject threat is exacerbated by the UAE's diverse and security. with global standards.
the entity formation to the Compliance population and economic openness, which
Committee which approved the request, and are exploited by terrorist organizations to 255. The UAE has established a comprehensive 258. In the UAE, the banking sector's assessment
the registration was formally rejected. facilitate illicit financial transfers. The UAE framework to enhance financial transparency of typologies and cases related to sector
• All relevant names were added to the remains committed to combating these and ensure basic and beneficial ownership exploitation is rated as medium due to its
internal Audit List. threats through stringent monitoring, information is readily accessible on time vulnerability to misuse, despite its critical

• All relevant names were added to the intelligence gathering, CFT controls by the directly or upon request. This initiative importance. A limited number of terrorism
supervisory authorities (including periodic supports relevant authorities in investigations financing incidents have been identified
National Economic Register Audit List.
inspections on their entity’s procedures by providing independent information sources. within this sector. For Money or Value
• Rejection was reported to the UAEFIU.
and controls. Additionally, In the event Transfer Services (MVTS), the assessment
of violations, appropriate penalties are 256. T
 he misuse of virtual assets by terrorist is significant, as this sector is frequently
imposed by the supervisory authority. Any groups is notably high, where these entities exploited by various organizations and is
4.2 Terrorism Financing: deficiencies identified that pertain to TFS exploit the anonymity of virtual currencies to identified as the most utilized financial
will be systematically addressed through fund their activities discretely. The regional channel, highlighting its critical vulnerability.
4.2.1 TF risks in the UAE context Remediation Action Plans or Risk Mitigation instability provides a fertile ground for such Similarly, the Hawala sector is rated as
Plans (RAP/RMP)), and international cooperation misuse, making it a critical area of concern significant due to its heavy exploitation,
248. T
 he residual risk level associated with TF in to maintain regional stability and security. for global security agencies. However, making it the second most utilized financial
the UAE is currently assessed as Medium The UAE actively monitors fraudulent channel after MVTS, indicating high risk and
high (MH). This evaluation is the result of a 252. The UAE faces a significant threat from its methods used by unlicensed virtual asset vulnerability. Legal persons are also rated as
methodical analytical process that considers status as a major finance and trade hub. service providers and enforces thorough significant, with terrorist organizations that
four primary categories, each rigorously Dubai and Abu Dhabi's prominent positions due diligence processes to mitigate risks may exploit the sector for self-funding, as
analysed across two pivotal dimensions: 'TF in the Global Financial Centers Index and the associated with money laundering, terrorist several incidents within the country have
Threat' and 'TF Vulnerability'. strategic importance of Jebel Ali Port as a financing, and arms proliferation. Efforts been identified and addressed.

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 high-risk countries for projects and reliance
Case study (11): Money transfer Case study (12): Legal The Central Bank utilized the World-Check on irregular seasonal workers increases
service business Persons Sector database, which revealed a suspicious their vulnerability. The strategic location of
connection to the Muslim Brotherhood, an the UAE, its diverse demographics, and its
On February 24th, 2021, the court delivered In a complex case involving financial organization officially designated as a terrorist prominent role in global humanitarian and
a significant ruling against Mr X and his irregularities and suspected terrorist entity in the UAE. developmental aid may also heighten these
associates, marking a critical moment in financing, the Central Bank and Financial risks. Therefore, the threat of the NPOs
the fight against terrorism financing. Mr X, Intelligence Unit (FIU) of the UAE launched an In response, the court moved to prosecute sector being exploited for terrorist financing
a businessman with operations in the UAE investigation into two commercial entities, the case, ultimately convicting 21 is assessed as Medium.
and Yemen, was found guilty of covertly identified as Companies X and Y, that defendants—9 individuals and 12 legal entities.
supporting a terrorist organization. Beneath received significant funds from a third-party The penalties imposed were severe, with 261. Despite the challenges facing the NPO
the guise of legitimate business activities, Mr non-profit organization. Upon further scrutiny, sentences ranging from life imprisonment sector in the country, primarily due to
X, along with co-defendants Mr Y and Mr Z, it was discovered that from February 2015 to 10 years in prison. Additionally, the court the multiplicity of regulatory authorities
facilitated the provision of communication to May 2017, these companies transferred ordered the confiscation of the seized funds, involved in licensing, supervising, and
tools, financial resources, and logistical approximately AED 51 million (€12.4 million) to a fine of 500,000 dirhams for each legal entity overseeing this sector, which has led to
support to the Houthi movement. other accounts through cheques and cash involved, and the permanent closure of the several challenges and vulnerabilities such
withdrawals. implicated companies. as the absence of a central authority to
Investigations revealed that Mr X’s company assess risks related to TF and fragmented
acted as a front for moving funds between The UAEFIU’s inquiry led to the appointment This case underscores the critical importance responsibilities and powers among various
Yemen and the UAE, with amounts ranging of a specialized committee by the Central of vigilant financial oversight and the role regulatory authorities overseeing the
from 40,000 to 100,000 dirhams. These Bank to assess the activities of these of regulatory bodies in detecting and sector; diverse and inconsistent licensing
transactions, carried out through exchange companies. The investigation revealed that dismantling networks that pose significant and registration procedures; and lack of
companies or direct handovers by Mr X’s both companies were owned and operated risks to national security. regulatory decisions on virtual currencies,
brother, , were instrumental in sustaining the by the same individuals, who also authorized which complicates the regulatory landscape
activities of the Houthi group. The court’s transactions across both entities. These and exacerbates these issues. However, the
findings highlighted the sophisticated individuals were found to be receiving funds UAE has implemented several precautionary
methods used to obscure these illegal from high-risk countries, raising further 4.2.2 Non-Profit Organisations: measures to address these deficiencies
operations under legitimate business concerns about the legitimacy of their and challenges by aligning and amending
practices. financial activities. 259. The NPO sector in the UAE can be legislation governing the NPO sector to
categorized into six sub-categories based ensure that all challenges and weaknesses
The judgment reflected the seriousness of Additionally, it was discovered that several on their characteristics and nature of work: are addressed.
their offenses. Mr X received a 15-year prison other companies receiving funds from charitable; humanitarian; health; education;
sentence followed by deportation, while his Company X were also receiving similar environment; and general and cultural/sport. 262. F
 ederal Decree-Law No. 50 of 2023 on the
co-defendants faced proportionate penalties. payments from Company Y, demonstrating Regulation of Public Benefit Organizations
The ruling emphasized the critical role of a coordinated pattern. The banking 260. A
 lthough there is no intelligence or evidence includes provisions for: unifying the
legal mechanisms in dismantling networks transactions for these companies did not indicating that the NPOs sector in the UAE requirements and procedures for licensing

that finance terrorism and ensuring that such align with their reported revenue levels, is being exploited for TF purposes, there public benefit organizations in the country;

actors are held accountable. suggesting that their financial operations are several factors that could make this coordinating and integrating the roles

were inconsistent with legitimate business sector vulnerable to such exploitation. between the ministry and local authorities

This case underscores the importance of practices. This discrepancy led to deeper These include its cross-border activities involved in licensing, supervising, and

robust regulatory frameworks and vigilance investigations. and operational characteristics. These overseeing public benefit organizations;

in distinguishing lawful businesses from those organizations often operate in conflict zones establishing a central database ("National

serving nefarious purposes. It serves as a where there are active terrorist threats, and Register of Public Benefit Organizations");
The decisive evidence emerged when a link
reminder of the judiciary’s role in preserving the process of providing rapid humanitarian defining the powers and responsibilities of all
was established between the foreign non-
regional security by preventing the exploitation aid to affected areas can be threatened parties involved in overseeing and monitoring
profit organization funding Companies X and
of financial systems for terrorist activities. by these terrorist entities. Furthermore, the the sector according to best practices and
Y and a recognized terrorist group.
frequent transfer of large sums of money to approved methodologies; and setting clear

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 procedures and regulations to combat money 266. In line with international efforts, the UAE has
laundering and terrorist financing in the ratified key treaties and implemented the
sector. Additionally, work is ongoing to issue United Nations resolutions, encompassing
regulatory decisions related to sanctions and financial, arms, and travel bans to combat
administrative measures, and a national team illegal activities. The FIU has increased its
has been formed, including representatives intelligence output on TF. Proportionate
from all authorities involved in the non- sanctions for financial violations and
profit sector, to gather and compile data extensive training workshops for employees
and assess the sector's risks. Therefore, the underscore the UAE's commitment to
assessment of the vulnerabilities of NPOs to financial security and should continue. The
exploitation in TF is deemed Medium. UAE should continue rigorous monitoring
and prompt reporting of suspicious
activities further support these measures,
Table 5: Ratings of specific NPOs category
highlighting the UAE's dedication to
vulnerabilities
maintaining financial integrity and aligning
Vulnerabilities
Category with global standards.
Level
Charity Medium
Humanity Medium 267. The UAE should continue to enhance its
Health Medium-Low scrutiny of financial channels, particularly in
Public and Cultural / Sports Medium-Low sectors such as real estate and non-profits, to
Education Low mitigate these threats. The evolving tactics of (ML) in the UAE. The principal risk factors transactions, the presence of foreign PEPs,

Environment Low
terrorist financiers necessitate a dynamic and underpinning this assessment stem from high net-worth individuals, non-face-to-face
robust counter-financing strategy to protect both domestic and foreign predicate business relationships, and nesting.
the nation's financial integrity and security. offences. The most significant ML threats in
263. The UAE is exposed to an overall Medium the UAE include fraud and drug trafficking, 273. T
 he VASPs sector also presents an array
level of TF regarding NPOs, with threat and Overall Conclusion: while medium-high threats encompass of risks across services like virtual asset
vulnerability both rated as medium. counterfeiting and piracy, smuggling— custodians, exchanges, and brokers. These
268. T
 he UAE remains unwavering in its particularly of cash and precious metals—tax risks include cyberattacks on blockchain
• Conclusion and next steps commitment to constantly strengthen its evasion, foreign corruption, and currency networks, the misuse of virtual assets
AML/CFT System and foster a culture of counterfeiting. by international criminal networks, and
264. The UAE remains committed to preventing awareness, compliance, and effectiveness geographical risks from simplified cross-
and combating TF through stringent among all public and private stakeholders. 271. Regarding TF, the NRA has also highlighted a border transactions.
monitoring, intelligence gathering, CFT Medium-High level of risk, acknowledging that,
controls by the supervisory authorities 269. The comprehensive analysis conducted despite the absence of domestic terrorist 274. As for DNFBPs, these sectors remain
(including periodic inspections) on all during this 2nd NRA reveals that, despite attacks and the effectiveness of counter- vulnerable due to the cash-intensive
supervised entities controls systems and significant efforts, the UAE is not immune to terrorism measures, the UAE must remain nature of transactions, de-risking measures
procedures, including the implementation of international threats and remains vulnerable vigilant against external threats. implemented by FIs, and the lack of
proportionate and dissuasive sanctions. to risks. However, the way forward is clear: standardised registration, particularly in the
the UAE is resolute in enhancing its AML/ 272. S
 everal sectors of the economy, including DPMS sector. The real estate sector, too, is
265. A comprehensive legal framework has CFT system, in line with its responsibilities as FIs, DNFBPs, and the VASPs, face particular exposed to exploitation, particularly through
been established to enhance financial a global financial hub and a reliable partner vulnerabilities. Within the financial sector, high-value luxury properties, often linked to
transparency and ensure basic and beneficial within the international community, and its interconnected factors such as non-resident criminal activities such as drug trafficking.
ownership information is readily accessible on duty to safeguard both its community and customers, high-risk jurisdictions, and high- Corporate service providers and legal persons
time directly or upon request, and to protect the economy. risk businesses, alongside the use of third and arrangements are similarly at risk of abuse,
the NPOs sector. These initiatives support parties to obscure UBO, contribute to these with complex operations and transactions
relevant authorities in investigations by 270. The 2nd NRA identifies an overall Medium- vulnerabilities. Additional challenges include designed to conceal UBO and the use of
providing independent information sources. High level of risk for money laundering trade-based money laundering, complex nominee arrangements or offshore transfers.

72 73
 275. To address these identified threats and place will be essential to ensure the ongoing
vulnerabilities, the UAE’s National Strategy for effectiveness of the implemented measures
2024-2027 is founded on several key pillars, and to continue identifying and mitigating
which centre on compliance, effectiveness, emerging risks on an ongoing basis.
and sustainability:
• Enhancing national and international
coordination and cooperation, leveraging
information exchange between competent
authorities, partnerships with the private
sector, and close engagement with
counterpart jurisdictions and international
organisations.
• Ensuring effective supervision that
guarantees the private sector’s compliance
with AML, CFT, and CPF obligations.
• Strengthening the detection, investigation,and
disruption of illicit financial activities.
• Ensuring the availability of optimal human
and technical resources, aligned with roles
and responsibilities, supported by robust data
collection and analysis. Additionally, fostering
national technical expertise within economic
sectors in line with the requirements of
combating ML/TF/PF.
• Continuously improving the legal and
regulatory framework to adapt to the evolving
risk landscape, enhance transparency, and
uphold the rule of law.

276. The UAE’s focus remains on tackling complex

financial crimes, particularly those involving
the abuse of legal persons, foreign predicate
offences, trade-based money laundering,
professional money laundering, and organised
crime. In addition, the UAE looks to the future,
addressing the risks posed by virtual assets
and advancing forms of cybercrime, with a
view to implementing appropriate mitigation
measures through legislation, regulation, and
enforcement.

277. By implementing the national strategy and

related national action plan, the UAE strongly
demonstrating its high level commitment
to further enhance its AML/CFT regime
and protect its financial system from illicit
activities. Regular monitoring and evaluation in

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www.namlcftc.gov.ae