Anti Money Laundering
What Is Anti Money Laundering (AML)?
Money laundering is the processing of proceeds of crime to disguise their illegal origin and use them in the legal economy. Financing of terrorism is the use of funds from legal or illicit sources to finance future terrorist activities.
Anti-money laundering (AML) refers to the laws, regulations and procedures intended to prevent criminals from disguising illegally obtained funds as legitimate income.
Federal Law No. 20 of 2018 on Anti-Money Laundering is a fundamental pillar and contributes to raising the effectiveness of the legal and institutional framework of the nation to achieve desired results, in line with the requirements and recommendations of the Financial Action Task Force (FATF) was issued on 30 October 2018.
The new law provides for several measures to combat money-laundering mandatory declaration at exit and entry point such as the airport for anyone entering or leaving the country to defining the independent offense of money laundering.
The new law considered that the money laundering is a different crime rather than the main crime, which was the source of the laundered money and that even if the criminal has been punished for the main crime, he could still face separate sentence for hiding such money considered as an individual crime.
The same law indicates that the court which investigates the money laundering case does not have to wait or depend on a judgment of the main crime to convict the criminal.
This regulation requires banks, money exchange houses, finance companies, and any other financial institutions operating in the UAE to follow strict Know Your Customer (KYC) guidelines.
The AML Law introduced a number of concepts recommended by FATF designed to enhance the UAE’s effectiveness in identifying and preventing attempts at money laundering and terror financing.
At Article 2, the AML Law defines a “perpetrator” of the crime of money laundering. Any person, who willfully commits any of the following acts:-
- Transferring or converting proceeds or conducting any transaction with the aim of concealing or disguising their Illegal source.
- Concealing or disguising the true nature, source or location of the proceeds, or the method involving the disposition, movement or ownership of the Proceeds or rights related thereto.
- Acquiring, possessing or using proceeds upon receipt.
- Assisting the perpetrator of the predicate offense to escape punishment.
The legal person shall be criminally responsible for the crime if it is committed in their name or for its account intentionally, without prejudice to the personal criminal responsibility of the perpetrator and the administrative penalties as prescribed by law.
At Article 9, the AML Law requires the creation of an independent Financial Information Unit (an “FIU”), to which suspicious activity/transaction reports are to be sent, and which is empowered and able to exchange information with comparable units in other countries.
At Article 15, the AML Law requires financial institutions and DNFBPs to prepare and file promptly with the FIU detailed suspicious activity/transaction reports upon the identification of any plausible reasons to suspect money laundering or terror financing.
At Articles 18 and 19, the AML Law requires requests for international cooperation related to money laundering and terror financing to be prioritized and executed urgently. In particular, local authorities are required to assist with document collection, witness interrogation, and extradition of suspects. Moreover, requests for international cooperation should not be refused if the crime is under investigation and/or prosecution locally as well as internationally or because of confidentiality restrictions on the relevant financial institution/ Designated Non-Financial Businesses and Professions (DNFBPs).
- The objective of anti-money laundering (AML) is to deter criminals from feeding their illicit funds into the financial system. Criminals use money laundering to hide the true source of their money that has been derived from crimes.
- Greater investigative powers and channels to collect and use financial intelligence. The transition from merely collecting financial data to being able to utilize the intelligence to take more pro-active action is a vital advancement for law enforcement;
- Under the new AML law, corporate liability for money laundering offences has been extended to fines of up to fifty million dirhams (AED 50,000,000), and compulsory liquidation where the offence is related to terrorist financing so that person occurring this offence think twice.
- Authorities hall have the right to freeze suspicious funds deposited at financial institutions by creating a direct mechanism involving the Governor of the Central Bank, the authorities are enabled to take expedited action against suspected criminal actors and minimize the risk of the suspected funds being dissipated.
- Greater powers for the Public Prosecution to conduct their investigation. Specifically, this involves, though is not limited to, authorisation for the Public Prosecution to obtain and investigate third party data and records through mandatory cooperation with a broad array of other agencies, institutions and businesses;
Punishments for involving in money laundering activities are as follows:
In general, all the punishments set out in the New AML Law are harsher than under the Former AML Law. A highlight of some of those punishments is as follows:
- Any person who commits, or attempts to commit, a Money Laundering offence shall be punished by imprisonment of up to ten years and / or a fine of between AED 100,000 and AED 500,000. In cases of multiple perpetrators, the Court, subject to its discretion, may exempt a perpetrator from the imprisonment penalty if he takes the initiative and reports the crime to the competent authorities prior to the knowledge of such authorities and if his actions lead to the arrest of the other perpetrators or seizure of the laundered monies.
- Any establishment that commits an offence of Money Laundering, Financing of Terrorism or Financing of Unlawful Organizations, shall be punished by a fine of between AED 300,000 and AED 1,000,000.
- Failure to report a Suspicious Transaction shall be punishable by imprisonment and / or a fine of between AED 50,000 and AED 300,000.
- Tipping off a person being investigated regarding a Suspicious Transaction shall be punishable by imprisonment of up to one year and / or a fine of between AED 10,000 and AED 100,000.
- Violation of the requirements of Airport Declarations shall be punishable by imprisonment and / or a fine.
- Unlike the Former AML Law, the New AML Law regulates the confiscation of the proceeds of Money Laundering, the Financing of Terrorism or the Financing of Unlawful Organizations.