UAE issues new guidance to tackle unlicensed virtual asset service providers
Reporting entities should stay vigilant against fraudulent methods by unlicensed firms
Abu Dhabi: The UAE, on Monday, issued guidances to tackle unlicensed virtual asset service providers (VASPs) as it continues to strengthen its financial sector regulation.
The guidance, issued by the anti-money laundering branch of the Central Bank, aims to educate licenced financial institutions (LFIs) and the wider public sector on the risks associated with unlicensed virtual asset service providers.
VASPs are individuals or businesses that handle virtual assets for others. This includes NFTs, Stablecoin providers, and those controlling decentralised finance (DeFi) protocols.
The National Anti-Money Laundering and Combating Financing of Terrorism and Financing of Illegal Organisations Committee (NAMLCFTC) guidance provides financial entities with a comprehensive roadmap to enhance their governance and operational processes.
Khaled Mohamed Balama, Governor of the CBUAE and Chairman of the NAMLCFTC, said, "The new guidance on combating the use of unlicensed virtual asset service providers comes when virtual assets become more accessible through digital channels."
Entities include LFIs, Designated Non-Financial Businesses and Professions (DNFBPs), and licenced VASPs.
"It provides detailed information on how firms can identify and address governance challenges and emerging risks," said the Central Bank.
The new guidance directs entities to watch out for unlicensed VASPs' fraud, manage money laundering terrorism financing risks, address emerging threats in assessments, and perform due diligence to detect fake documents and sanctions evasion, explained the Central Bank.
Balama added, "As our digital economy matures, our work on combating all kinds of financial crimes intensifies through raising awareness of their risks and emphasising the importance of compliance with relevant regulations and legislation to ensure the integrity of the UAE's financial system."
The guidance document has been issued under the Decree Federal Law No.20 of 2018 on Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) and Illegal Organisations. It also aligns with the Financial Action Task Force (FATF) publication on updated guidance for a risk-based approach to virtual assets and virtual asset service providers.