UAE regulators tighten grip on crypto-related financial crime

Abu Dhabi: The UAE Financial Intelligence Unit (UAE FIU) and Dubai’s Virtual Assets Regulatory Authority (VARA) have signed an agreement to strengthen cooperation and information sharing in the fight against financial crime involving virtual assets.

The Memorandum of Understanding (MoU), signed on October 5, provides a framework for the two authorities to exchange relevant financial intelligence and expertise and improve coordination in identifying and addressing financial-crime risks in the virtual assets sector.

The agreement comes as the UAE continues to develop its regulatory framework for virtual assets while seeking to strengthen safeguards around the rapidly evolving sector.

Intelligence sharing

The MoU was signed by Ali Faisal Ba’Alawi, Chief of the UAE Financial Intelligence Unit, and Matthew White, Chief Executive Officer of VARA.

The agreement provides for the exchange of information and expertise in accordance with applicable legislation and confidentiality requirements.

Ba’Alawi said cooperation between authorities was increasingly important as financial crime becomes more technologically sophisticated and crosses borders.

“Amid rapid technological advances and the cross-border nature of financial crime, strengthening cooperation and information exchange is essential to addressing emerging risks effectively,” he said.

“Our collaboration with VARA strengthens our collective ability to detect and analyse suspicious activity and understand emerging typologies and risks associated with virtual assets, helping to strengthen and safeguard the integrity of the UAE’s financial system,” Ba’Alawi said.

Virtual assets

VARA said the agreement would strengthen existing cooperation between the regulator and the UAE FIU, including channels for sharing expertise and identifying emerging risks.

“Effective regulation depends on the ability to connect supervisory insight with high-quality financial intelligence,” White said.

“This MoU consolidates and strengthens the collaboration already in place between VARA and the UAE FIU, reinforcing the channels through which we share expertise, identify emerging risks and support coordinated action against illicit activity,” he said.

White added that continued cooperation between regulators, the UAE FIU, law-enforcement bodies and the industry was “essential” to achieving their objectives.

The UAE FIU is an independent body established within the Central Bank of the UAE and is responsible for receiving suspicious transaction reports from financial institutions, designated non-financial businesses and professions, and virtual asset service providers.

It analyses the reports and sends the results of its analysis to competent authorities to support efforts against money laundering, associated predicate offences, terrorist financing and proliferation financing.

The FIU also works with national supervisory authorities and financial intelligence units in other countries and is a member of the Egmont Group of Financial Intelligence Units. VARA was established in March 2022 following the entry into force of Dubai Law No. 4 of 2022.

It is responsible for regulating, supervising and overseeing virtual assets and related activities across Dubai's commercial zones, including Special Development Zones and Free Zones, excluding the Dubai International Financial Centre.