money laundering
Multiple UAE Government entities are enforcing crackdowns against malpractices in the financial services space. Image Credit: Agency

The actions by the UAE Central Bank to fine 11 banks Dh45.76 million is a strong signal that as a financial services regulator, the UAE is working on areas of improvement identified by the Financial Action Task Force (FATF).

One of the key issues identified in the FATF Mutual Evaluation Report issued in April 2020 was for there to be more dissuasive enforcement actions by authorities. The sanctions against the 11 banks is only one such in a series of actions.

The Central Bank imposed sanctions on two exchange houses for weak anti-money laundering (AML) and combatting financing of terrorism (CFT) compliance measures, issuing fines of Dh500,000 and Dh950,000 in October last.

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On February 10, another exchange house was fined Dh504,000 for weak AML and CFT compliance frameworks. These come in the wake of the establishment of the Executive Office of Anti Money Laundering and Countering Financing of Terrorism. The UAE Securities and Commodities Authority (SCA) – the UAE’s federal securities and capital market sector regulator – has issued administrative fines to entities it regulates for AML-compliance shortfalls.

These are really a step in the right direction and comes when other parts of the UAE Government conducted their own action to combat financial crimes. Last year saw the Ministry of Justice temporarily suspended 200 law firm licenses for AML failures, resulting in fines of Dh100,000 each on seven law firms that were unable to rectify identified failures adequately.

The UAE Ministry of Economy also announced in November that it had established a dedicated AML Department. Recently, the Abu Dhabi Judicial Department announced the Abu Dhabi Criminal Courts had sentenced a former chairman of a government-owned company as well as its CEO to 15 years’ imprisonment for money laundering. It was accompanied by an order to pay Dh501,000 as compensation to the companies they represented, return Dh8 billion public funds that were misappropriated, and for the expatriate CEO to be deported after serving his sentence.

No leeway for offenders

The judgement is the latest in a string of recent money laundering cases, with criminal sentences also being announced in November and December last. Following the establishment of specialized AML Courts in Abu Dhabi, Sharjah, Fujairah, Umm Al Quwain and Ajman through various resolutions, it is clear the UAE judicial and law enforcement agencies are working to crack down on those looking to abuse the financial and economic opportunities.

Dubai was ranked in eight place as a financial centre in the Global Financial Centre Index in September 2019. And the UAE is a major financial, logistics, business and legal hub for the Middle East and a gateway to several regions.

The latest actions are a real testimony to the UAE Government’s commitment to tackle financial crime and AML/CFT risks and to protect the gateway opportunities the UAE offers from criminal activity.

- Samir Safar-Aly is Senior Associate at Baker McKenzie Habib Al Mulla.