Stock Money laundering
UAE businesses were given a deadline of end March to get all their paperwork ready on anti-money laundering compliance. Image Credit: Shutterstock

Dubai: Businesses registered at some UAE free zones are getting penalty notices for failing to register with updated anti-money laundering (AML) regulations. Further delays in getting themselves registered will expose them to some heavy fines.

This is part of the UAE’s zero-tolerance policy on money laundering or other proscribed activities.

“Some free zones allow multiple business activities that combine financial services with real estate, trading or consulting services,” said Jitendra Gianchandani, founder partner at the consultancy JCP. “These businesses have received the penalty notice and which will need to be replied to in 15 days.

“Many of these business owners, especially the smaller ones, are still not aware that registering on the government portal is one of the first steps.”

The portal that Gianchandani is referring to is the ‘goAML’, managed by the UAE Ministry of Economy. Licensed businesses in the UAE answering to these five descriptions – in real estate services, trading in precious stones, offering consultancy, lawyers and accountants – had until end March to submit the required paperwork and get themselves AML-compliant. (Those operating on these licenses are clubbed under the Designated Non-Financial Businesses and Professions (DNFBP).)

“Again, it's only the beginning - they should also have AML policies in place, have [in-house] compliance officers and provide regular training for staff, or else more fines will be levied,” said Gianchandani.

No room to hide
Penalties for not meeting AML and CFT (counter terrorist financing) range from Dh50,000 to Dh5 million. The failure to comply with the regulations can also lead to the suspension of the license.

"We have seen that the UAE Ministry of Economy have increased supervision of the financial operations linked to designated non-financial businesses and professions," said Kinjal Bagadia Mehta, Manager - Tax & Compliance at Global Business Services.

"DNFBP should assess their internal operations and ensure that they have appropriately implemented the legal requirements for UAE's AML and CFT legislation."

Better sign up

According to the Ministry of Economy, the goAML portal is an integrated platform used to file suspicious transaction reports (STRs) and/or suspicious activity reports (SAR). “It is your obligatory duty under the Federal Decree Law 20 of 2018 and Article 20(2) of Cabinet Decision No. (10) of 2019, to have procedures in place to report suspicious transactions to manage anti-money laundering (AML) and counter terrorist financing. This system will allow you to help authorities identify criminal and suspicious activity.”

Tightening up on regulations

In recent months, the UAE has also issued updated requirements for all licensed businesses to be fully transparent on their ownership structures. This is part of the ‘UBO” (Ultimate Beneficial Owner) requirements, and is defined as the individual who has – direct or indirect – ownership or control of a company. The Dubai Department of Economic has been imposing stiff penalties to those who failed to meet the deadline, even after pushing back the earlier date to give businesses more time to register.

The enforcement department at Ministry of Economy is linking registered entities on goAML and those businesses carrying out the regulated five activities as per licenses issued by authorities such as DED and free zones

- Jitendra Gianchandani of JCG

The get-tougher policy is forcing errant businesses to take notice. For failure to get on goAML, “The enforcement department at the Ministry of Economy has charged Dh50,000 on those who have not registered on goAML while still carrying out regulated activities as per the license,” said Gianchandani.

And the penalties for repeated non-compliance can get quite steep…