Whether AML or UBO, UAE businesses have some high-priority compliance tasks to do

REGULATIONS TIGHTENED: Dealing with the fallout from COVID-19 wasn’t the only thing that UAE businesses had on their minds from last year. The UAE has been tightening up regulations related to the carrying out of business in the country, updated regulations with far-reaching consequences.

REVISED RULES: The revised rules are part of the UAE’ wider efforts to give business enterprises and its owners/staff as little leeway as possible to engage in proscribed activities. Licensed entities are now required to be as transparent as they can be – and even more – if they want to retain their presence in the local marketplace.

MANDATORY: Three sets of regulations became mandatory, going by their acronyms goAML, UBO and ESR. Failure to comply risks businesses with some of the stiffest penalties on commercial activity. Local businesses are starting to find how costly non-compliance can be.

ULTIMATE BENEFICIAL OWNER: UBO relates to ‘ultimate beneficial owner’, and calls on all licensed businesses to provide the identity of the owner or the dominant shareholder.

DETAILS NEEDED: This must include details of individuals with ownership of at least 25 per cent shareholding and with voting rights, or someone vested with the power to dismiss and appoint a majority of a company's directors.

FINES IMPOSED: Dubai has in recent weeks issued fines on those businesses that failed to meet the revised July 7 deadline to be compliant on this requirement. Other emirates too should be cracking the whip to get all their licensed enterprises on the right side of these requirements.

REGISTER: The goAML rule requires five categories of businesses to register on the Ministry of Economy portal for a future reporting of ‘suspicious transactions’ or ‘suspicious activity’. The five business categories relate to those in real estate brokerage, those trading in precious stones, any independent auditor, a consultancy service provider, and independent lawyers.

CATEGORIES: These five categories come under ‘Designated Non-Financial Businesses and Professions’. “These providers have to ensure the goAML registration is complete; establish a customer due-diligence profile for customers; ensure they have adequate internal policies, procedures, and controls in place to comply with legal requirements on AML/CFT (combat financing of terrorism), Identify true beneficial owners and report suspicious transactions,” said Kinjal Bagadia Mehta, Manager - Tax & Compliance at Global Business Services.

FINAL SUBMISSION DATE: For goAML registrations, the Ministry of Economy had set end March as the final date for submission.

ECONOMIC SUBSTANCE REGULATIONS: The third compliance measure UAE authorities had updated was on ESR, or Economic Substance Regulations. These require UAE-based onshore and free zone companies (and certain other businesses) that carry out a set of defined ‘relevant activities’ to maintain and demonstrate a certain ‘economic presence’ in the UAE. This way they meet the ‘Economic Substance Test’ requirements.

ACTIVITIES: The relevant activities include banking and insurance services, fund management, leasing operations, operating a headquarters in the UAE, running a shipping enterprise, having holding company operation in the country, and being in distribution and services.

CLEAR SIGNAL: Whether it is ESR or goAML, or for that matter UBO, the signal the UAE authorities are giving all businesses in-country are clear enough – Be transparent on all fronts. And ensure full compliance.