Money laundering in a gist

Ramya Rao 0

Money laundering has been a global problem over the last few decades. Every year, billions of dollars are smuggled across international borders, and thousands of criminals go unpunished, as it is difficult to trace as they are affiliated with other crimes. As a result, policymakers and officials who track the financial sector place a high emphasis on money laundering. It is the process of concealing, or “laundering,” illegally obtained funds to conceal the source of the funds and make them appear legitimately obtained.

Despite the country’s efforts to combat financial, organized, and terrorist crimes, money laundering remains a problem. The U.A.E has a robust anti-money laundering (AML) scheme in place to guard against the threat of money laundering and terrorist financing.

Since 2001, the UAE Government (UAEG) has taken steps to help monitor cash flows through the UAE financial system and to cooperate with international efforts to combat terrorist financing. The UAE has enacted two laws that serve as the foundation for the country’s Anti Money Laundering (AML) and counterterrorist financing (CTF) efforts: Law No 4/2002, the Anti Money Laundering law, and Law No. 1/2004, the counterterrorism law.

Although the Anti-Money Laundering law criminalizes money laundering, Administrative Regulation No. 24/2000 that provides guidelines for how financial institutions are to monitor for money laundering activity.

Anti-money laundering laws:

Anti-Money Laundering and Counter-Terrorism Financing Decree No. 20 of 2018 was released to improve the nation’s legislative and legal system to ensure compliance with international standards on anti-money laundering and counter-terrorism financing. The object of the law is to:

  • combat money-laundering practices
  • establish a legal framework that supports the authorities concerned with anti-money laundering and crimes related to money-laundering
  • Counter the financing of terrorist operations and suspicious organisations

A money-laundering offender, according to the Decree-Law, is someone who knows the money came from a crime or misdemeanour and deliberately commits one of the following acts:

  1. Transferring or transporting proceeds of crime with intent to conceal or disguise its illicit origin
  2. Concealing, or disguising the true nature, origin, location, way of disposition, movement, rights related to any proceeds or the ownership thereof
  3. Acquiring, possessing, or using such proceeds
  4. Assisting the perpetrator of the predicate offense to escape punishment.

Money laundering is different from predicate crime, according to the law, and a person’s penalty for a predicate crime does not exempt them from being penalised for money laundering.

Any person who commits, or attempts to commit, a Money Laundering offense shall be punished by imprisonment of up to ten years and/or a fine of between AED 100,000 and AED 500,000.

Platform to combat money laundering:

The UAE’s Central Bank’s Financial Intelligence Unit (FIU) has launched the ‘goAML’ anti-money laundering platform, which was established by the United Nations Office on Drugs and Crime (UNODC). This portal is an integrated platform that is used to file suspicious transaction reports (STRs) or any suspicious activity reports (SAR). Businesses and professions are obliged under the federal decree law 20 of 2018 and article 20 (2) of cabinet decisions No. (10) Of 2019.

The UAE Ministry of Economy has extended the deadline for companies in the “relevant non-financial industry and occupations” sector to register in government-approved regulations to combat money laundering and terrorism financing until the end of April as a huge number of companies who meet the following criteria’s have not registered as per the previous deadline (31st March 2021)

The Ministry explained that companies which include brokers and real estate agents, dealers of precious metals and gemstones, independent auditors and accountants and corporate service providers, and trust funds are required to register on the goAML system and the automated reporting system for sanctions lists, which is obligatory and free, before the end of the new deadline (30th April 2021), and to take the appropriate steps to comply with the requirements of Federal Law No. 20 of 2018.

Companies are required to proceed with the registration swiftly to avoid Fines starting Dhs 50,000 which can go up to Dhs 5 million. Companies who refuse to register will face sanctions such as a suspension or their operations being shut down.

Money laundering threats are present in a wide variety of non-financial businesses and activities, according to the ministry. They are classified into four classes:

  • Brokers and real estate agents: When entering into operations in the interest of their clients for purchase and sale of real estate.
  • Dealers of precious metals and gemstones: When they perform any single-cash transaction or several seemingly related transactions with a value of Dhs 55,000 or more.
  • Independent auditors and accountants: When they prepare, conduct or implement financial operations for the benefit of their clients, related to the following activities:
    • Buying and selling real estate.
    • Managing money that the client owns.
    • Managing financial, savings, or stock accounts.
    • Contributing to establishing, operating, or managing companies.
    • Buying and selling commercial entities.
  • Corporate service providers and trust funds: When they undertake or execute an operation for the benefit of their clients or on their behalf in relation to the following activities:
    • Work as an agent in establishing companies.
    • Working or preparing someone else to work as a director or company secretary, or as a partner in the company.
    •  Providing a registered office, business address, place of residence, address for correspondence, administrative address of a legal person, or legal arrangement.
    • Act as a trustee for a direct trust fund or in a similar capacity for some type of legal arrangement.
    •  Working or preparing another person to act as a shareholder for another person.

How ZBS can help!

ZBS accounting and booking can help ease the process of registration with “goAML” to avoid any penalties that are unnecessary for your business so you can focus on what matters more! Your Business!

Feel free to contact us for any support regarding the registering process of “goAML” and sit back while our top auditors and accountant deal with your external worries.

References:

Information and images used in this blog post were acquired from the official websites of The Ministry of Economy, The Ministry of Finance, The United Arab Emirates Government portal, Central Bank of U.A.E, and Khaleej Times Newspaper.

Tags:

Leave a Reply

Your email address will not be published. Required fields are marked *