• AML 2. AML 2. Overview And Purpose Of The AML Rulebook

    • Guidance

      1. Under Section 15A of the Financial Services and Markets Regulations 2015 ("FSMR"), the Regulator has jurisdiction for the regulation of AML in ADGM. The AML Rulebook sets out the requirements imposed by the Regulator. The U.A.E. criminal law applies in the ADGM and, therefore, Persons in the ADGM must be aware of their obligations in respect of the criminal law as well as these Rules. Relevant U.A.E. criminal laws include Federal AML Legislation and Federal Law No. 3 of 1987 (the Penal Code of the United Arab Emirates). The Rules in the AML Rulebook should not be relied upon to interpret or determine the application of the criminal laws of the U.A.E.
      2. The AML Rulebook has been designed to provide a single reference point for all Relevant Persons who are supervised by the Regulator for Anti-Money Laundering and Sanctions compliance in accordance with the scope of application outlined in Rule 1.2.1. Accordingly it applies to Relevant Persons, but in different degrees as provided in Rule 1.2.2(2). The AML Rulebook takes into consideration the fact that Relevant Persons have differing AML risk profiles. A Relevant Person should familiarise itself with the AML Rulebook, and assess the extent to which the Chapters and sections apply to it.
      3. The AML Rulebook is not intended to be read in isolation from other UAE relevant legislation or developments in international policy and best practice and, to the extent applicable, Relevant Persons need to be aware of, and take into account, how these aforementioned matters may impact on the Relevant Person's day to day operations. This is particularly relevant when considering the list of terrorist organisations or persons issued under Article 63 of Federal Law No.7 of 2014 on Combatting Terrorism and the United Nations Security Council ("UNSC") Resolutions which apply in the ADGM, and Sanctions imposed by other jurisdictions which may apply to a Relevant Person depending on the Relevant Person's jurisdiction of origin, its business and/or customer base.
      4. Chapter 1 specifies who is ultimately responsible for a Relevant Person's compliance with AML. The Regulator expects the Governing Body and Senior Management of a Relevant Person to establish a robust and effective AML and Sanctions compliance culture for the business.
      5. Chapter 2 provides an overview of the AML Rulebook and Chapter 3 sets out the key definitions in the AML Rulebook.
      6. Chapter 4 outlines the general compliance requirements including Group polices, notifications, record keeping requirements and the annual AML Return.
      7. Chapter 5 explains the meaning of the risk-based approach ("RBA"), which should be applied when complying with the AML Rulebook. The RBA requires a risk-based assessment of a Relevant Person's business (in Chapter 6) and its customers (in Chapter 7). A risk-based assessment should be a dynamic process involving regular review, and the use of these reviews to establish the appropriate processes to match the levels of risk. No two Relevant Persons will have the same approach, and implementation of the RBA and the AML Rulebook permits a Relevant Person to design and implement systems and controls that should be appropriate to their business and customers, with the obvious caveat being that such systems should be reasonable and proportionate in light of the AML risks. The Regulator expects the RBA to determine the breadth and depth of the Customer Due Diligence ("CDD") which is undertaken for a particular customer under Chapter 8, though the Regulator understands that there is an inevitable overlap between the risk-based assessment of the Customer in Chapter 7 and CDD in Chapter 8. This overlap may occur at the initial stages of on-boarding of customers but may also occur when undertaking on-going CDD.
      8. Chapter 9 sets out where a Relevant Person may rely on a third party to undertake all or some of its CDD obligations. Reliance on third-party CDD reduces the need to duplicate CDD already performed for a customer. Alternatively, a Relevant Person may outsource some or all of its CDD obligations to a service provider.
      9. Chapter 10 sets out certain obligations in relation to correspondent banking, wire transfers and other matters which are limited to Authorised Persons (other than a Credit Rating Agency) and Recognised Bodies and, in particular, to banks.
      10. Chapter 11 sets out a Relevant Person's obligations in relation to UNSC Resolutions and Sanctions, and government, regulatory and international findings (in relation to AML, terrorist financing and the financing of weapons of mass destruction).
      11. Chapter 12 sets out the obligation for a Relevant Person to appoint an MLRO and the responsibilities of such a Person.
      12. Chapter 13 sets out the requirements for AML training and awareness. A Relevant Person should adopt the RBA when complying with Chapter 13, so as to make its training and awareness proportionate to the AML risks of the business and the Employee role.
      13. Chapter 14 contains the obligations applying to all Relevant Persons concerning Suspicious Activity Reports, which are required to be made under Federal AML Legislation.
      14. Chapter 15 sets out additional obligations applying to DNFBPs, including registration and notification requirements.
      15. Chapter 16 sets out the obligations applying to Relevant Persons that are NPOs.
      Amended on (3 February, 2020).

    • The U.A.E. criminal law

      16. Under Article 3 of Federal Decree By Law No. 20 of 2018, a Relevant Person may be criminally liable for the offence of money laundering if such an activity is intentionally committed in its name or for its account. Relevant Persons are also reminded that:
      a. the failure to report suspicions of money laundering;
      b. "tipping off"; and
      c. assisting in the commission of money laundering,
      may each constitute a criminal offence that is punishable under the laws of the U.A.E.
      Amended on (15 April, 2019).

    • Financial Action Task Force Standards

      17. The Financial Action Task Force (the "FATF") is an inter-governmental body whose purpose is the development and promotion of international standards to combat money laundering and terrorist financing.
      18. The Regulator has had regard to the FATF Recommendations in making these Rules and has determined to closely align these Rules with the FATF Recommendations, where that is deemed to be necessary and appropriate. A Relevant Person may wish to refer to the FATF Recommendations and Interpretive Notes to assist it in complying with these rules. However, in the event that an FATF Recommendation or Interpretive Note conflicts with a Rule in the AML Rulebook, the relevant Rule takes precedence.
      19. A Relevant Person may also wish to refer to the FATF typology reports which may assist in identifying new money laundering threats and which provide information on money laundering and terrorist financing methods. The FATF typology reports cover many pertinent topics for Relevant Persons, including corruption, new payment methods, money laundering using trusts and Company Service Providers, and vulnerabilities of free trade zones. These typology reports can be found on the FATF website www.fatf-gafi.org.
      Amended on (3 February, 2020).

    • Basel Committee Standards

      20. The Basel Committee on Banking Supervision has published a set of guidelines for banks (Sound Management of Risks related to Money Laundering and Financing of Terrorism, January 2014) which are intended to supplement FATF Recommendations. Banks operating in ADGM should read the Basel Committee guidelines in conjunction with FATF Recommendations and in complying with these Rules.
      21. In the event that any of the Basel Committee guidelines conflict with a Rule in the AML Rulebook, the relevant Rule takes precedence.
      Amended on (15 April, 2019).

    • Wolfsberg Group

      22. The Wolfsberg Group is an association of thirteen global banks that has published guidance aimed at assisting financial institutions in managing money laundering risks (Wolfsberg Statement Guidance on a Risk Based Approach for Managing Money Laundering Risks, March 2006) and in preventing terrorist financing (Wolfsberg Statement on the Suppression of the Financing of Terrorism, January 2002). Banks operating in ADGM should be familiar with relevant Wolfberg Group published guidance in conjunction with the FATF Recommendations and in complying with these Rules.
      23. In the event that any part of the Wolfsberg Group published guidance conflicts with a Rule in the AML Rulebook, the relevant Rule takes precedence.
      Amended on (3 February, 2020).

    • Sanctions

      24. The U.A.E, as a member of the United Nations, is required to comply with all Sanctions issued and passed by the UNSC. The U.A.E periodically publicises its imposition of Sanctions. These UNSC obligations apply in the ADGM and their importance is emphasised by specific obligations contained in the AML Rulebook requiring Relevant Persons to establish and maintain effective systems and controls to make appropriate use of UNSC Sanctions and Resolutions (see Chapter 11).
      25. The FATF has issued guidance on a number of specific UNSC Sanctions and Resolutions regarding the countering of the proliferation of weapons of mass destruction. Such guidance has been issued to assist in implementing the targeted financial Sanctions and activity based financial prohibitions. This guidance can be found on the FATF website (at www.fatf-gafi.org).
      26. In relation to unilateral Sanctions imposed in specific jurisdictions such as the European Union, the U.K. ("HM Treasury") and the U.S. (by the Office of Foreign Assets Control ("OFAC")) and any other Sanctions that may apply to the Relevant Person's business partners and customers, the Regulator expects a Relevant Person to consider and take positive steps to ensure compliance where required or appropriate.
      Amended on (3 February, 2020).