Effect of Anti-Money Laundering on UAE Business

On 30^th October 2018, the UAE issued Federal Law No. 20 of 2018 on Anti-Money Laundering (AML), Financing of illegal organizations, and Financing of Terrorism. In order to implement the law, the Ministry of Foreign Affairs and International Cooperation launched the Executive Office to Combat Money Laundering and Terrorist Financing in February 2021. The law comprises various regulations, procedures, and directions to monitor and curb the disguise of illegal funds. The Anti- Money Laundering Law in the UAE was aimed to ensure the transparency of transactions in the DNFBP (Designated Non-Financial Business and Profession) sectors. Accordingly, the DNFBPs were given until the 30^th of April to register for the goAML system, and the procedures for issuing penalties for violating the regulations came into effect on the 1^st of May. The Ministry of Economy in UAE has appointed to this regard a new head of inspection, to make sure that the companies follow the new law.

The prime objectives of the new law include:

• Powerful channels of financial intelligence.
• Restructuring of the procedures that allow authorities to freeze suspected accounts.
• The public prosecution is vested with a greater power
• The acts violating the UN charter on economic sanctions are criminalized

The new AML laws increased the penalties as part of prevention methods whereby fines ranging from Fifty Thousand Dirhams ( AED 50,000) Fifty Million Dirhams (AED 50, 000,000)  for money laundering offenses in the UAE and could also lead to the revocation of the license or the closure of the facility itself. Terrorist financing will result in the compulsory liquidation of the company.

As a result of the Anti- Money Laundering laws in the UAE,

• Investors are required to provide more information for high-risk activities such as investment business, payroll services, real estate, oil, general trading, gold, and precious metals, etc.
• Account opening procedures in banks could be delayed for cross-border trading businesses, involving high-risk countries such as Iran, Ayria, Botswana, Ghana, etc.

The implementation of the law not only aims for curbing illegal fund transfers but also,

• Restrict terrorism activities by monitoring finances
• Establish fair competition between companies
• Decrease crime rates
• Steady the capital flows through the right channels
• Helps curb illegal drug trafficking and related activities.
• Implement transparency and trust in all business dealings