The Central Bank of the UAE has released updated guidelines aimed at combating money laundering, terrorist financing, and the proliferation of weapons financing, aligning with global best practices and addressing key regulatory aspects. These updates are designed to enhance the regulatory framework and improve the effectiveness of compliance within the financial sector, in line with the requirements for combatting money laundering and related financial crimes.
These regulatory guidelines demonstrate the Central Bank’s unwavering commitment to safeguarding the integrity and stability of the financial system while reducing financial crime risks. The guidelines will equip all licensed financial institutions and registered remittance intermediaries with a greater awareness of the risks associated with money laundering, terrorist financing, and proliferation. This aligns with the National Strategy (2024-2027) and the latest international standards, including the Financial Action Task Force (FATF) requirements, thus supporting their ability to adopt proactive measures for detecting and preventing suspicious activities. It contributes to establishing the UAE as a secure and stable global financial center.
His Excellency Khaled Mohamed Balama, Governor of the Central Bank of the UAE, stated: “The issuance of these new regulatory guidelines reflects the Central Bank’s dedication to establishing the UAE’s leadership in combatting money laundering, terrorist financing, and proliferation according to the highest international standards, thereby reinforcing its position as a reliable and secure global financial hub. We aim through these guidelines to enhance awareness in the financial sector and empower licensed financial institutions and registered remittance intermediaries to effectively and responsibly identify and mitigate emerging risks. Our commitment is to build a robust national framework to combat financial crimes, create a resilient financial system, and actively contribute to the stability of the global financial system.”
The updated package includes four critical regulatory guidelines along with two best practice manuals, all focused on enhancing compliance effectiveness and operational readiness within financial institutions.
Regulatory Guidelines to Enhance Compliance Effectiveness
1- Guidelines Regarding Proliferation Financing Risks: Aiming to elevate compliance levels and strengthen the efforts of the financial sector in minimizing proliferation financing risks. The guidelines outline three essential components for an effective framework to address and mitigate these risks, including: first, assessing the inherent risks of proliferation financing; second, evaluating the effectiveness of existing policies, procedures, and controls, and taking necessary actions to address any gaps; third, determining expectations and supervisory requirements for ongoing monitoring of emerging risks, including tracking new trends, patterns, and entities involved in potential proliferation financing activities.
2- Guidelines Concerning Trade-Based Money Laundering and Re-shipping Risks: These guidelines focus on enabling licensed financial institutions and registered remittance intermediaries to develop a deeper understanding of the money laundering, terrorist financing, and proliferation risks associated with trade and re-shipping. They also aim to improve operational readiness for effectively monitoring and managing these risks, ensuring full compliance with the country’s legal and regulatory frameworks.
3- Guidelines on Correspondent Banking and Relationship Management Expectations: These aim to enhance the awareness of licensed financial institutions and registered remittance intermediaries regarding risks associated with correspondent banking services and empower them to monitor these risks effectively. The guidelines provide a framework for entities offering these services to formulate internal policies and procedures that ensure compliance with legal frameworks while aligning operations with the new requirements for effectively managing risks arising from correspondent banking relationships.
4- Guidelines on Customer Due Diligence, Know Your Customer Requirements, and Record Keeping: These are designed to reinforce regulatory controls within licensed financial institutions and registered remittance intermediaries regarding customer identity verification, risk assessment from the onset of the relationship, and throughout its duration. The guidelines define core principles for establishing customer risk profiles and the implementation of due diligence procedures (both simple and enhanced), as well as specifying the type of data and documents necessary for record retention.
Best Practice Manuals on Risk Assessment and Training
1- Best Practice Manual on Risk-Based Approach Implementation and Institutional Risk Assessments: This aims to shape the methodology for licensed financial institutions and registered remittance intermediaries in complying with legal and regulatory requirements related to a risk-based approach. The practices outline how to develop comprehensive models for assessing money laundering, terrorist financing, and proliferation risks at the institutional level, providing a practical framework for implementing preventive measures that match the scale and nature of identified risks.
2- Best Practice Manual on Role-Based Training Implementation for Combatting Money Laundering and Terrorist Financing: This aims to enhance the capabilities of licensed financial institutions in meeting their obligations to develop the skills of their human resources and senior management. The practices set out frameworks for designing specialized training programs that improve early detection of suspicious activities, contributing to reducing the risks associated with money laundering, terrorist financing, and proliferation under the highest professional standards.