Ensuring compliance with Anti-Money Laundering and Combatting Financing of Terrorism (AML-CFT) laws is mandatory for UAE businesses, especially Financial Institutions and Designated Non-Financial Businesses and Professions (DNFBPs) such as Real Estate Agents, Dealers of Precious Metals & Precious Stones, Auditors, Trust & Corporate Service Providers. Businesses must ensure AML-CFT compliance in the UAE by verifying and screening for Politically Exposed Persons (PEPs)/Targeted Financial Sanctions (TFS).

As per the UAE Cabinet Decision No. (10) of 2019 on AML-CFT, high-risk businesses are required to screen their clients at the time of onboarding to check for PEP, Relative and Close Associates (RCA), or Sanctions. Businesses must screen the PEPs and conduct due diligence on any PEPs or high-risk customers. They should also screen the customers to ensure that entities listed on Sanctions lists are not allowed to make any financial transactions. AML consultants in Dubai can help you navigate the challenges of PEP and sanction screening.

Who are Politically Exposed Persons? 

As per the UAE Cabinet Decision No. (10) of 2019 on AML-CFT, PEPs are individuals entrusted with key public functions in the UAE or any other country. PEPs can be Heads of States or Governments, senior politicians, senior government officials, judicial or military officials, senior executive managers of state-owned corporations, and senior officials of political parties and persons with the management of an international organisation or any prominent function within such an organisation. The definition of a PEP also covers the following:

• Direct family members of a PEP such as spouses, children, spouses of children, and parents
• Close associates of PEPs including individuals holding joint ownership in a company or legal arrangement with the PEP or anyone having a close business relationship with the PEP
• Close associates of PEPs having individual ownership rights in a legal person or arrangement established in favour of the PEP

What are Targeted Financial Sanctions? 

TFS includes sanctions (travel bans, arms embargos, Sectorial sanctions i.e Gold- Kongo, Charcol-Somalia) and WMD related goods and materials ) slapped on specific individuals or groups to counter the financing of terrorist activities. TFS is being implemented through asset freezing and other financial sanctions to curb funds or other assets from being made available, directly or indirectly, for the benefit of listed individuals, groups and entities or organisations that are sanctioned.

The chief objective of TFS is to deny specific individuals, groups, organisations, and entities the funds and resources to disrupt global peace and security, support terrorism or finance the proliferation of weapons of mass destruction. To achieve this goal, sanctions are imposed on groups and individuals so that they don’t get funds, financial assets, or economic resources of any kind. AML consultants in Dubai can guide you more about TFS screening.

Why Businesses should Conduct PEP/Sanctions Screening in the UAE? 

Regulated businesses are at a higher risk of money laundering and financing terrorism. Such businesses should carry out a risk assessment of their clients based on geographies, industry, nature of business, type of clients, country of transaction and operation; size or pattern of transactions; and business relationships. Financial Institutions and DNFBPs deal with clients from across the borders and serve customers of diverse types. Being vigilant around PEP accounts helps them to prevent their company from being used as a channel for money laundering or terror financing.

Businesses that act on behalf of domestic or foreign clients (law firms, accounting firms etc.) also face risk from PEPs and sanctioned entities. They are at a higher risk as they usually receive payments, manage client funds or purchase real estate on their customers’ behalf. Implementing an effective PEP/Sanctions screening program in place, helps such business entities to mitigate the risk of potential financial fraud and ensure AML-CFT compliance in the UAE.

How to Conduct PEP Screening in the UAE? 

As per Article 15 of Cabinet Decision No. (10) of 2019, businesses must do the following tasks to screen the PEPs:

• Implement risk management systems to check whether a Customer or the Beneficial Owner is a PEP
• Obtain approval from senior management before starting a new business relationship or continuing an existing one, with a PEP
• Take adequate measures to establish the fund sources of Customers and Beneficial Owners identified as PEPs
• Conduct enhanced ongoing monitoring

How to Carry out TFS Screening? 

Businesses must screen their customers against the local and international sanctions list before establishing a business relationship with them. A Sanctions List contains the names of individuals and organizations linked to terrorism, financing of terrorism or proliferation of weapons of mass destruction and its financing. The entities listed in a Sanctions List are subject to sanctions as per the UNSCRs and decisions of the Sanctions Committee.

If your current or former customer becomes listed, you must freeze the assets and should not offer them access to any additional funds or services. More importantly, businesses must immediately inform the Supervisory Authority or the Executive Office. AML consultants in Dubai can help you comply with TFS requirements.

Consult with the Best AML consultants in Dubai, UAE 

Businesses must develop an effective AML-CFT policy to comply with the requirements set out by the UAE authorities to fight money laundering and financing of terrorism. Failure to do so will lead to hefty penalties, which warrant the services of the best AML consultants in Dubai such as Jitendra Chartered Accountants (JCA).

JCA has a dedicated department to provide robust AML services in Dubai, UAE. JCA can advise the organisations on how to comply with AML-CFT / TFS requirements and help with sanction screening. Consult with JCA today to avoid penalties and reputation damage.