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Businesses urged to use fintech to counter AML

Dubai - This advisory was issued jointly by the UAE Central Bank, Ministry of Economy, Ministry of Justice, Securities and Commodities Authority, Insurance Authority, Abu Dhabi Global Markets and Dubai Financial Services Authority.

The UAE's top regulators have asked financial institutions (FIs) and designated non-financial businesses and professions (DNFBPs) to utilise reliable technology and Fintech tools to ensure that compliances to anti-money laundering (AML) and combating the financing of terrorism (CFT) are being fully complied with.
This advisory was issued jointly by the UAE Central Bank, Ministry of Economy, Ministry of Justice, Securities and Commodities Authority, Insurance Authority, Abu Dhabi Global Markets and Dubai Financial Services Authority on the treatment of financial crime risks in the wake of Covid-19 pandemic and in line with the Financial Action Task Force (FATF) report published on April 1, 2020.
The Paris-based FATF, world's main AML watchdog, issued a report on the UAE last week, which showed that the UAE made a significant progress in implementing suitable legal framework and reporting mechanism for AML and CFT laws.
Acknowledging that it will be more difficult for businesses to adhere to identify and verify processes due to remote working models in the aftermath of Covid-19, the regulators asked FIs and DNBFPs to use "Fintech, Regtech, Suptech to the fullest extent possible.
"FIs and DNFBPs should also take into consideration the published FATF Guidance on Digital ID, which highlights the benefits of trustworthy digital identity for improving the security, privacy, and convenience of identifying people remotely for both onboarding and conducting transactions while also mitigating money laundering and terrorist financing risks," said the advisory, adding that businesses can also utilise UAE government's validation gateway, the UAE Pass or Emirates IDs.
"Where an FI or DNFBP is unable to make use of such technology, exception handling provisions acceptable by the supervisory authorities can be utilised. However, the supervisory authorities expect such businesses to maintain a record of when these provisions were legally vetted and invoked and for senior management to be aware of such events, as part of its' AML risk management framework," it said.
The regulators asked FIs and DNFBPs to revisit their risk assessment and control frameworks and revise their internal policies, procedures, and/or control measures as necessary where such enhancements are warranted.
Mayank Sawhney, managing director of MaxGrowth Consulting, said the issuance of the guidance for FIs and DNFBPs reaffirms the commitment and seriousness with which the UAE authorities are implementing all the compliance requirements of FATF in relation to AML and CTF even during these challenging times of Covid-19.
"One of the thing which has been emphasised in this guidance note is for FIs and DNFBPs to have an authentic and reliable Digital ID for their customers for the digital transactions done by them," said Sawhney.
- waheedabbas@khaleejtimes.com