By Michael Scott
The United Arab Emirates (UAE) targets regulators to enforce the verification of clients’ identities as mandatory for all accredited financial institutions. The move directs all firms involved in digital assets to embrace the amended anti-money laundering (AML) laws.
UAE Tightens AML Compliance for Digital Assets Operators
Based on the new regulations from the Central Bank of the United Arab Emirates (CBUAE), licensed financial institutions (LFIs) must verify all customers’ identities. The Central Bank targets all parties to enforce the update by the end of June to save UAE from becoming the conduit of illicit financing.
On 31st May, guidance for LFIs concerning the risks associated with virtual assets and virtual assets providers was published by the CBUAE. The 44-page document stipulates the new regulations concerning Anti-Money Laundering and Combating the Financing of Terrorism for banking organizations partaking in crypto in the United Arab Emirates. Another consideration of the guidance is the global standards issued by the Financial Action Task Force.
Fighting Illicit Finance Placed at Cryptos Door Step
According to the central bank, licensed financial institutions refer to the non-crypto financial organizations that create a connection with virtual asset providers (VASPs). Examples include finance organizations, banks, registered hawala providers, exchange houses, and insurance companies.
The guidance shows that licensed financial institutions are required to request the central bank approve the opening of accounts for every virtual asset provider on a case-by-case approach. Establishing links in the absence of approval is forbidden.
UAE Pursuing Know Your Customer as Mandatory Requirement for Approving Registrations
In addition to the creation of any relationship prior to the general verification process for clients, LFIs must understand the state of clients’ business. In this case, creating a customer’s profile is crucial and includes the transaction volume and types that the client is anticipated to undertake.
Monitoring the volumes of noninstitutional and personal clients’ crypto transactions from high-risk areas by licensed financial institutions would also be crucial. This means that clients’ shift of virtual assets to their accounts can only occur outside the United Arab Emirates-approved VASP network.
United Arab Emirates Key to Learn from Hong Kong
The increased activity towards a global race by various jurisdictions to attract crypto talent and innovation is evident in recent benchmarking tours. A recent incident involves the UAE-Hong Kong meeting to deliberate on future cooperation efforts.
The representatives from the Central Bank of the United Arab Emirates and the Hong Kong Monetary Authority met to deliberate cooperation concerning the regulations of digital assets. Besides, these two banks vowed to facilitate conversations concerning joint financial technology development strategies and knowledge-sharing interventions.