The Central Bank of the UAE (CBUAE) has issued new guidance on anti-money laundering and combating the financing of terrorism (AML/CFT) to Registered Hawala Providers (RHP) in the country and Licensed Financial Institutions (LFI) that offers services to RHPs.
The new guidance will assist in the understanding and effective implementation of the statutory AML/CFT obligations for RHPs and LFIs, as outlined in Federal Decree-Law No. (20) of 2018 on AML/CFT and Cabinet Decision No. (10) of 2019. This guidance also takes Financial Action Task Force (FATF) standards and guidance into account.
Hawala providers extend an informal funds-transfer service between people using non-bank settlement methods. The Central Bank allows legitimate hawala activity, which is considered as a key element in its efforts to improve financial inclusion and bring the unbanked population into the regulated financial system.
“The CBUAE will continue to keep a suitably close eye on licensed financial institutions in the country, including registered hawala providers to enhance their effectiveness in implementing AML/CFT measures to safeguard the UAE’s financial system,” Mr. Khaled Balama, governor of the CBUAE, said.
Earlier this year, the country introduced strict measures to fight money laundering and established a dedicated agency to identify people responsible and those suspected of financing terrorists and organized crime.
Hawala is regulated by the RHP Regulation issued in 2019. All providers undertaking hawala activity in the UAE must hold a hawala provider certificate issued by the CBUAE.
“RHP are required to comply fully with UAE requirements relating to targeted financial sanctions and suspicious transaction reporting. They are also required to establish and maintain an effective AML/CFT compliance program designed to prevent misuse of this activity, this should include a competent compliance officer, appropriate customer and agent due diligence, transaction monitoring and record-keeping,” the CBUAE said.
RHPs are mandated to maintain an account with a bank operating in the UAE to be used for settlements. Last month, the CBUAE issued new guidelines governing the implementation of sanctions related to AML/CFT.
Earlier this month, the UAE’s Financial Intelligence Unit collaborated with the China Anti-Money Laundering Monitoring and Analysis Centre to help to take severe actions against global money laundering and terrorism financing.