The Central Bank of the United Arab Emirates, through the National Anti-Money Laundering and Combating Financing of Terrorism and Financing of Illegal Organisations Committee (NAMLCFTC), has taken a significant step to address unlicensed virtual asset service providers (VASPs) by issuing comprehensive guidelines.
These guidelines not only serve as a valuable resource for combating financial crimes but also underscore the importance of complying with relevant regulations and legislation to maintain the integrity of the UAE’s financial system.
The NAMLCFTC emphasizes that unlicensed VASPs operating within the UAE will face both civil and criminal penalties, which may include fines levied against the VASP entity, its owners, and senior managers.
In addition, companies demonstrating “willful blindness” in their dealings with unlicensed VASPs and lacking robust anti-money laundering (AML), combating financing of terrorism (CFT), and counter-proliferation financing controls could also face penalties.
This timely issuance of guidance coincides with the increasing accessibility of virtual assets through digital channels. As the digital economy in the UAE matures, efforts to combat various financial crimes intensify, emphasizing the importance of raising awareness regarding their risks.
Khaled Mohamed Balama, Governor of the Central Bank of the UAE and chairman of the NAMLCFTC, underscores the significance of compliance with regulations and legislation to ensure the financial system’s integrity.
The guidelines represent a collaborative effort between the NAMLCFTC and various regulatory bodies within the UAE, including the Dubai Financial Services Authority, Abu Dhabi Global Market, Securities and Commodities Authority, Ministry of Justice, Ministry of Economy, and Virtual Assets Regulatory Authority. These supervisory authorities acknowledge the diverse and innovative tactics employed by suspicious parties to carry out fraudulent schemes.
Key indicators of fraudulent entities include the absence of a regulatory license, lack of a physical presence, unrealistic promises such as Ponzi schemes, inadequate website and communications, undue pressure to invest hastily, engagement in unlicensed products (virtual assets), absence of consumer protection, non-compliance with regulatory disclosure, a lack of compliance records, social engineering, fraudulent initial coin offerings (ICOs), fake wallets and exchanges, illicit use of virtual currencies, and transactions involving freehold property and real estate, among others.
Companies are also required to identify instances in which investors or customers actively seek or repeatedly utilize the services of unlicensed virtual asset service providers.
It is worth noting that regulatory entities encourage careful analysis of transactions to discern new high-risk patterns and prompt adjustments to monitoring systems and alert mechanisms in accordance with updated reporting rules. Moreover, the Central Bank underscores the importance of promptly reporting suspicious transactions and activities to the UAE Financial Intelligence Unit (FIU), thereby contributing to a stronger defense against financial crimes.
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