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This week the head of UAE’s Executive Office of AML/CFT spoke with AML Intelligence’s Elizabeth Hearst to outline how the Emirates has stepped up its fight against money laundering.
The wide-ranging interview takes place against FATF’s Plenary session which began this week in Paris. One of the decisions being made is whether the United Arab Emirates should join the likes of Malta and Turkey on the agency’s ‘Grey List.’
ELIZABETH HEARST: The UAE has been in the news recently because of reports that FATF is to consider whether to put the federation on its so-called ‘grey list.’ Has this surprised you?
HE HAMID AL ZAABI: The UAE is firmly committed to combatting financial crime and the global AML/CFT agenda. I want to stress that such list is a decision that can only be made by FATF. Out of respect for FATF’s independence, I cannot comment on any media reports or speculation regarding the so-called ‘grey list’.
EH: Can you explain what measures the UAE has taken to combat financial crime and money laundering in recent years?
HAZ: The UAE’s efforts to combat financial crime are wide-ranging.
The following is an overview of some of the UAE efforts:
Understanding of risk – the UAE has enhanced its understanding of the global problem of financial crime through undertaking and completing the National Risk Assessment for AML/CFT, as well as additional detailed risk assessments focused on specific risks. Led by the National Risk Assessment Sub-Committee (NRASC), these risk assessments adopt a risk-based approach and address specific and emerging risks in the UAE and globally, such as virtual assets. The competent UAE authorities are working closely together to manage and mitigate the risks facing the UAE identified through these risk assessments.
Strengthened international cooperation and domestic coordination – the UAE has ensured that authorities across the country are prioritizing both official and informal forms of international cooperation. The UAE FIU, for example, has signed Memoranda of Understanding (MoU) with counterpart FIUs in more than 50 other countries and territories, in order to facilitate regular contacts and sharing of information.
The FIU is also actively engaged in intelligence sharing with all competent UAE entities, including 13 MoUs with domestic authorities such as the Federal Customs Authority, Dubai Police, Abu Dhabi Police, Sharjah Police, Ministry of Economy and Ministry of Justice. Efforts on both the international and domestic cooperation fronts have led to more prosecutions and confiscations of the proceeds of crime.
Supervision – the UAE has enhanced its approach to AML/CFT supervision, led by the Central Bank, Ministry of Economy, Ministry of Justice, and Securities and Commodities Authority and the free zones.
All supervisory authorities have dedicated AML/CFT directorates which have collectively conducted almost 800 on-site, full-scope and follow-up inspections in 2021. Moreover, they use a range of dissuasive enforcement actions for non-compliant firms: the media has reported many examples of fines and penalties. The UAE supervisors have also imposed many other dissuasive sanctions such as monitorships, remediation programs, license suspensions, client onboarding restrictions, and so forth.
Increased transparency – through the implementation of Beneficial Ownership (BO) regulations and requirements, the UAE has taken measures to prevent the abuse of legal entities.
Nearly all UAE entities have registered their beneficial owners, which is a legal requirement, and the data is accessible by competent UAE entities including registries and law enforcement. Data on all UAE entities is also available to the public through the National Economic Registry, an online platform integrating registry data from across each Emirate.
Under the UAE’s new regulatory framework, registries have issued millions of UAE dirhams in fines against firms that do not comply with the requirements to disclose their beneficial owners. This is a significant step in ensuring fraudsters do not take advantage of the business-friendly environment here in the UAE.
Financial intelligence – the UAE is capturing more data and intelligence and applying it to all relevant investigations, not just those related to financial crimes but applicable criminal conduct more generally such as drug trafficking. This is particularly through close coordination between the private sector, the FIU, the Customs authorities and the Police and Public Prosecution in the UAE and all Emirates.
Financial investigations – the UAE has enhanced financial investigations and prioritized the most pressing money laundering and terrorist financing cases. We have seen examples in the media of major cases where money launderers and illicit financiers have been brought to justice in the UAE, including through close cooperation with our international partners. There are many other cases that are confidential or ongoing that I can’t comment on specifically.
Confiscations – the UAE confiscated more than US$625 million in 2021, including US$300 million in money laundering offences, nearly US$82 million linked to foreign predicate offences, US$78 million in cash and US$4 million in gold and precious metals.
This is evidence of our National AML/CFT Strategy in action. We prioritized confiscating illicit gains and are pleased with these results, and we will continue to ensure that the proceeds of crime are identified and confiscated in line with international best practice.
Targeted financial sanctions (TFS) – In 2021, the UAE confiscated more than US$120 million to prevent terrorist financing and proliferation financing. As a testament to the UAE’s decisive action, around 99% of regulated entities under the CBUAE, MOE, MOJ, SCA, ADGM and DFSA are registered in the Notification and Alert System established by the Executive Office for the Committee for Goods and Material subject to Import and Export Controls (EO-IEC) which provides live updates to the UN Sanctions List and the Local List, enabling the timely and effective implementation of sanctions by the private sector.
In terms of TFS in action, the UAE Cabinet also issued Resolution 83 of 2021, designating 38 individuals and 15 entities on the approved list of persons and organizations supporting terrorism (the Local List), underscoring the UAE’s commitment to target and dismantle networks that finance terrorism. The names of the persons and entities were published through the Alert system and through the Emirates News Agency in order to ensure appropriate actions were taken by financial institutions and the private sector.
Non-profit organization supervision – the Ministry of Community Development (MoCD) is using its new powers awarded through the Federal Law for Non-Profit Organizations in 2020, this includes supervisory powers and tools to assess risk and enforce UAE laws governing NPOs.
For example, last year, HE Hessa bint Essa Buhumaid, Minister of Community Development, and HE Ahmed Ali Al Sayegh, Minister of State, announced a joint mechanism between the MoCD and the UAE Financial Intelligence Unit (FIU) for the coordination of efforts to combat money laundering, financing of terrorist groups and illicit organizations in the NPO sector.
The cooperation also facilitates the exchange of information on NPO with relation to cases of money laundering, financing of terrorist groups and illicit organizations, and to establish a secure electronic link for the purpose of exchanging information.
Close partnerships and engagement with private sector – The Public Private Partnership Subcommittee was established last year and in just a short period of time includes 17 government and more than 20 private sector entities (FIs & DNFBPs), thereby providing a common platform in which to share AML/CFT and counter proliferation financing experience and information, including in relation to suspicious activity.
The partnership is modelled on international best practice and takes into consideration the public-private partnership approaches in partner countries such as the United Kingdom, United States and Singapore.
Introduce many more new regulations and policies such as in relation to virtual assets, proliferation financing, and social media influencers – the UAE is fully aware of emerging and heightened areas of financial crime risks. The financial crime framework in the UAE incorporates best practices when it comes to key areas of risk such as virtual assets, social media influencers and legal entities among others. In order to mitigate the risks, the UAE is also running trainings and workshops thereby raising the profile of AML/CFT and increasing compliance in these sectors.
This is just a high-level overview. There are many other initiatives and activities that the UAE authorities and private sector are leading.
EH: How well do you think the UAE is doing in fighting financial crime?
HAZ: The UAE takes its role in protecting the integrity of the global financial system extremely seriously. Our efforts to continuously enhance our legal and enforcement framework are driven by the National Risk Assessment, National Strategy and National Action Plan for AML/CFT. They are also informed by international standards, such as the FATF recommendations and immediate outcomes.
As I mentioned, there are a wide range of recent examples which speak to the UAE’s progress on AML/CFT and provide an indicator of how well the UAE’s anti-financial crime framework is doing.
The Federal Government is working closely with the authorities of each Emirate, free zone and the private sector to ensure that all UAE entities are implementing effective AML/CFT measures. Progress in areas such as international cooperation, supervision, use of financial intelligence and confiscation is due to the ongoing efforts and coordination by authorities across the UAE.
One metric of progress is understanding financial crime risks. We have a much deeper understanding of the problem now globally as well as in the UAE. The authorities have taken action to target key risks and I am sure you will have seen examples of this. This means that significant resources have been directed to where they are needed most, particularly in relation to mitigating risks and complex typologies here in the UAE.
EH: What further areas does the UAE need to address to improve its AML regime?
HAZ: Financial crime is a global and evolving problem. That is why AML/CFT efforts in the UAE are an ongoing process and, as such, the UAE’s approach is comprehensive, integrated and consistently evolving.
We will continue to focus on key priorities such as information sharing, cooperation, and beneficial ownership, but also emerging risks such as virtual assets. Recently we completed a risk assessment to address the AML/CFT risks involving virtual assets, and this continues to be a space we are watching very closely.
Since criminals constantly look for gaps in the global financial system, we are also committed to increasing human resources and the use of technology in the UAE to combat financial crime.
We are training thousands of people in the UAE across the government and the private sector in AML/CFT and have developed and adopted a number of advanced technologies and tools, including the Fawri Tick system, goAML, the Integrate Enquiries Management System, the National Economic Registry and many others.
Human knowledge and technological advancements go hand in hand and are the basis of implementing our AML/CFT strategy and the UAE’s continued improvements in this space. Just 12 months into the existence of the Executive Office for AML/CFT as the primary national co-ordinating body in the UAE, we are pleased with the progress.
EH: How many people are engaged in the fight against financial crime in the UAE?
HAZ: There are around 100 UAE entities with competencies in AML/CFT at the Federal, Emirate and local levels, collectively staffed with hundreds of dedicated financial crime professionals. In addition, across the UAE, more than 12,000 participants from across sectors have attended training and awareness-building sessions in the past year. So it is safe to say there are thousands of people engaged in our shared objective of fighting financial crime in the UAE.
I want to underscore, however, that it is not just about ‘how many’ people but their expertise and how we are also focusing on supporting human knowledge through information sharing and the use of technology. I have already mentioned above some of the tools and solutions we have implemented from a technology perspective.
On the human resources front, the Executive Office on AML/CFT has launched an initiative to train 1,000 competent professionals across a range of AML/CFT subject matters. Through this initiative, we are taking the lead through the Public Private Partnership Subcommittee in coordinating with the private sector to provide financial sponsorships and nominate candidates.
There are other initiatives, to train more than 140 professionals working alongside 36 federal and local competent authorities in the UAE and obtain their Certified Anti-Money Laundering Specialist (CAMS) certification. There are also many financial institutions, law firms, compliance professionals and experts here in the UAE who are extremely knowledgeable about the topic of financial crime. These are part of our efforts to develop as an AML/CFT center for excellence.
EH: Have you implemented any additional measures to ensure that the UAE will not be grey listed at the upcoming FATF plenary?
HAZ: The UAE is firmly committed to combatting financial crime and the global AML/CFT agenda. I want to stress that such list is a decision that can only be made by FATF. Out of respect for FATF’s independence, I cannot comment on any media reports or speculation regarding the so-called ‘grey list’.
Beyond FATF, the UAE has been contributing to the global fight against financial crime for many years now. We have a system of identifying and preventing terrorist and other criminal activities, in cooperation with our international partners. This is not a ‘new’ area to us and in this sense the UAE is committed to taking the necessary measures to protect the integrity of the financial system.
As my colleague HE Minister Ahmed Al Sayegh has said, we have stepped up our AML/CFT measures by taking onboard the recommendations and starting to change.
“We think we have made significant progress – the bar has been set very high. Regardless of the outcome, we have an action plan and will continue to implement AML/CFT measures as we move forward. “
Through the action plan, our AML/CFT objectives are reinforced at all levels of government by the Higher Committee Overseeing the National Strategy for AML/CFT.
The Higher Committee is chaired by H.H. Sheikh Abdullah bin Zayed Al Nahyan, to show how critical we consider this matter to be. Each competent UAE authority is making progress and reporting to the Higher Committee and the Executive Office for AML/CFT, as well as the UAE National Anti-Money Laundering and Combatting Financing of Terrorism & Financing of Illegal Organizations Committee (NAMLCFTC), the primary body for policy making and issuing regulations in relation to AML/CFT.
EH: What consequences would a grey listing by FATF bring to the UAE as a financial hub?
HAZ: The UAE is firmly committed to combatting financial crime and the global AML/CFT agenda. I want to stress that such list is a decision that can only be made by FATF. Out of respect for FATF’s independence, I cannot comment on media reports or speculation regarding the so-called ‘grey list’ and any potential consequences thereof.
Our overall economic objective is to ensure the UAE remains the premier location and hub for investment, economic opportunities and innovation. Having a stable framework of rules and regulations helps us to strengthen the economy and prevent businesses from being undermined by criminals and bad actors.
On this front, the UAE is continuing to engage financial institutions and the private sector in the UAE as partners in the fight against financial crime, through constructive and productive dialogue on all aspects of its AML/CFT approach. The UAE economy is diverse and resilient. Efforts to strengthen the national economy and UAE’s position as a leading financial hub will continue.
The NAMLCFTC has existed for more than 21 years and is represented by members from all of the major UAE competent authorities, including the Public Prosecution, Police, free zones, Supreme Council for National Security, Federal Tax Authority, UAE Central Bank, Ministry of Economy, Ministry of Justice, Central Bank, Ministry of Finance and Ministry of Foreign Affairs and International Cooperation, among others.
Do you think more can be done by countries in the Middle East to ensure they are not targeted by money launderers?
I cannot speak for the approach of other countries in the region. The UAE will continue to enhance our cooperation with regional and international partners to share information and best practices. We are also continuing to work alongside other global organizations engaged in the fight against financial crime. This is because money laundering is a global problem.
There are also many examples of the work that the UAE been doing across the region, not just on AML/CFT but to advance peace and prosperity more generally. Following the historic Abraham Accords, for example, the Financial Intelligence Units of Israel and the UAE signed an MOU to deepen cooperation in the joint fight against money laundering and terrorist financing.
Since the MOU, there has also been deeper private sector cooperation between Israeli technology firms and some of the UAE’s largest financial institutions.
Additionally, as part of the significant cooperation between the UAE and Turkey led by H.H. Sheikh Mohammed bin Zayed al-Nahyan’s visit to Ankara last year, the UAE Central Bank and Turkish Central Bank and the respective FIUs signed agreements to deepen collaboration and information exchange aimed at combatting financial crime.
These are just a few of the examples of how collectively we can work together to secure stability and prosperity globally and in the region as a whole.
EH: Do you think the volume of foreign business and expats doing business through the UAE poses a high risk of financial crime?
HAZ: The UAE has undertaken a number of initiatives to understand its risk profile and has implemented measures to respond to key risks.
With regard to foreign business and expats, the UAE welcomes people and innovators from all over the world conducting legitimate business activities.
The UAE authorities are responding to risks proportionately and have already implemented a number of measures to combat this issue. One of the topically-focused risk assessments focused on the foreign proceeds of crime and professional money laundering, for example.
Through this risk assessment, a number of actions have been taken to prevent such risks. For example, the Cash Declaration System has been developed by the Federal Authority for Identity and Citizenship, Customs and Port Security (ICA), which allows travelers to declare the import or export of funds in excess of the threshold requiring a declaration prior to their journey.
This system broadens the capability of the ICA, and now other UAE authorities, to analyze linked movements of funds. It has been deployed to investigate and arrest a number of foreign nationals through close cooperation with our international partners. In one case, the UK National Crime Agency (NCA) arrested a money mule at Heathrow Airport trying to smuggle almost GBP 2 million out of the UK to Dubai in suitcases and the woman was later sentenced to nearly 3 years in UK prison for money laundering. The UK authorities thanked UAE counterparts for their cooperation and the critical information supplied by the UAE customs authorities. It is a UK challenge as much as it is a UAE challenge requiring close cross border cooperation, and that is why my colleague HE Minister Ahmed Ali Al Sayegh on behalf of the UAE signed the landmark Partnership to Combat Illicit Finance with the UK last year.
EH: The UAE and UK last April hosted a joint training session on AML/CFT, could you tell me more about that and what outcomes were achieved? Would this be an effort you would like to extend to other countries?
HAZ: International cooperation is a key priority for the UAE and the UAE is working closely in cooperation with the UK to fight financial and organized crime.
In September 2021, the UAE and UK jointly agreed a Partnership to Tackle Illicit Financial Flows, signed by HE Ahmed Al Sayegh, UAE Minister of State and the Rt Hon Priti Patel MP, UK Home Secretary.
This Partnership strengthens UAE and UK’s efforts in the fight against financial crime risk through three distinctive workstreams: 1) Supervision and Risk-Based Approach; 2) Countering the Financing of Terrorism and Targeted Financial Sanctions; and 3) Countering the Most Harmful Money Laundering of Mutual Concern.
The Partnership also formalizes the ongoing cooperation between the UK and the UAE, including in relation to ongoing investigations and regular training sessions. Outcomes include the recent arrest of an individual in the UK behind a US$132 million money laundering scheme involving money mules who were identified and arrested in the UK through cooperation and information shared by the UAE authorities. The UAE is open to extending similar partnerships with other countries.
EH: I have read and indeed written about some of your recent successes. How often do you run operations with your international counterparts, and do you have any examples of recent successes in 2021/2022?
HAZ: In recent years, the UAE has conducted a number of operations and initiatives with key international counterparts to further our AML/CFT efforts.
The UAE has also conducted a number of joint training sessions and workshops with the UK, US, and EU. For example, The UK and UAE hold a series of joint technical training workshops on an ongoing basis. Workshops held last year, for example, hosted by the United Kingdom’s team of experts, provided an opportunity to share the latest advances in AML/CFT thinking as part of the UAE’s ongoing efforts to raise awareness, build technical expertise and further strengthen its supervisory system.
Similarly, the UAE has also worked with our partners in the United States to hold joint training sessions and workshops. The latest US-UAE sessions focused on a range of AML/CFT issues, including trade-based money laundering schemes, conducting AML/CFT investigations and implementing targeted financial sanctions.
The UAE has also run training sessions with the European Union (EU) and Europol. Recent workshops considered the importance of a multi-agency approach to parallel investigations, a key aspect of the EU’s approach to AML/CFT with lessons to be learnt to inform the UAE’s approach. The session addressed the concept of technical AML/CFT co-operation and co-ordination among relevant institutional actors both within the UAE and internationally.
Each of these training workshops not only provided a forum to share knowledge and exchange best practices but also created a strong platform upon which to build further cooperation on AML/CFT issues. For example, international cooperation on mutual legal assistance requests has also been an important part of the UAE’s fight against financial crime. Since January 2019, the Ministry of Interior has responded to 7,000 informal requests regarding basic information and nearly 1,900 informal requests regarding beneficial ownership data from global counterparts.
All of these cooperation areas have also helped to lead to major cases with our international partners. For example, the Hushpuppi case with the US; the arrest of two of Europe’s most wanted in collaboration with Interpol in 2021; and the disruption and seizure of the largest ever cigarette smuggling ring in UK history, preventing the loss of c. GBP 93 million in tax revenue for the UK as outlined in the fact sheet are all recent examples.
EH: What do you think is the most pressing threat to anti-financial crime measures taking place today?
HAZ: Some of the most pressing threats are the emerging global risks from instruments such as virtual assets and in cyberspace. These are rapidly evolving, and the UAE will continue to develop appropriate measures in this area to ensure that our financial system benefits from such innovations while mitigating their financial crime risks.
Another pertinent issue is the quality of sharing information; financial crime is a cross-border problem so countries must work collectively to combat this problem together. Criminals and terrorists are constantly adapting their methods, so the UAE continues to hold in training sessions and gather intelligence on new typologies to counter the persistent threat.
EH: Do you have any new initiatives that you are planning in the AFC/AML fronts?
HAZ: The UAE’s work to strengthen our AML/CFT framework is ongoing and evolving. This includes the work of the Executive Office for AML/CFT. We have a wide-ranging mandate overseeing the implementation of the National Action Plan and ensuring the UAE has a strong and effective AML/CFT framework. Some of the initiatives that I can mention here include:
The commencement of the National Proliferation Financing Risk Assessment
A new round to update the National Risk Assessment
Continued activities within the Public Private Partnership Committee
Working closely with FATF and MENAFATF and other global players to issue best practice papers, such as the recent white paper on Illicit Wildlife Trade.
EH: The UAE is currently categorised by the US State Department as a Country of ‘Primary Concern’ in respect to money laundering and financial crime, what efforts are being made to tackle this?
HAZ: I would like to point out that the list you mention includes 80 countries around the world, including other global financial centers such as the United Kingdom, the Netherlands and Canada. What this indicates is that money laundering and financial crime is a global problem. That is why the UAE working closely together with its international partners, including the United States, to prevent it. We have intensified our approach to combatting money laundering and terrorist financing by working quickly and effectively to implement the National Action Plan for AML/CFT, and continue to take this problem extremely seriously, as I outlined in the question above.
This includes efforts to conclude several major end-to-end cases, where the UAE authorities successfully investigated and penalized the criminals involved.
In one major case, Dubai Police acted on information from international counterparts about a scheme to defraud a major global company. Following close coordination between the UAE Financial Intelligence Unit (FIU), the Federal Customs Authority and the Dubai Public Prosecutor, the FIU froze AED 9 million (US$2.5 million) and the Ministry of Interior seized the stolen funds in the UAE. Evidence provided by the FIU and law enforcement was used in the Dubai Courts to convict 8 individuals and 3 companies for cyber fraud and money laundering, with multi-year jail sentences, deportations and multiple fines handed down worth a total of US$3.81 million.
In another case, Abu Dhabi Police used information that a transnational organized crime gang was operating an unlicensed investment company in the UAE. Through close coordination between the UAE Ministry of Economy, company registrars, FIU, Public Prosecution, police forces across multiple Emirates and the Ministry of Interior, the Abu Dhabi Criminal Court sentenced 40 individuals to prison terms of 5 to 10 years, as well as fining the persons involved US$234 million for fraud and money laundering.
EH: What role do you think publications such as AML Intelligence play in tackling anti-money laundering, improving education and raising awareness of AML/CFT matters?
HAZ: Industry players like AML Intelligence play a big role in raising awareness about good compliance practices globally. They also provide an important platform to exchange knowledge and best practices by bringing together experts in the financial crime field.
EH: Finally, we continuously read reports about organised crime leaders achieving residency in the UAE, including members of the so-called Kinahan Cartel. How actively are you monitoring this situation?
HAZ: Money laundering, terrorist financing and associated offenses are illegal. The UAE authorities are using all available resources to investigate and prosecute anyone engaged in these activities. With respect to your question, I cannot comment on individual cases..
I can reassure you that the UAE takes every measure to identify, investigate and take action against criminals, including with our international partners. Deportation and extradition can be punishments for foreign nationals who commit such crimes or are wanted on an arrest warrant in line with proper procedures.
Source: https://www.amlintelligence.com/