Hawala providers in UAE require to comply with new AML guidelines

August 23, 2021 (MLN): The Central Bank of the UAE issued fresh guidance on anti-money laundering and combatting the financing of terrorism (AML/CFT) for Registered Hawala Providers (RHP) in the UAE and Licensed Financial Institutions (LFIs) that provide services to RHPs.

The new guidance, which came into effect on Wednesday, will help in effective implementation of the statutory AML/CFT obligations for RHPs and LFIs, the central bank said. It also takes Financial Action Task Force (FATF) standards and guidance into account, as per reported by Zawya News.

Hawala is the traditional practice of transferring money using non-bank settlement methods. Since the transactions provide anonymity, the practice is known to be used as a method of money laundering.

“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,” Khaled Mohamed Balama, governor of the central bank said.

The CBUAE permits legitimate hawala activity, which is considered an important element in efforts to boost financial inclusion and bring the unbanked segment of the population into the regulated financial system.

Hawala is regulated by the Registered Hawala Providers Regulation issued in 2019. All providers undertaking hawala activity must hold a hawala provider certificate issued by the Central Bank.

“RHP are required to comply with UAE requirements relating to targeted financial sanctions and suspicious transaction reporting (STR),” Zawya News added.

In addition, RHP are also required to “establish and maintain an effective AML/CFT compliance program designed to prevent misuse of this activity to facilitate money-laundering or terrorist financing.

This should include a competent compliance officer, appropriate customer and agent due diligence, transaction monitoring and record keeping.”

Zawya News also noted, “RHP must maintain an account with a bank operating in the UAE to be used for settlement, and provide the CBUAE with its details.”

LFIs must not accept unregistered customers and must immediately report an STR to the UAE’s Financial Intelligence Unit, inform the CBUAE when they are detected, and closely monitor the relationship, the regulator said.

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