Hamed Al Zaabi highlights UAE's strong progress in combatting money laundering, terrorist financing

Hamed Al Zaabi highlights UAE's strong progress in combatting money laundering, terrorist financing

By Ramy Sameeh

ABU DHABI, 27th April, 2023 (WAM) -- Hamid AlZaabi, Director-General of the Executive Office for Anti-Money Laundering and Counter Terrorism Financing (AML/CFT), has announced that the UAE has made significant progress in combating money laundering and terrorist financing in the past year.

The Financial Action Task Force (FATF) recently commended the country's progress during its latest meeting. The Executive Office is working closely with the FATF to implement the UAE Action Plan and remains fully committed to achieving all objectives outlined in the plan.

In an interview with the Emirates News Agency (WAM), Al Zaabi said that the UAE had adopted a whole-of-government approach and is working closely with authorities across the UAE and the private sector to ensure that all entities are implementing effective AML/CFT measures.

UAE supervisors issued 161 fines of 76 entities totalling more than AED115 million in Q1 2023, compared to AED76 million in 2022. Confiscations have also increased, with assets surpassing AED925 million confiscated from November 2022 to February 2023.

He said that the UAE has adopted a whole-of-government approach as one of the global economy’s most important trade and investment hubs. This means that the federal government is working closely with authorities across the UAE and the private sector to ensure that all entities are implementing effective AML/CFT measures.

The UAE economy grew 7.6% last year according to Ministry of Economy figures, and is expected to grow 4.1% in 2023 according to the World Bank. There are social and economic benefits to protecting the UAE economy and the ability of firms to conduct business with confidence and trust.
“While our investment in the national AML/CFT framework is long-term in nature, we are already seeing improvements across the entire system. If we take compliance as an example, the private sector has adopted better procedures in response to supervisory policies and requirements, and awareness of financial crimes has drastically increased, indicating a responsive, cohesive, and dynamic system.”

Al Zaabi highlighted some of the main achievements of the past year, including the UAE's ranking as fifth globally in confiscations and arrests as a percentage of the country's total expected financial crime value. Emirati law enforcement agencies have contributed to major international investigations and arrests, including the largest drugs ring in Europe and INTERPOL's most wanted trafficker Kidane Habtemariam.

The Financial Intelligence Unit received nearly 7,000 suspicious transaction reports and suspicious activity reports from relevant entities across financial institutions and Designated Non-Financial Businesses and Professions in the first two months of 2023, an increase of 81% from the previous year. STR/SAR submissions from DNFBPs, including exchange houses, cash service providers, precious metals and stones dealers, real estate, and virtual asset service providers, increased by 91%.

He said that the Executive Office has engaged with a wide range of sectors, particularly those identified as high-risk by the National Risk Assessment. The system has brought together the public and private sectors through the work of the UAE’s PPP Sub-Committee. And as mentioned, it has aligned with international efforts through the signing of new MLAs and higher numbers of STR/SARs involving foreign entities.

About the main legislative amendments that the EO is working on implementing now in cooperation with competent authorities, he said that in 2022, there were several major changes to AML legislation, including the adoption of Cabinet Resolution 111 concerning the regulation of Virtual Assets (VAs) and Virtual Asset Service Providers (VASPs).

The resolution develops the legislative framework of the VA sector in the UAE by setting out and protecting the rights and obligations of all relevant parties and establishing its regulatory basis. It also ensures that the VA sector in the UAE complies with Federal Decree Law No. (20) of 2018 on Anti-Money Laundering and Combatting the Financing of Terrorism and Financing of Illegal Organisations.

He noted that the Executive Office provides the Secretariat for the UAE’s Public-Private Partnership Sub Committee (PPPSC), an important bridge between corporate entities and government authorities. The PPPSC has completed its first consultative paper on the sharing of tactical information, and the findings of this will go towards recommendations for legislative reform that allows members to share sensitive information while also protecting privacy rights.

Looking ahead, the Executive Office’s Policy and Risk Department has successfully completed various policy papers relating to key sectors such as Art, Antiques and Cultural Objects (AACOs). The recommendations will be seriously considered when further reforms are made to the legislation.

Al Zaabi highlighted that the UAE supervisors continue to conduct risk-based inspections based on coherent Targeted Financial Sanctions criteria. During Q1 2023, all supervisory authorities were active, with the Central Bank of the UAE leading the way. It conducted 464 off-site inspections and 128 on-site inspections, applying fines reaching nearly AED 70 million. The Ministry of Economy also conducted 4,344 off-site inspections and 3,360 on-site inspections, applying fines amounting to AED 16.5 million.

In addition to inspections, the Ministry of Economy is working closely with registrars on a risk-based inspection program to ensure compliance with national Ultimate Beneficial Ownership (UBO) regulations.

Regarding international cooperation, Al Zaabi stated that the UAE had signed 44 bilateral Mutual Legal Assistance Treaties and sent out 327 requests for information to foreign counterparts through various channels. The UAE works closely with its partners in the US, European Union, and Gulf region through working groups, task forces, and capacity-building exercises.

The Executive Office has also conducted outreach sessions for more than 17,000 public and private sector personnel to share sectoral risk assessment outcomes and other relevant information. The UAE hosted the 2023 MENAFATF Typologies and Capacity Building Workshop in March under the patronage of H.H. Sheikh Abdullah bin Zayed Al Nahyan, Minister of Foreign Affairs and International Cooperation, drawing the participation of over 100 delegates representing more than 20 nations.

“Moreover, in 2022, the UAE FIU completed three strategic analysis projects on fraud crimes, trends, and typologies; dealers in precious metals and stones; and customs-related ML, and a white paper on Far East typology patterns and schemes, which have been disseminated to UAE authorities and reporting entities,” he added.

When asked about the outputs of the FATF statement and the group commending the strong progress achieved by the UAE in AML/CFT, AlZaabi said, "We are working closely with the Financial Action Task Force on the delivery of the UAE’s action plan. We were encouraged by the positive feedback on the UAE’s “significant progress” at the FATF Plenary in February 2023 and remain committed to ensuring all points on the plan are satisfied.

“The FATF track is part of a long-term plan to enact a sustainable and robust AML/CFT system, and we will continue to expand and enhance our capabilities over the years ahead. Our commitment to fighting financial crime comes from the belief that our efforts promote economic growth, increase international trade and investment, and protect the integrity of the global financial system.”

Highlighting the main objectives of the EO for 2023, Al Zaabi said, "First and foremost, we will continue to enhance the UAE’s national risk and compliance framework so that there can be no place for financial crime within our borders. We are working tirelessly to help protect the integrity of the global financial system and our national economy. Financial crime damages businesses, harms wider society, and breaks down trust between people and organisations.

"Second, we will expand our global engagement program on a bilateral basis with national partners and by working with and through multilateral organisations. The world of financial crime is fast evolving and truly global in nature, meaning that only by collaborating with international partners is it possible to defeat sophisticated cross-border networks.

“The Executive Office has six strategic objectives that run until 2026 and support an effective and interconnected AML/CFT system in the UAE with the right policies and risk management. This plan will also drive high standards and excellence within the Executive Office. We have a clear mandate from the Higher Committee to oversee the National Strategy implementation and a concrete plan for how we will deliver success.”