In the United Arab Emirates (UAE), Anti-Money Laundering (AML) and Ultimate Beneficial Owner (UBO) compliance are crucial components of the national framework to combat financial crimes and enhance the integrity of the financial system. The UAE has implemented rigorous AML laws and regulations in alignment with international standards set by the Financial Action Task Force (FATF). These mechanisms focus on the identification, verification, and reporting of UBOs, ensuring that businesses transparently disclose the individuals who ultimately control or benefit from them. The Central Bank of the UAE and the Financial Intelligence Unit oversee these compliance efforts, promoting a culture of transparency and accountability in all financial transactions. As the UAE continues to strengthen its AML regime, it enhances its reputation as a global financial hub while safeguarding against illicit activities.
Legal Framework on UBO and AML Compliance in United Arab Emirates (UAE)
Applicable legislations governing the Ultimate Beneficial Owners (UBOs) and Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CTF):
• Federal Decree No. (20) of 2018 on Anti-Money Laundering and Countering the Financing of Terrorism.
• Cabinet Resolution No. (10) of 2019 Concerning the Executive Regulations of Federal Decree-Law No. (20) of 2018.
• Cabinet Resolution No. (109) of 2023 on Regulating the Real Beneficiary Procedures.
• Cabinet Decision No. (132) of 2023 on Administrative Penalties for Violations of UBO Regulations.
These legislations ensure the integrity of the financial system, prevent illegal financial activities, and promote transparency in ownership structures.
What is an Ultimate Beneficial Owner (UBO)?
The UBO is defined as the natural person who ultimately owns or controls a legal entity, either directly or indirectly, or on whose behalf transactions are conducted. According to Cabinet Resolution No. (109) of 2023, the UBO is the person who: • Has ownership or control over a company in accordance with Article (5) of the Resolution. • Exercises control through a chain of ownership or other indirect means. • Legally exercises ultimate effective control, as outlined in Article (5) of the resolution. This legislation ensures transparency by identifying the real individuals who hold power over business operations and transactions.
Compliance Requirements
As per Cabinet Resolution No. (109) of 2023, companies must comply with the requirements below and maintain accurate and up-to-date records.
These requirements include but are not limited to:
• Register of Beneficial Owners: Ensure your company maintains an accurate register of UBOs and their details.
• Register of Partners/Owners: Keep a record of all business partners and ownership shares.
• Minutes of Meetings: Maintain meeting minutes for boards of directors, managers, and general assemblies.
• Establishment Papers & Publication: Ensure that company is using its name as per its Trade License in all its papers and correspondence. To be verified via Invoice and Quotation.
• Financial Statements: Keep your financial statements accessible and up-to-date i.e. Audit Report.
• License Compliance: Verify that your activities match the registered activities in the trade license.
• Premises Verification: Ensure that there is no other company operating on your premises without proper authorization.
These requirements help demonstrate your company’s compliance with AML and CTF legislations.
Under Cabinet Resolution No. (109) of 2023, DACC holds the responsibility as the Registrar. Key duties and roles are stipulated in articles (13) and (14) of the Resolution.
Stay Compliant:
Take Action Now As part of your legal obligations, it is important to review and update your records regularly to ensure that your company meets the above-mentioned requirements. Non-compliance may result in penalties and legal consequences as per Cabinet Decision No. (132) of 2023.
NEX Consultants can provide invaluable assistance to companies in the United Arab Emirates regarding Ultimate Beneficial Ownership (UBO) filing, Anti-Money Laundering (AML) advisory, and ongoing corporate compliance in several ways:
1. UBO Registration Support : NEX Consultants assist businesses in identifying and verifying their UBOs, ensuring compliance with UAE regulations. They help in preparing and submitting UBO registration forms accurately and within the stipulated timelines.
2. AML Policy Development : The consultants develop customized AML policies and procedures tailored to the specific needs of each business. They ensure these policies are aligned with local laws and international standards.
3. Training and Awareness : NEX offers training programs for employees to enhance their understanding of AML regulations and UBO compliance. This is vital for fostering a compliance culture within the organization.
4. Risk Assessment : Conducting comprehensive risk assessments to identify potential money laundering risks and loopholes in existing compliance frameworks is another key service. NEX can help businesses mitigate these risks effectively.
5. Ongoing Monitoring and Reporting : NEX assists companies in establishing ongoing monitoring processes to track transactions and report suspicious activities to the relevant authorities, ensuring sustained compliance with AML regulations.
6. Corporate Governance Advisory : Providing guidance on corporate governance practices, including board structures, internal controls, and compliance frameworks, to enhance overall corporate integrity.
7. Regulatory Updates : Keeping businesses informed about changes in regulations and best practices related to AML and UBO compliance, ensuring they remain compliant with evolving laws.
8. Support during Audits : NEX consultants can help prepare for regulatory audits and inspections by providing necessary documentation and evidence of compliance efforts.
NEX Consultants‘ expertise, companies in the UAE can navigate the complexities of UBO filing, AML compliance, and ongoing corporate governance, thereby minimizing legal risks and enhancing their operational integrity. In conclusion, effective UBO and AML compliance are essential for maintaining the integrity of the financial system in the UAE. The commitment to transparency and accountability not only aligns with international standards but also secures the UAE’s position as a reputable global financial hub. As regulations continue to evolve, businesses must stay vigilant and proactive in their compliance efforts. NEX Consultants play a crucial role in supporting companies with UBO filing, AML advisory, and ongoing compliance. Their expertise ensures that businesses navigate complex regulatory landscapes efficiently, fostering a culture of compliance and reducing the risk of legal repercussions. By partnering with NEX, companies can focus on their core operations while ensuring they meet all necessary compliance requirements effectively.