UAE Central Bank Cracks Down on Unlicensed Virtual Asset Service Providers

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Key takeaways:

  • The CBUAE and other regulatory bodies in the country have released new cooperative guidelines for VASPs doing business nationwide.
  • The new guidelines come when virtual assets are more readily available, according to a press statement from the head of the NAMLCFTC and the governor of the CBUAE.

New cooperative guidelines for virtual asset service providers (VASPs) doing business in the nation have been released by the Central Bank of the United Arab Emirates (CBUAE) and other regulatory bodies nationwide. 

VASPs operating inside the jurisdiction without the required licenses face fines according to the updated guidelines. 

The list that the CBUAE and the National Anti-Money Laundering and Combating Financing of Terrorism and Financing of Illegal Organizations Committee (NAMLCFTC) referred to as “Red Flags” for VASPs was released on November 6. 

The absence of a regulatory license, irrational promises, inadequate communication, a lack of regulatory disclosures, and other signs that could point to suspect parties were on the list. 

The regulatory authorities anticipate that all licensed financial institutions (LFIs), licensed VASPs, and designated non-financial companies and professions (DNFBPs) will disclose transactions from questionable parties, per the updated guidelines. The advisory stated:

“Any information related to unlicensed virtual asset activities can be reported through whistleblowing mechanisms, to help regulatory authorities in their efforts to uphold the law and protect the UAE financial system.”

VASPs operating in the United Arab Emirates without a valid license are subject to financial sanctions against the firm, its owners, and senior managers, among other civil and criminal consequences, the central bank stated in the updated statement. 

Furthermore, noted in the document were the potential consequences for law enforcement of LFIs, DNFBPs, and licensed VASPs who show a readiness to work with unlicensed VASPs.

The new guidelines come when virtual assets are more readily available, according to a press statement from His Excellency Khaled Mohamed Balama, head of the NAMLCFTC and governor of the CBUAE. 

According to the CBUAE executive, their efforts to prevent financial crimes of all kinds are becoming more intense as the digital economy develops. Balama claims that doing this guarantees the integrity of the UAE financial system.

Due to shortcomings in AML and CTF, the UAE was added to the FATF’s grey list in March 2022 and was under closer scrutiny. Nonetheless, the nation pledged at a high level to collaborate with the international watchdog to fortify its CTF and AML policies.

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