UAE Unveils AML/CFT guidance for crypto

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Key takeaways:

  • UAE Central Bank Announces Strict Regulations to Fight Money Laundering and Terrorist Financing in the Virtual Asset Sector
  • According to the central bank, the new guidance will be implemented within a month from its release. 

The Central Bank of the United Arab Emirates (UAE) has released updated guidelines on anti-money laundering and combating the financing of terrorism (AML/CFT) specifically addressing the risks associated with virtual assets. 

On May 31, the CBUAE released recommendations for LFIs on risks “related to virtual assets and virtual assets service providers.” The new guidelines on anti-money laundering and countering the financing of terrorism for banking institutions using cryptocurrency in the UAE are detailed in a 44-page document. The Financial Action Task Force’s international criteria are considered.

The recommendation comes as UAE officials make every effort to entice cryptocurrency businesses to the region, in part through a friendly regulatory framework. A new organisation charged with virtual asset regulation was unveiled in Dubai in March. 

The guidance emphasizes the potential risks involved in dealing with virtual assets and virtual asset service providers for licensed financial institutions (LFIs), such as banks. The document outlines the various modes of interaction between LFIs and virtual asset service providers. 

Licensed financial institutions are now required to conduct comprehensive due diligence when engaging with virtual asset consumers and counterparties in order to effectively mitigate potential risks. 

According to Khaled Balama, the Governor of the UAE Central Bank, the recently issued guidance concerning the virtual assets sector plays a crucial role in fortifying the supervisory and regulatory frameworks of the Central Bank to combat money laundering and the financing of terrorism. 

The governor’s statement highlights the significance of the new guidance in enhancing the UAE’s efforts to ensure the integrity and security of financial systems in relation to virtual assets.

The forthcoming regulations, which will be legally binding in a month, apply to a wide range of financial entities including hawala providers, payment service providers, exchange houses, and insurance agencies and brokers. These regulations aim to ensure compliance throughout the sector and enhance risk management practices within the virtual asset space.

The Middle East’s embrace of blockchain technology and cryptocurrencies has been led by the UAE. The nation has continually adopted a progressive attitude towards these cutting-edge technologies, realising their potential to completely transform a number of industries, including banking.

 The UAE government financial regulatory authority recently announced that it would start accepting licence applications from companies looking to provide domestic virtual asset services. 

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Aadrika Sharma
Aadrika Sharma

I enjoy writing and try to learn new things every passing day!

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