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The United Arab Emirates remains committed to instituting anti-money laundering practices in the country and thereby imposing strict penalties to offenders in money laundering cases. The extent of the penalties being imposed generally includes imprisonment and fines equivalent to the misappropriated amount. In its recent verdicts, the UAE courts have set heavy penalties to the tune of even Dirhams Fifty Million in money laundering cases.
Defining ‘Money laundering’:
Article 2 of the Federal Decree-Law number 20 of 2018 on ‘combating money laundering crimes, the financing of terrorism and the financing of unlawful organization act’ and its amendments (‘AML Decree law’), defines ‘money laundering’ as an activity comprising of any of the following acts:
Whoever had the knowledge that the funds are derived from a predicate offence and willfully commits any of the acts set out here below shall be considered as committing ‘Money Laundering’:
- transferring or moving the proceeds or conducting any transaction in respect thereof with the intent of concealing or disguising their illicit source, concealing or disguising the true nature, source or location of the proceeds as well as the manner of disposal thereof, their movement, their ownership or the rights related thereto.
- acquiring, possessing or using the proceeds upon receiving them.
- assisting the perpetrator of the predicate offence to escape punishment.
The AML Decree (article 14) seeks to impose administrative fines on financial institutions, designated non-financial businesses and professions, virtual asset service providers and non-profit organizations in case they violate any provision and impose:
- Administrative penalty not less than (AED 50,000) fifty thousand dirhams and not more than (AED 5,000,000) five million dirhams for each violation.
In furtherance to the UAE cabinet decision number 16/2021 on the ‘consolidated list of administrative violation and fines’ (‘AML regulations’), the UAE ministry of economy has recently introduced the list of penalties for violations relating to money laundering and terrorism financing, listing around twenty-six categories of fines ranging from Dirhams 50,000 to 1,000,000. The fines imposed under the said AML regulations apply to activities of the business sector and the designated non-financial businesses and professionals that fall under the supervision of the Ministry of Economy and the Ministry of Justice. Broadly speaking, the activities fall under four main categories of i) brokers and real agents; ii) dealers of precious metals and gemstones, iii) auditors; and iv) corporate service providers.
The fines imposed by the AML regulations include, amongst others:
- A fine of Dirhams 1 million or more will be imposed for failure to take the special measures concerning the customers included in international or local sanction lists before establishing or maintaining business relationship; or opening or maintaining bank accounts using alias, fictious or fake names, or numbers, rather than holders’ names; or dealing with unauthorized banks in any way whatsoever.
- A fine of Dirhams 200,000 or more will be imposed for: not taking enhanced due diligence measures to manage high risks; or; not notifying the Financial Information Unit (FIU) of a suspicious transaction report when it is not possible to take due diligence measures towards a client before establishing or continuing a business relationship with him or carrying out a transaction for the benefit of the client or in his name; or; Failure to respond to FIU’s requests for additional information regarding any reported suspicious transactions etc.
It should also be noted that the crime of money laundering is always considered as an independent crime, and thereby punishment of the offender under the larger crime/ related crime will not automatically preclude the offender from additional punishment for the money laundering offence in itself, thus paving the way for severe overall punishments and penalties. UAE’s increasingly strong policies on anti-money laundering and counter-terrorism reflects its unrelenting international commitment to ensure that it will not provide a safe haven to criminals in violation of the AML practices.