UAE

1. Does UAE have legislation making it a criminal offence to engage in money laundering and/or terrorist financing?

Yes. UAE Federal Law No.20 of 2018 (“AML Law”) provides a number of money laundering and terrorist financing offences.

2. To whom does the legislation apply?

The money laundering (“ML”) and terrorist financing (“TF”) offences apply to all natural and legal persons. There are additional obligations under the AML Law which only apply to Financial Institutions and Designated Non-Financial Businesses and Professions (see below).

3. What does the legislation prohibit?

Money laundering offence (Article 2 AML Law):

A person with knowledge that funds are the proceeds of crime who wilfully commits any of the following acts:

• transferring or moving proceeds or conducting any transaction with the aim of concealing or disguising their illegal source;
• concealing or disguising the true nature, source or location of the proceeds and the method of their disposition, movement, ownership of or rights;
• acquiring, possessing or using proceeds upon receipt; or
• assisting the perpetrator of the predicate offense to escape punishment.

Terrorist/illegal organisation financing offences (Articles 3 AML law):

A person who intentionally commits any of the following:

• any of the acts specified above of Article 2, if she/he knows that the proceeds are wholly or partly owned by a terrorist organisation or terrorist person or intended to finance a terrorist organisation, a terrorist person or a terrorism crime, even if it is without the intention to conceal or disguise their illicit origin;
• providing, collecting, preparing or obtaining proceeds or facilitating their obtainment by others with intent to use them, or while knowing that such proceeds will be used in whole or in part for the commitment of a terrorist offense, or if he has committed such acts on behalf of a terrorist organisation or a terrorist person while aware of their true background or purpose.

It is also an offence to intentionally commit the above acts in respect of illegal organisations.

Both “funds” and “proceeds” are broadly defined in the AML law, making the prohibitions far-reaching.

4. How is money laundering defined? Does underlying criminal activity have to be proven?

Money laundering is defined as the acts specified in Article 2 of the AML Law (see above).

Under the AML Law, the ML offence is an independent crime and a conviction under the predicate offence does not prevent a conviction under the ML offence.

5. What level of intent or knowledge is required to establish a violation?

The ML/TF offences must have been committed wilfully or with intent, and with knowledge of certain constituents of the offences. This is likely to be interpreted by the authorities based on the evidence and presentation of facts.

6. What are the potential penalties for infringing the legislation?

Money Laundering offence, or attempt to commit an offence:

A maximum of 10 years’ imprisonment; and/or

Fine of between 100,000 AED and 5,000,000 AED.

Confiscation or freezing of criminal proceeds, or seizure of funds up to the value of the proceeds.

Terrorist Financing offence:

A life imprisonment; or

Temporary imprisonment of minimum 10 years; and

Fine of between AED 300,000 and AED 10,000.

For a company: dissolution and closure of offices where the activities are performed.

Illegal organisation financing offence:

A temporary imprisonment; and

Fine of a minimum of AED 300,000.

Company whose representatives, managers or agents commit an offence on its account or in its name:

Fine of between AED 500,000 and AED 50,000,000.

7. Does the legislation have extra-territorial reach?

This is not clearly expressed under the law. However, the definition of ‘predicate offence’ is defined as an act constituting an offence under UAE law whether the act is committed inside or outside the UAE when such act is punishable in both countries. Further, the penalties imposed under the law caters for convictions by ‘foreigners’ conferring the right to deport the individual.

8. Are there additional anti-money laundering or counter terrorist financing regulations or obligations, such as registration or reporting obligations, for businesses or individuals that operate in particular sectors or undertake particular activities?

Yes. Firms classified as financial institutions (FIs) or Designated Non-Financial Businesses and Professions (DNFBPs) (such as law firms, accountancy firms, auditors, precious metal dealers, real estate agents etc) under UAE AML legislation are supervised by various authorities in the UAE and therefore must register for AML purposes. These firms are required to implement enhanced procedures to mitigate the risk of ML and TF by, for example, implementing policies and procedures, firm and customer risk assessment and transaction monitoring procedures, applying customer due diligence measures and reporting and filing Suspicious Activity Reports among other responsibilities. Each regulator has implemented its own rules/regulations and guidance for the firms they supervise to enhance the legislative requirements.

9. What are the potential penalties for failing to comply with these obligations?

The AML law provides for the relevant AML regulator/supervisor to impose administrative sanctions on non-compliant Financial Institutions and DNFBPs. These include warnings, stringent financial penalties (between AED 50,000 and AED 5,000,000), revocation of licenses and the public announcement of administrative penalties. In addition:

Failure to report suspicious activity (either intentionally or by gross negligence):

Imprisonment; and/or

Fine of between AED 100,000 and AED 1,000,000

Tipping off in respect of suspicious activity reports:

Imprisonment for a minimum of 6 months; and/or

Fine of between AED 100,000 AED 500,000.

10. Who are the relevant enforcement authorities in UAE and what are their contact details?

In the UAE, criminal offences are usually investigated and prosecuted by the police and public prosecutor. In September 2021, the UAE set up a special Money Laundering Court to deal with such offences.

Enforcement actions resulting in administrative penalties and fines may also be imposed by a firm’s relevant supervisor/regulator for AML purposes. These include the relevant financial services regulators such as the Central Bank, the Dubai Financial Services Authority (for firms in the Dubai International Financial Centre freezone), Financial Services Regulation Authority (for firms in the Abu Dhabi Global Markets freezone).