How to Implement An Effective AML-CFT Framework For Your Business in UAE?

Money laundering and terrorism financing are among the major and prime crimes that can cause businesses grave damages and may result in complicated legal issues. The businesses are at high risk in the present era, as the risk of money laundering has been increased. The businesses ignoring the AML-CFT framework may face huge issues along with the non-compliance risks in the future. The UAE has strictly instructed the businesses to implement a strict AML-CFT framework to keep a watch on the terrorism and money laundering.

If the businesses follow the regulations and the AML laws issued by the authorities, they can be on the safer side and could avoid critical circumstances. The businesses can easily implement the AML-CFT framework if they follow the key procedures and processes highlighted in this blog.

What Are the Steps to be Followed to Develop a Strategic AML-CFT Framework?

The major steps and key highlights that must be kept in mind while implementing the framework would include the following:

• Identify and understand your risk

The risks that are faced by the businesses may vary based on the business activity and the range of transactions. The businesses must understand their potential risk based on the environment they are operating in, such as the customers, suppliers, payment procedures, and the location of the customers, etc., based on which the risk can be assessed.

• Have clear-cut policies and rules

Having mere communication regarding the AML-CFT policy or rules would not emphasize its implementation; hence, the businesses must ensure that all the regulations and the policies are drafted in a clear-cut manner and are conveyed to the stakeholders and the employees in writing.

• Appoint an expert Compliance Officer

Being supervised by a higher authority could reduce the risk of money laundering and terrorism financing to some extent, as it would make the criminal reluctant to act. On the other hand, the compliance officers can keep an eye on every operation and activity conducted in the organization. The employees could also reach out to the officer to report instances of the crime.

You can also read: What Are The Tax Compliance Requirements For Foreign Banks in Dubai?

• Through customer verification and due diligence

Knowing your customer is very important for all the businesses to ensure they are not involved in any kind of crime. The customer due diligence process would enable the business to understand the background of the customer and would enable them to keep a watch on their activities, based on which the risk can be mitigated. It would involve the verification of the identity, tracing the money received via the client, etc.

• Ensure proper documentation

Maintaining all the documentation is yet another crucial step, which could be used as evidence and proof in certain circumstances. The entities must at least maintain the documents for at least 5 years so that they can be used to prove the compliance.

• Training of employees in the organisation

Training the employees in the business is yet another important process that must be carried out by the business entities, as it would enable the employees to understand the possible circumstances where the money laundering and terrorism financing could arise. This could also enable the employees to act as whistle-blowers if any risk is detected, whereby the businesses can take action in advance.

• Performing a stringent check or audit

Acquiring external professionals like auditors could be another best option to enhance the AML-CFT framework, as it would enable the businesses to check if there are any loopholes in the business operation or any risk that the business is exposed to. The external audits and the internal checks would ensure the effectiveness of the internal controls implemented and would highlight the key areas where improvement is required.

You can also read: goAML Registration UAE: Process, Deadline & Expert Guide

What Is The Benefit of Having a Perfect AML-CFT Framework?

If you have a good AML-CFT framework, it could provide you with multiple benefits, some of which would include the following:

• Ensuring compliance with the laws and avoiding unwanted costs such as penalties and fines
• Avoiding any reputational damage
• Avoiding risks beforehand
• Ensuring operational efficiency
• Protecting the resources of the business

How Can Our Team of Experts Help You?

CDA has a team of the best auditors, accountants, and tax consultants who are well aware of the AML-CFT laws and the circumstances that could result in any money laundering or terrorism financing risk. Hence, the professionals can assist your business in getting to know about the risk and implementing an effective framework. The experts are always on standby to provide you with any kind of assistance so that there are no non-compliance and money laundering risks are mitigated.

To know more about the services, connect with our experts today!

Mitesh Maithia

Tax Manager

Mitesh is a Tax Professional with expertise in direct, indirect, and international taxation, including transfer pricing, since 2018. Passionate about making complex tax matters simple, he shares insights to help businesses stay compliant and forward-looking.