Complete List of Fines and Penalty for Money Laundering and Terror Financing in UAE

UAE is considered as an international hub for all commercial activities, and being such an international hub the risk for financial frauds and malpractices such as money laundering and terror financing is also at its peak. So, to avoid such threats, the UAE government has announced a certain list of penalties that an entity would be liable to pay in the course of any such fraudulent activities. The Ministry of Economy of UAE has announced such a list intending to overcome the above-stated issues.
The violations are related to the DNFBPs (Designated non-financial businesses and professions) which the ministry supervises.

The four major business categories are as follows:

• Corporate service providers
  
• Auditors
  
• Brokers and real estate agents
• Dealer of precious metals and gemstones
  

The ministry has notified the respected business companies to stay vigilant about money-laundering and terror-financing risks and to cooperate with the efforts of the government.
The list of fines and penalties:

A penalty of Dh1 Million

A penalty of Dh1 million will be payable by an entity in the following cases:

• Dealings with fake banks
• Maintaining bank accounts with fake names or opening new bank accounts with fake names or numbers of its owners
• Failure by an entity to take required measures pertaining to clients who are listed on international or domestic sanctions lists, before establishing or continuing commercial relationships

Penalty of Dh200,000

• When an entity fails to take up required due-diligence measures for the management of high risks
• When an entity fails to provide notification to the financial information unit regarding detection of the suspicious transaction while it’s impossible to undergo due-diligence measures with the client or the business prior to the establishment or continuation of a commercial relationship with such clients or making transaction for the benefit of such client or on his behalf.
• When an entity fails to respond to the additional information request made by the financial information unit pertaining to the suspicious transaction report that has been filed.
• Indirect or direct disclosure to customers or others regarding the suspicious nature of business relationships with such customers.
• When an entity fails to implement measures to combat money-laundering set by the National Committee regarding clients from high-risk countries.

Penalty of Dh100,000

A penalty of Dh100,000 will be payable by an entity in the following cases:

• When an entity fails to take required measures for determining risks of crime in its field of work
• When the entity fails in the assessment of risks that may arise in its field of work or while undertaking new professional practices through the entity's establishment
• When the entity fails to take up due-diligence measures prior to the establishment of a business relationship or continuing a present relationship or carrying out a process that may benefit the client
• When an entity fails to verify the documents or the data acquired from reliable or independent sources and also to verify the identity of the client and the prime benefactor of the business relationship established.
• Delay made by the entity in informing the financial information unit regarding a suspicious transaction report when there are firm grounds to believe that the client is in any manner related to any crime as a whole or in part or when the client's money is the proceeds from any criminal activity or used for such activity.
• When an entity fails to take up due-diligence measures towards the politically exposed clients prior to the establishment of a commercial relationship with them.
• When an entity fails to keep all the required records and keep track of all financial transactions

Read more: Amendments to Administrative Penalties Relating to UAE VAT

Penalty of Dh50,000

A penalty of Dh50,000 will be payable by an entity in the following cases:

• Entity's failure to take up reasonable measures to detect risk as per the national risk assessment
• When an entity fails to set up the controls, procedures, and internal policies focusing on combating the crime
• Fails in management of low risks with simplified measures
• Fails in understanding the purpose and nature of the commercial relationship
• Fails in understanding the nature of client's business, its ownership structure along with client's control over such business
• Fails in taking up required measures for continuous monitoring of the business relationship
• Fails to find a compliance officer
• Inappropriate maintenance of all the financial transactions that won't allow data analysis and tracking the financial operations
• Fails to keep the records of transactions and other processes of the clients for a period of five years after the completion or termination of business relationship with the clients.
• Fails to provide relevant information regarding data analysis, records, and files, correspondence, documents, and forms upon request made by the concerned authorities
• Fails to provide adequate training to the employees regarding combatting money-laundering and financial terrorism risks.

Read more: Redetermination of Administrative Penalties

How can CDA assist you?

CDA always focuses on navigating its client's business towards economic growth. CDA is always known for its best strategies which it provides to its clientele to face any kind of economic downturn. CDA with its best accounting services and auditing services always ensures whether the clients maintain all the financial records and statements and if they comply with the rules and regulations. CDA always safeguards its clients from unanticipated penalties and fines that may arise due to non-compliance of rules or due to improper strategies by providing an overall professionalized service package. To know more contact CDA.
Read more: VAT Penalties in UAE