More than 500,000 firms in the United Arab Emirates (UAE) must disclose their ultimate owners from Wednesday or face penalties, as the Middle East financial hub tries to avoid inclusion on a dirty money watchlist.
However, under legislation passed last year beneficial and legal ownership data will only be disclosed to the government and not publicly accessible. Financial transparency advocates say having that data available to all is the gold standard, although so far only a handful of countries do so.
The Financial Action Task Force (FATF), an intergovernmental anti-money laundering monitor, declined to comment on the UAE law but directed Reuters to a 2020 report which said “fundamental and major improvements” were needed to avoid it placing the UAE on its ‘grey list’ of countries under increased monitoring.
Countries on this list risk reputational damage, trouble accessing global finance and increased transaction costs.
The UAE has tightened up over the last few years to overcome a perception it is a hot spot for illicit money and in February the government created an Executive Office for Anti-Money Laundering and Counter Terrorism Financing.
The Middle East and North Africa Financial Action Task Force (MENAFATF) recently re-rated the UAE’s level of transparency and beneficial ownership from ‘partially compliant’ to ‘largely compliant’, Amna Fikri, the foreign ministry’s economic and trade director, said in response to questions about what will happen to the information once it is collected and who will be able to search it.
The UAE’s economy ministry has said that 513,000 companies across 38 licensing authorities must have submitted registers on their beneficial owners and shareholders by Wednesday or face penalties.
These include a written warning, a 100,000 dirham fine, license suspension or restrictions on the powers of the board.
“The risk of criminals being able to misuse legal persons in the UAE for money laundering/terrorist financing remains high, particularly through concealment of beneficial ownership information via complex structures or the use of informal nominees,” the FATF’s 2020 report said.
Impact of non-compliance
The move of regulators in MEA towards more stringent regulations will help the fight against financial crime and application of those laws by utilising robust mitigating tools will be beneficial for all companies in the financial services sector.
Non-compliance could lead to being placed on the dirty money list. To avoid this, please contact Kharis & Knoble for your financial crime prevention solutions. Kharis & Knoble Risk and Compliance Consultants specialises in providing support for financial services companies and regulators in the UK, EU, Middle East and Africa to leverage an effective and sustainable AML, Fraud and Anti Bribery and Corruption environment as a competitive advantage and driver of business growth.
Read more at Reuters
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