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Dubai Financial Services Authority issues counter-money laundering consultation paper

BIScom Subsection: 
Nigel Morris-Cotterill

Titled "PROPOSED CHANGES TO THE DFSA’S ANTI MONEY LAUNDERING, COUNTER-TERRORIST FINANCING AND SANCTIONS REGIME," the consultation paper was issued on 18 February 2018 and the consultation period ends on 24th March 2018.

Notes by Nigel Morris-Cotterill, The Anti Money Laundering Network

The entire consultation paper is at http://dfsa.complinet.com/net_... .

The DFSA is the regulatory body for Dubai International Financial Centre, the quasi-offshore financial centre in Dubai. Dubai's financial sector, outside the DFSA, is regulated by the Central Bank of United Arab Emirates (centralbank.ae) which also houses The Suspicious Cases Unit "AMLSCU." That department name has been changed to "Financial Intelligence Department " but the website does not reflect this change. However, DIFC/DFSA is, in some respects, in a legal limbo in relation to counter-money laundering, etc. law and regulation where there is an overlap with the federal UAE law.

DFSA is highly autonomous and adopts a global regulatory regime in its financial industry and this is, in many cases, far removed from the structure of the regime in other parts of the Gulf. The DIFC is regulated in a manner similar to western financial centres, modelled in many ways, including its courts, on London.

However, in terms of geo-politics, the DIFC is part of the UEA and, therefore, included for FATF purposes within its reviews of the UAE.

The UAE, including the DIFC, was last subject to a FATF ME in 2007. The relevant ME Report was published in April 2008. The ME report identified ar
eas requiring improvement. The DFSA made changes to its rules, in response to the recommendations in the report, at that time.

In 2012, FATF updated and issued a new set of Recommendations, with a particular emphasis on a Risk Based Approach. In response to the 2012 FATF
Recommendations, the DFSA undertook a review of its entire AML framework, which resulted in the creation of a new AML regime that covered both Financial Institutions and DNFBPs, which came into effect in July 2013.

In late 2015, the DFSA carried out a further assessment of the AML regime against the 2012 Recommendations, and the Federal AML Legislation. We identified areas in the AML Module that needed to be amended. Those changes were proposed in June 2016 and came into effect in February 2017.

--- DFSA - consultation paper 18 Feb 2018

While the DFSA has updated its counter-money laundering regulations and guidance regularly, the UAE's Central Bank's website says that the most recent update there was in 2010. That, however, is out of date and there have been a number of updates to both law and regulation in the meantime.

The DFSA wants the overlap removed so that there is no doubt as to which authority is in charge in the DIFC. To this end, it proposes the following: