UAE Central Bank Issues AML/CTF New Guidance For Virtual Assets

Key Points:

• When dealing with virtual assets, the UAE Central Bank has published new anti-money laundering and counter-terrorism funding guidelines for financial institutions.
• It applies to LFIs such as banks, financial firms, exchange houses, payment service providers, registered hawala providers, insurance companies, and agents and brokers.
• The new regulation will take effect in one month.

The UAE Central Bank said on Wednesday that it had published new anti-money laundering (AML) and counter-terrorism financing (CTF) instructions for financial institutions dealing with virtual assets such as cryptocurrencies and non-fungible tokens.

The advice addresses the risks associated with dealing with so-called virtual assets and virtual asset service providers (VASPs), taking into consideration the recommendations of the global watchdog, the Financial Action Task Force (FATF).

Cryptocurrencies, cryptocoins, payment tokens, exchange tokens, and convertible virtual currencies are examples of virtual assets.

The new restrictions will be implemented in one month. It will have an impact on Licensed Financial Institutions in the UAE, including banks, financing firms, exchange houses, payment service providers, registered hawala providers, insurance companies, agents, and brokers.

His Excellency Khaled Mohamed Balama, Governor of the CBUAE, in a written statement, stated:

“The new guidance related to the virtual assets sector contribute to strengthening the supervisory and regulatory frameworks of the Central Bank to combat money laundering and the financing of terrorism.”

The UAE was added to the FATF’s “grey” list of nations subject to heightened surveillance in March 2022. The UAE reacted by pledging to work closely with the FATF to improve.

Dubai’s Virtual Asset Regulatory Authority (VARA) proposed a new virtual asset framework in February this year with the goal of requiring players to comply with AML rules.

According to the UAE Central Bank, the new guideline includes customer due diligence and expanded due diligence for LFIs toward prospective VASP clients and counterparties, with the goal of de-risking and assisting them with training programs, a governance structure, and record-keeping systems.

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