The Central Bank of the United Arab Emirates (CBUAE) has announced new guidelines on anti-money laundering and counter-terrorism financing for financial institutions involved in transactions with virtual assets, including cryptocurrencies and non-fungible tokens (NFTs).
The Guidance will assist LFIs’ understanding of risks and effective implementation of their statutory AML/CFT obligations, and takes Financial Action Task Force standards into account. For more information: https://t.co/xEfvx0OY0R
— Central Bank of the UAE (@centralbankuae) May 31, 2023
The guidelines, released on May 5, 2023, highlighted the importance of licensed financial institutions exercising due diligence when dealing with clients and counterparties engaged in virtual asset transactions. They apply to various entities such as banks, financial businesses, exchange houses, payment service providers, registered hawala providers, insurance companies, agents, and brokers.
These guidelines provide strategies for licensed financial institutions (LFIs) and virtual asset service providers (VASPs) to establish effective communication channels and mitigate the risks associated with virtual assets. They also require LFIs to conduct customer due diligence (CDD) and enhanced due diligence (EDD) when dealing with potential VASP customers and counterparties.
These new guidelines are expected to be implemented within a month of their announcement.
H.E. Khaled Balama, the governor of the Central Bank of the UAE (CBUAE), highlighted the regulations’ focus on combating money laundering and terrorism financing. He stated that the new guidelines enhance the supervisory and regulatory frameworks of the central bank for the virtual asset sector.
He noted that CBUAE aims to continually strengthen its initiatives, increase awareness among licensed financial institutions, and prevent financial crimes while maintaining the integrity and stability of the financial and monetary system.
The governor further highlighted how these guidelines align with the recommendations set by the Financial Action Task Force (FATF), demonstrating their commitment to ensuring compliance with international standards.
In March 2022, the UAE was added to the FATF’s grey list, which means the nation will be subjected to increased scrutiny in the financial and digital assets markets. In response, the UAE expressed its commitment to working closely with the FATF to make progress in addressing anti-money laundering and counter-terrorism financing issues.
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