Financial Sanction Imposed on UAE Finance Company by the Central Bank of the UAE

The Central Bank of the UAE (CBUAE) has imposed a fine of Dh. 1.8 million on a finance company operating in the UAE due to repeated violations of Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) regulations. The finance company was also found to have operational failings by its Board of Directors, which led to the imposition of the financial sanction and operational requirements.

Financial Sanction imposed a financial sanction of Dhs1,800,000 on the finance company. This financial penalty is in line with Article 14 of the Federal Decree Law No. (20) of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Financing of Illegal Organizations, and Article 137 of the Decretal Federal Law No. (14) of 2018 Regarding the Central Bank & Organization of Financial Institutions and Activities.

Operational Requirements In addition to the financial sanction, the CBUAE has also imposed operational requirements on the finance company. The finance company is required to remediate the violations and for its Board of Directors to meet and rectify issues related to its composition.

Findings of the Review The imposition of the financial sanction and operational requirements follows a review by a third-party consultant and an examination conducted by the CBUAE. The review and examination revealed high-risk and repeated AML/CFT violations by the finance company, as well as operational failings by its Board of Directors.

Weak Compliance Culture

The findings of the review and examination illustrate that the finance company engaged in high-risk, repeated violations and had an overall weak compliance culture regarding policies. This lack of compliance highlights the need for finance companies to adhere to the laws, regulations, and standards adopted by the CBUAE to maintain the transparency and integrity of the business of finance companies.

Financial Regulation in the UAE

The UAE, the Arab world’s second-largest economy, has implemented a number of initiatives in recent months to regulate its financial sector. The country has enacted strict laws to prevent money laundering and the financing of terrorism, and has issued regulations over the years to clamp down on financial crimes.

Recently, the CBUAE issued new guidelines for licensed financial institutions, including banks, finance companies, exchange houses, insurance companies, agents and brokers, to combat money laundering. These guidelines focus on the use of digital identification systems by licensed financial institutions to address their customer due diligence obligations.

In 2021, the UAE established the Executive Office of Anti-Money Laundering and Counter-Terrorism Financing, an agency responsible for dealing with money launderers.

Additionally, in 2020, the Ministry of Economy set up an anti-money laundering department to ensure that all non-financial businesses and professionals comply with local laws.

News resource:

• https://gulfnews.com/amp/business/banking/uae-central-bank-imposes-dh18-million-fine-on-finance-company-1.93597737
• https://www.gulftoday.ae/news/2023/02/02/uae-central-bank–imposes-sanctions-on-a-finance-company-operating-in-uae?interstitial17
• https://www.khaleejtimes.com/uae/crime/uae-central-bank-fines-firm-dh1-8-million-for-money-laundering?_refresh=true