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CONSULTATION PAPER NO - dfsa.complinet.com

CONSULTATION PAPER . PROPOSED CHANGES TO THE. DFSA'S ANTI money . laundering , COUNTER- TERRORIST financing AND. SANCTIONS REGIME. 22 FEBRUARY 2018. CP118 CHANGES TO THE DFSA'S AML REGIME. PREFACE. Why are we issuing this CONSULTATION PAPER (CP)? In advance of the upcoming Financial Action Task Force (FATF) Mutual Evaluation of the United Arab Emirates (UAE), the DFSA is proposing changes to the Regulatory Law 2004. (Regulatory Law) and the Anti- money laundering , Counter-Terrorist financing and Sanctions Module (AML) of the DFSA's Rulebook. The changes proposed are to ensure that the DFSA's AML regime is compliant with the 2012 FATF Recommendations1 (the 2012. Recommendations) and the Federal AML Legislation2.

consultation paper no.118 proposed changes to the dfsa’s anti money laundering, counter-terrorist financing and sanctions regime 22 february 2018

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Transcription of CONSULTATION PAPER NO - dfsa.complinet.com

1 CONSULTATION PAPER . PROPOSED CHANGES TO THE. DFSA'S ANTI money . laundering , COUNTER- TERRORIST financing AND. SANCTIONS REGIME. 22 FEBRUARY 2018. CP118 CHANGES TO THE DFSA'S AML REGIME. PREFACE. Why are we issuing this CONSULTATION PAPER (CP)? In advance of the upcoming Financial Action Task Force (FATF) Mutual Evaluation of the United Arab Emirates (UAE), the DFSA is proposing changes to the Regulatory Law 2004. (Regulatory Law) and the Anti- money laundering , Counter-Terrorist financing and Sanctions Module (AML) of the DFSA's Rulebook. The changes proposed are to ensure that the DFSA's AML regime is compliant with the 2012 FATF Recommendations1 (the 2012. Recommendations) and the Federal AML Legislation2.

2 Who should read this CP? The proposals in this PAPER should be of interest to Relevant Persons, including Authorised Firms, Authorised Market Institutions, Designated Non-Financial Businesses or Professions (DNFBPs), to their advisers, and to applicants and their advisers. Terminology In this CP, defined terms are identified by the capitalisation of the initial letter of a word, or of each word in a phrase, and are defined in the Glossary Module (GLO). Unless the context otherwise requires, where capitalisation of the initial letter is not used, the expression has its natural meaning. What are the next steps? All comments should be emailed to using the table provided in Appendix 4.

3 Please refer to the CP number in the subject line. You may identify the organisation you represent in providing your comments. The DFSA reserves the right to publish, including on its website, any comments you provide, unless you expressly request otherwise at the time of making comments. The deadline for providing comments is 24 March 2018. Following public CONSULTATION , we will proceed to recommend the proposed changes to the Regulatory Law to His Highness the President of the DIFC, for enactment by His Highness the Ruler of Dubai. If those proposed changes to the Regulatory Law are enacted, we shall then proceed to bring into force the relevant changes to the DFSA's Rulebook. You should not act on the proposals until the relevant changes to the laws and DFSA Rulebook are made.

4 We shall issue a notice on our website telling you when this happens. 1 The International Standards on Combatting money laundering and the financing of Terrorism and Proliferation. 2 In this PAPER the Federal Law of 2002 (the Federal AML Law) and the Cabinet Resolution 2014 (the Cabinet Resolution) are called, collectively, the Federal AML Legislation. 22 February 2018 Page 2. CP118 CHANGES TO THE DFSA'S AML REGIME. Structure of this CP. The remainder of this CONSULTATION PAPER contains: (a) background to the proposals;. (b) an explanation of the proposed changes to the Regulatory Law 2004 and the AML. Module;. (c) Appendix 1: draft amendments to the Regulatory Law 2004;. (d) Appendix 2: draft amendments to the AML Module.

5 (e) Appendix 3: draft amendments to the GLO Module; and (f) Appendix 4: template for providing comments on this CONSULTATION PAPER . 22 February 2018 Page 3. CP118 CHANGES TO DFSA'S AML REGIME. Background 1. FATF is the global standard setter in the fight against money laundering and combatting the financing of terrorism and terrorist acts. They have developed Recommendations, which set out the legal, regulatory and operational measures that countries must have in place to protect the financial system from misuse. 2. These Recommendations are revised periodically, most recently in 2012, to ensure that countries respond to current money laundering and terrorist financing threats (AML/CTF).

6 As well as other threats to the financial system. The interpretative notes, which accompany the Recommendations, are also revised on an on-going basis, most recently in June 2017. 3. FATF monitors, by means of a Mutual Evaluation (ME), the progress of its members (which include the UAE) in implementing these Recommendations. This ME also evaluates how effective their AML/CTF measures are. After a ME is carried out, a follow- up process provides a framework to monitor progress made by the countries to address any deficiencies identified. 4. 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 areas requiring improvement.

7 The DFSA made changes to its rules, in response to the recommendations in the report, at that time. 5. 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. 6. 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.

8 And came into effect in February 7. It has been confirmed that the next UAE FATF ME will take place in July 2019 and preparations have begun at a Federal level to coordinate the UAE's response. As a stakeholder, the DFSA has been party to these preparations. This has given the DFSA. insight into what the assessors are focusing on in this round of ME, and allowed us to obtain feedback given by experts, who have been engaged by the UAE government to assist in the preparation for the ME. 8. On this basis, we have identified areas in the Regulatory Law 2004 and AML Module that need modifying. These proposed changes are set out in this CONSULTATION PAPER . 3 This relates to CP 107 The announcement can be found here: Legislation-(14).

9 22 February 2018 Page 4. CP118 CHANGES TO DFSA'S AML REGIME. We expect to propose further amendments to our AML regime later in 2018 in the lead up to the UAE's ME following further feedback due from the experts Specific issues 1. Clarifications to the DFSAs AML Regime Please see 9. In CP107,4 the DFSA consulted on certain changes to the Regulatory Law proposed 2004. These changes related to the updates made to the Federal AML. changes to Articles Legislation and included clarifying that the DFSA was the relevant AML. 8(3(e), 60, 70 Supervisory Authority in the DIFC. We said we would consider and 71 of the recommending these changes to His Highness the President of the DIFC. Regulatory at the appropriate point for presentation to His Highness the Ruler of Law in Dubai for his consideration for enactment.)

10 Appendix 1. 10. Following discussions with relevant stakeholders as part of the UAE's Mutual Evaluation (ME), we have delayed putting these changes forward, pending other clarifications. We are now proposing additional amendments to the Regulatory Law in order to align the DFSA regime more precisely with the Federal AML Legislation and 2012. Recommendations. These will include (to the extent still relevant) the changes we previously proposed under CP107. 11. The proposals include: (a) adding a clear objective for the DFSA to monitor compliance by Relevant Persons (defined in draft Article 70(5))5 with anti- money laundering legislation and to prevent, detect and restrain conduct that amounts to breaches of such legislation draft Article 8(3A).


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