Mutual Evaluation Report - FATF-GAFI.ORG

1 Financial Action Task Force Groupe d Action Financi re Middle East and North African Financial Action Task Force Mutual Evaluation Report Anti Money Laundering and Combating the Financing of Terrorism 9 April 2008 UNITED ARAB EMIRATES The United Arab Emirates is a member of the Middle East and North Africa Financial Action Task Force (MENAFATF). It is also a member of the Gulf Co operation Council, which is a member of the Financial Action Task Force (FATF). This Evaluation was conducted by the International Monetary Fund and was then discussed and adopted in Plenary as a Mutual Evaluation as follows: MENAFATF (1st Evaluation ) 9 April 2008 FATF (2nd Evaluation ) 20 June 2008 2008 MENAFATF, FATF and the International Monetary Fund.

2 All rights reserved. No reproduction or translation of this publication may be made without prior written permission. Requests for permission to further disseminate, reproduce or translate all or part of this publication should be obtained from MENAFATF, Box 10881, Manama, Kingdom of Bahrain (fax: +973 17 53067; e mail: TABLE OF CONTENTS Acronyms .. 7 Preface .. 8 Executive Summary .. 9 1. GENERAL .. 14 General Information on the United Arab Emirates .. 14 General Situation of Money Laundering and Financing of Terrorism .. 15 Overview of the Financial Sector.)

3 15 Overview of the DNFBP Sector .. 17 Overview of Commercial Laws and Mechanisms Governing Legal Persons and Arrangements .. 17 Overview of strategy to prevent money laundering and terrorist financing .. 18 2. LEGAL SYSTEM AND RELATED INSTITUTIONAL MEASURES .. 22 Criminalization of Money Laundering ( & 2) .. 22 Description and Analysis .. 22 Recommendations and Comments .. 26 Compliance with Recommendations 1 & 2 .. 26 Criminalization of Terrorist Financing ( ) .. 27 Description and Analysis .. 27 Recommendations and Comments.

4 29 Compliance with Special Recommendation II .. 29 Confiscation, freezing and seizing of proceeds of crime ( ) .. 29 Description and Analysis .. 29 Recommendations and Comments .. 32 Compliance with Recommendation 3 .. 32 Freezing of funds used for terrorist financing ( ).. 32 Description and Analysis .. 32 Recommendations and Comments .. 37 Compliance with Special Recommendation III .. 37 The Financial Intelligence Unit and its Functions ( ) .. 37 Description and Analysis .. 37 Recommendations and Comments .. 44 Compliance with Recommendation 26.

5 45 Law enforcement, prosecution and other competent authorities - the framework for the investigation and prosecution of offenses, and for confiscation and freezing ( , & 28) .. 45 Description and Analysis .. 45 Recommendations and Comments .. 50 Compliance with Recommendations 27 & 28 .. 50 Cross Border Declaration or Disclosure ( ) .. 51 Description and Analysis .. 51 Recommendations and Comments .. 55 Compliance with Special Recommendation IX .. 56 3. PREVENTIVE MEASURES FINANCIAL INSTITUTIONS .. 57 Risk Of Money Laundering Or Terrorist Financing.

6 59 Customer Due Diligence, Including Enhanced or Reduced Measures ( To 8) .. 59 Description and Analysis .. 59 Recommendations and Comments .. 70 Compliance with Recommendations 5 to 8 .. 71 Third parties and introduced business ( ) .. 72 Description and Analysis .. 72 Recommendations and Comments .. 73 Compliance with Recommendation 9 .. 73 Financial Institution Secrecy or Confidentiality ( ) .. 73 Description and Analysis .. 73 Recommendations and Comments .. 74 Compliance with Recommendation 4 .. 74 Record-Keeping and Wire Transfer Rules ( & ).

7 74 Description and Analysis .. 74 Recommendations and Comments .. 76 Compliance with Recommendation 10 and SR. VII .. 76 Monitoring of Transactions and Relationships ( & 21) .. 77 Description and Analysis .. 77 Recommendations and Comments .. 78 Compliance with Recommendations 11 & 21 .. 78 Suspicious Transaction Reports and Other Reporting ( , 19, 25 & ) .. 78 Description and Analysis .. 78 Recommendations and Comments .. 83 Compliance with Recommendations 13, 14, 19 and 25 (criteria ), and Special Recommendation IV.

8 84 Internal controls, compliance, audit and foreign branches ( & 22) .. 84 Description and Analysis .. 84 Recommendations and Comments .. 87 Compliance with Recommendations 15 & 22 .. 88 Shell Banks ( ) .. 88 Description and Analysis .. 88 Recommendations and Comments .. 88 Compliance with Recommendation 18 .. 88 The Supervisory and Oversight System Competent Authorities and SROs Role, Functions, Duties, and Powers (Including Sanctions) (R. 17, 23, 25 & 29) .. 89 Description and Analysis .. 89 Recommendations and Comments.

9 103 Compliance with Recommendations 17, 23, 25 & 29 .. 104 Money or value transfer services ( ) .. 105 Description and Analysis .. 105 Recommendations and Comments .. 107 Compliance with Special Recommendation VI .. 107 4. PREVENTIVE MEASURES DESIGNATED NON-FINANCIAL BUSINESSES AND PROFESSIONS .. 108 Customer due diligence and record-keeping ( ) .. 110 Description and Analysis .. 110 Recommendations and Comments .. 111 Compliance with Recommendation 12 .. 112 Suspicious transaction reporting ( ) .. 112 Description and Analysis.

10 112 Recommendations and Comments .. 116 Compliance with Recommendation 16 .. 117 Regulation, supervision and monitoring ( ) .. 117 Description and Analysis .. 117 Recommendations and Comments .. 119 Domestic sector and the Commercial Free Zones .. 119 Other non-financial businesses and professions & Modern-secure transaction techniques ( ) .. 120 Description and Analysis .. 120 Recommendations and Comments .. 120 Compliance with Recommendation 20 .. 120 5. LEGAL PERSONS AND ARRANGEMENTS & NON-PROFIT ORGANISATIONS .. 121 Legal Persons Access to beneficial ownership and control information ( ).