The DFSA Rulebook - Dubai Financial Services Authority

1 Appendix 1. In this appendix as all the text is new it is not underlined or struck through in the usual manner. In this appendix underlining indicates new text and striking through indicates deleted text. The dfsa Rulebook Anti-Money Laundering, Counter-Terrorist Financing and Sanctions Module (AML). Anti-Money Laundering, Counter-Terrorist Financing and Sanctions Module (AML). Contents The contents of this module are divided into the following chapters, sections and appendices: 1 INTRODUCTION ..1. Application .. 1. Responsibility for compliance with this module.

2 1. Application table .. 3. 2 OVERVIEW AND PURPOSE OF THE MODULE ..4. 3 INTERPRETATION AND TERMINOLOGY ..7. Interpretation .. 7. Glossary for AML .. 7. 4 APPLYING A RISK-BASED APPROACH ..14. The risk-based approach .. 14. 5 BUSINESS RISK ASSESSMENT ..16. Assessing business AML risks .. 16. AML systems and controls .. 17. 6 CUSTOMER RISK ASSESSMENT ..19. Assessing customer AML risks .. 20. 7 CUSTOMER DUE DILIGENCE ..23. Requirement to undertake customer due diligence .. 24. Timing of customer due diligence .. 24. Customer due diligence requirements.

3 25. Enhanced customer due diligence .. 28. Simplified customer due diligence .. 29. Ongoing customer due diligence .. 30. Failure to conduct or complete customer due diligence .. 32. 8 RELIANCE AND OUTSOURCING ..33. Reliance on a third party .. 33. Outsourcing .. 35. 9 CORRESPONDENT BANKING, WIRE TRANSFERS, ANONYMOUS. ACCOUNTS AND AUDIT ..36. Application .. 36. Correspondent banking .. 36. Wire transfers .. 37. Anonymous and nominee accounts .. 38. Audit .. 38. Anti-Money Laundering, Counter-Terrorist Financing and Sanctions Module (AML). 10 SANCTIONS AND OTHER INTERNATIONAL OBLIGATIONS.

4 39. Application .. 39. Relevant United Nations resolutions and sanctions .. 39. Government, regulatory and international findings .. 40. 11 MONEY LAUNDERING REPORTING OFFICER ..42. Application .. 42. Appointment of a MLRO .. 42. Qualities of a MLRO .. 43. Responsibilities of a MLRO .. 43. 12 AML TRAINING AND AWARENESS ..45. Training and awareness .. 45. 13 SUSPICIOUS ACTIVITY REPORTS ..47. Application and definitions .. 47. Internal reporting requirements .. 47. Suspicious activity report .. 48. Tipping-off .. 49. 14 GENERAL OBLIGATIONS ..51. Groups, branches and subsidiaries.

5 51. Group policies .. 51. Notifications .. 52. Record keeping .. 52. Annual AML return .. 54. Communication with the dfsa .. 54. Employee disclosures .. 55. 15 DNFBP REGISTRATION AND SUPERVISION ..56. Registration and notifications .. 56. Withdrawal of registration .. 56. Disclosure of regulatory status .. 57. 16 TRANSITIONAL Application .. 58. General .. 58. Specific relief Ancillary Service Provider and DNFBPs .. 58. Anti-Money Laundering, Counter-Terrorist Financing and Sanctions Module (AML). 1 INTRODUCTION. Application (1) This module (AML) applies to: (a) every Relevant Person in respect of all its activities carried on in or from the DIFC.

6 (b) the persons specified in Rule as being responsible for a Relevant Person's compliance with this module; and (c) a Relevant Person, which is a DIFC entity, to the extent required by Rule except to the extent that a provision of AML provides for a narrower application. (2) For a dealer in precious metals or precious stones, or a dealer in any saleable item of a price equal to or greater than $15,000, chapters 6 to 8 of this module apply only if it engages in any cash or cash-equivalent transaction with a customer equal to or above $15,000, whether the transaction is executed as a single operation or in several connected operations.

7 For the purposes of these Rules, a Relevant Person means: (a) an Authorised Firm other than a Credit Rating Agency;. (b) an Authorised Market Institution;. (c) a DNFBP; or (d) an Auditor. Responsibility for compliance with this module (1) Responsibility for a Relevant Person's compliance with this module lies with every member of its senior management. (2) In carrying out their responsibilities under this module every member of a Relevant Person's senior management must exercise due skill, care and diligence. (3) Nothing in this Rule precludes the dfsa from taking enforcement action against any person including any one or more of the following persons in respect of a breach of any Rule in this module: (a) a Relevant Person.

8 1. Anti-Money Laundering, Counter-Terrorist Financing and Sanctions Module (AML). (b) members of a Relevant Person's senior management; or (c) an Employee of a Relevant Person. 2. Anti-Money Laundering, Counter-Terrorist Financing and Sanctions Module (AML). Application table Guidance * Partially applicable. Relevant Persons should consider these chapters and determine which provisions apply. Relevant Person Chapters 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16. Authorised Person X X. Representative Office X X X X X X. Auditor X X X. Real estate developer or agency X X X X X X X X.

9 Law firm, notary firm, or other independent legal business X . Accounting firm, audit firm or insolvency firm X . Company service provider X . Single Family Office X . Dealer in precious metals or precious stones * * * X X X * * . Dealer in high-value goods * * * X X X * * . 3. Anti-Money Laundering, Counter-Terrorist Financing and Sanctions Module (AML). 2 OVERVIEW AND PURPOSE OF THE MODULE. Guidance 1. The AML module has been designed to provide a single reference point for all persons and entities (collectively called Relevant Persons) who are supervised by the dfsa for Anti-Money Laundering (AML), Counter-Terrorist Financing (CTF) and sanctions compliance.

10 Accordingly it applies to Authorised Firms, Authorised Market Institutions, Designated Non- Financial Businesses and Professions (DNFBP), and Auditors, but to each in different degrees. The AML. module takes into consideration the fact that Relevant Persons have differing AML risk profiles. A Relevant Person should familiarise itself with this module, and assess the extent to which the chapters and sections apply to it. 2. The AML module cannot be read in isolation from other relevant legislation or developments in international policy and best practice and, to the extent applicable, Relevant Persons need to be aware of, and take into account, how these aforementioned matters may impact on the Relevant Person's day to day operations.