Ministry of Economy imposes fines exceeding AED 3 million on eight DNFBP companies for violating AML legislation

H.E. Abdalla Alfan Al Shamsi: By penalizing the violators, the Ministry aims to raise DNFBP sector’s level of compliance with AML/CFT legislation

The Ministry of Economy conducted inspection tours to monitor the operations of designated non-financial business or professions (DNFBP) sector companies that are subject to its supervision, which include real estate agents and brokers; precious metals and gemstone dealers; auditors; and corporate service providers. The initiative falls in line with the Ministry’s efforts to ensure the sector’s compliance with the provisions stipulated by Federal Decree-Law No. (20) of 2018 on anti-money laundering and combating the financing of terrorism and illegal organizations (AML/CFT), and its executive regulations and related laws, in addition to ensuring the country’s full compliance with the international standards issued by the Financial Action Task Force (FATF). The total number of companies/entities operating in the DNFBP sector under the Ministry’s supervision is approximately 15,000.

The inspections fined eight DNFBP companies for their failure to adhere to the internal policies and controls established to combat crime; engaging in suspicious business relationships; and failure to adopt necessary measures to limit the risks of crime in the field of work; in addition to their failure to strengthen AML procedures and monitor/report suspicious transactions. As a result, total of 69 fines amounting to AED 3,550,000 were levied on them for the violation of 10 articles of the executive regulation of Federal Decree-Law No. (20) of 2018 on anti-money laundering and combating the financing of terrorism and illegal organizations, as well as Cabinet Decision No. 16 of 2021 on the unified list of the violations and administrative penalties for the said violations.

H.E. Abdalla Alfan Al Shamsi, Assistant Undersecretary for Monitoring and Follow Up at the Ministry of Economy, emphasized that by penalizing violators in the DNFBP sector, the Ministry strives to raise compliance levels to legislations. These efforts will help establish an effective national system to confront non-compliance and maintain an environment free of any illegal practices to ensure national economy’s constructive interaction with the global economy, he noted.

The Assistant Undersecretary added that MoE is working actively to provide technical assistance, raise awareness and enhance awareness within the DNFBP sector to enable them to implement internal procedures and processes that prepare them for further growth and prosperity, away from violations and legal hassles. He further noted that the Ministry will transparently implement administrative penalties on violating companies in the next phase.

Meanwhile, Safia Al Safi, Director of the Anti-Money Laundering Department at the Ministry of Economy, explained that the Ministry adopts its annual inspection plan by assessing and categorizing the risks faced by the DNFBP companies. The relevant inspection team is then trained and prepared for the task in line with international best practices. Moreover, she pointed out that the inspection and reporting procedures are carried out with high levels of professionalism, which leads to the handing over of technical and inspection reports that accurately convey the sector’s level of commitment and compliance with the law, gauge their risks, and the extent of the need to take corrective action. These reports are then submitted to the Enforcement Committee, following which, the Committee takes the necessary steps to address these violations by following a risk-based methodology and standards stipulated by the legislation.

Counselor Salem Ahmed Al Tunaiji, Head of the Investigation and Enforcement Department at the Ministry of Economy, underlined the tremendous efforts that were made during the past period to develop AML/CFT legislation in line with FATF’s recommendations. These amendments contributed to enhancing awareness on DNFBP’s obligations to help combat money laundering and terrorism financing. Al Tunaiji confirmed that the Ministry of Economy is exercising its supervisory and oversight roles to ensure the compliance of the targeted sectors with the implementation of the country’s AML legislation.

Furthermore, Al Tunaiji pointed out that the inspection reports were studied by specialized technical experts to verify violations with regard to the fines to be levied, based on the gravity of the infractions and their impact on compliance with legislation and other standards. He explained that the most prominent violations committed by inspected companies were the failure to develop policies and procedures to combat the crime; and the failure of the compliance officer to perform his duties stipulated by the AML legislation. Apart from these, failure to take necessary measures and procedures to identify crime risks in the company’s field of work; failure to apply due diligence measures on clients who are politically exposed; failure to conduct due diligence measures on customers (KYC) prior to establishing business relationship; and absence of documented procedures for monitoring and reporting suspicious transactions were also found during the inspections.

Other violations include failure to take measures to understand the purpose and nature of the business relationship; failure to take measures for continuous monitoring in the business relationship with customers; failure to take enhanced due diligence measures to manage high risks, in addition to non-compliance with Cabinet Resolution No. 74 of 2020 Regarding Terrorism Lists Regulation.

Al Tunaiji clarified that it is possible for penalized DNFBP companies to submit grievances/appeal against the violation cases within the specified legal period of 15 days from the date of notification of the violation in accordance with Cabinet Resolution No. 16 of 2021.