What are the responsibilities of the FIU- Financial Intelligence Unit under the UAE Anti-Money Laundering Law?

The UAE government has made many efforts to combat money laundering and financing of terrorism. The government has created a legislative and regulatory AML/ CFT environment in which institutional framework plays a vital role in preventing the money laundering and financing of terrorism. The AML/ CFT laws help protect the economy from misuse and identify and deter criminals from laundering illicit money into the legal system and prevent them from using it for criminal and terrorist funding. The UAE‘s legal and statutory framework includes a vital organisation – the FIU- the Financial Intelligence Unit. The organisation has been developed to ensure that entities follow the correct AML compliance procedure and sync with the AML UAE laws.

When and how did the FIU come into existence under the UAE Anti Money Laundering Law?

The Central Bank of UAE (CBUAE) established a specific unit in 1998 dedicated to investigating financial crimes, frauds, and suspicious transactions. It acted as a unique institution that prevented money laundering and terrorist financing activities. Then in 2002, this organisation was renamed Anti-Money Laundering and Suspicious Cases Unit (AMLSCU). After the UAE government introduced the Federal Decree-Law No. 20 of 2018 on AML/CFT, the unit was renamed the Financial Intelligence Unit. Since then, the organisation has been known as the FIU. 

As per the UAE Anti-Money Laundering Law, the Financial Intelligence Unit is headquartered in the State’s capital. FIUs operate independently and perform their duties as per the AML law. As per the rules, they can open branches within Central Bank branches in the Emirates of the State. The CBUAE will provide technical assistance, workforce, and human resources so that the FIU functions appropriately and fulfils the requirements as required by the UAE’s anti-money laundering law. 

Functions of Financial Intelligence Unit under the UAE AML/CFT Regulations:

The FIU was created to strengthen the UAE Government‘s anti-money laundering regulation. It acts as the central institution which receives the STRs and the related information on the fraudulent accounts and transactions. 

Powers of the FIU under the UAE AML Laws are discussed below: 

It can establish Financial Unit Departments and internal regulations on procedures for approval by the Central Bank’s Board of Directors.
Create a database that can store any information and secure it by establishing the rules to ensure the security of the data.
Provide training on AML and train the employees. Provide training material to provide the updated knowledge and skills to help perform duties to be AML compliant. It also includes providing training to other authorities inside or outside the State.
To research domestic and international crimes and follow up to arrive at conclusions.
Prepare reports on how it has prevented crimes and provide analysis on STRs- Suspicious Transaction Reports

The functions of the FIU in the Suspicious Transaction Report under the UAE Anti-Money Laundering Law are mentioned below:  

The FIU receives Suspicious Transaction Reports on financial crimes on approved templates from entities.
The unit analyses the STRs and creates a database.
It might ask the entities to submit any additional information that might be considered necessary to carry out their duties for STRs.
It provides results on the information obtained in the reports to improve the measures employed for combatting money laundering and financial terrorism. For this, it cooperates with supervisory authorities by sharing the analysis results. It helps to measure the quality of the reports submitted and ensure that the entities comply with the AML rules and regulations efficiently.
The FIU shares the data with the Law Enforcement Authorities when there seems to be a high probability that a financial crime has been committed.
Share information obtained from foreign financial authorities to the It judicial authority as required.
The FIU analyses the STRs and evaluates money laundering and terrorism financing activities.

Working of the Financial Intelligence Unit under the UAE AML

The Financial Intelligence Unit under the UAE Anti-Money Laundering Law analyses available reports and information from the entity in two ways as follows:

The FIU, under the Anti-Money Laundering law, has to study the available reports from the entity in two ways. It adopts the operational analysis method- using the available information to detect fraudulent transactions, persons, and criminal activities. The second method is strategic analysis. The FIU uses the information that includes the data provided by the concerned authorities to detect fraudulent transactions and identify criminal activities. 

It is noteworthy that the FIU uses the goAML portal to receive, analyse and forward the STRs efficiently; the data is enormous, so using an integrated system such as the goAML portal speeds up the process. The UNODC- United Nations Office on Drugs and Crime has developed the goAML system to prevent money laundering and financial terrorism. 

Duties of the FIU under the UAE International Legislative Framework

The FIU must perform its duties on the international level by exchanging information. It has to report the results obtained on Suspicious Transaction reports with its fellow AML compliance unit in other countries. 

Conclusion

Financial institutions need to follow the AML/ CFT laws. The Financial Intelligence Unit plays a significant role in ensuring compliance with various functions, such as collaboration with local, regional, and international stakeholders. The FIU works in tandem with them and ensures that they collectively achieve the goal of preventing money laundering and the funding of various crimes and terrorist activities with illicit funds. If you need assistance with AML compliance and ensure that your business is AML compliant with the UAE’s AML/ CFT rules and regulations, you might consider AML consultants.

About the Author

Pathik Shah

FCA, CAMS, CISA, CS, DISA (ICAI), FAFP (ICAI)

Pathik is a Chartered Accountant with more than 26 years of experience in governance, risk, and compliance. He helps companies with end-to-end AML compliance services, from conducting Enterprise- Wide Risk Assessments to implementing the robust AML Compliance framework. He has played a pivotal role as a functional expert in developing and implementing RegTech solutions for streamlined compliance.

Reach Out to Pathik

Article UAE

Targeted Financial Sanctions (TFS): Legal Requirements in UAE

The Cabinet Resolution No. 74 of 2020 pertains to the UAE list of Terrorists and the implementation of the UN Security Council decisions to combat money laundering and terrorism financing. The resolution requires all persons- natural or legal, financial institutions, and Designated Non-Financial Business Professionals to fulfil Targeted Financial Sanctions (TFS) obligations. In this blog, we’ll discuss the responsibilities which are a part of the AML compliance process.

Obligations to implement Targeted Financial Sanction to Combat Money Laundering and Terrorism Financing in the UAE

Registration: 

To get timely and regular updates from the UN security council, the sanctions committee, or the Local Terrorist List of the UAE regarding the new listing, re-listing, or de-listing decisions, all the persons in the UAE must register on the website of the Executive Office.

Screening:

It is a necessary process to implement the Targeted Financial Sanctions to combat Money Laundering and Terrorism Financing. All-natural persons and entities in the UAE must screen their transactions and the databases on a regular basis to keep a vigilant eye on any unusual activity and screen their databases and transactions regularly to identify any name matching on the sanction list.

The updates are available on the Executive office website and the official website of the United Nations.

They need to regularly screen the following: 

Existing customers’ databases / potential customers.
Parties to any business or transaction.
Database of the names of potential customers.
UBOs- Ultimate Beneficial Owner.
Names of persons and entities with which the customers/ UBOs are directly or indirectly related.
Screening each customer before establishing a business relationship or carrying out any transaction.
Directors/ Agents who act on behalf of the customers and those with a power of attorney.

Freezing of Accounts

All persons within the UAE have to resort to the stern measure of freezing of accounts of any person found on the sanction list – the United Nations (UN) list or the UAE Terrorist List. They have to act immediately and with the prior notice within 24 hours, or as the case may be.

Duties of the AML Compliance Officer

The AML compliance officer has to notify the Supervising Authority following the UAE AML/ CFT law in the following cases-

When funds, action, or attempted attempts are identified as required by the relevant UNSCRs or UAE Local Terrorist List
When a match is found of persons or entities on the sanction lists, the AML compliance officer must provide all the details required by the relevant UNSCRs and Local Lists to the Supervisory Authority.
When the AML compliance officer finds that previous/occasional customers are listed on the sanction lists of the local list
If a suspicion arises that an existing or a previous customer is listed or is directly or indirectly related to the listed person
No action is taken because of false positives, and there’s the inability to dismiss or ignore them based on the available information.
The AML compliance officer should provide all the information of unfrozen accounts- the status and value of the money. They also need to inform about the measures adopted for the unfrozen funds and any other information relevant to such decisions.
Financial institutions and DNFBPs have to report the information regarding the freezing of the accounts or an attempted action to do the same within five days to the FIU.

Internal Policy, controls or procedures by entities in the UAE to Targeted Financial Sanctions

Internal controls and procedures are an integral part of the compliance process as per resolution No. 74 of 2020. It is mandatory to have proper policies and procedures to prevent the employees from sharing the information of freezing the accounts with the customer or any third party directly or indirectly. When they implement the policy and procedures to mitigate the risks arising from such actions effectively, they need to define the processes for compliance. 

Internal Policy, controls or procedures by entities in the UAE to Targeted Financial Sanctions

Internal controls and procedures are an integral part of the compliance process as per resolution No. 74 of 2020. It is mandatory to have proper policies and procedures to prevent the employees from sharing the information of freezing the accounts with the customer or any third party directly or indirectly. When they implement the policy and procedures to mitigate the risks arising from such actions effectively, they need to define the processes for compliance. 

The obligation to Cooperation

People in the UAE must cooperate with the Executive Office or the Supervisory Authority, as per the Related United Nations Security Council Resolution or decisions of the UAE Cabinet regarding the issuance of the Local Terrorist List. They must freeze or lift the freezing of funds as the case may be without any delay. It is required so that the information submitted is verified and authenticated. 

Penalties as per the UAE AML Law for Non-Compliance

Failure to follow the obligations mentioned above by any person- natural or legal will have to pay fines of not less than AED 50,000 (Fifty Thousand Dirhams) and not more than AED 5,000,000 (Five Million Dirhams) and can also be subjected to imprisonment.

About the Author

Pathik Shah

FCA, CAMS, CISA, CS, DISA (ICAI), FAFP (ICAI)

Pathik is a Chartered Accountant with more than 26 years of experience in governance, risk, and compliance. He helps companies with end-to-end AML compliance services, from conducting Enterprise- Wide Risk Assessments to implementing the robust AML Compliance framework. He has played a pivotal role as a functional expert in developing and implementing RegTech solutions for streamlined compliance.

Reach Out to Pathik

Article UAE

Decoding the three stages of Money Laundering process: Placement, Layering and Integration

We understand that money laundering is a complex process or a networked structure involving multiple various stages. It is these stages through which the illegal money is passed to give it an appearance of legitimately obtained funds, concealing its true identity or association with criminal activities. Money laundering comprises of three steps or stages – the first is Placement, the second line is Layering, and the final one is Integration.

It is essential for the reporting entity’s AML Compliance Officer and the team to understand this process of money laundering and its stages to timely identify the transactions attempted to launder illegal funds. This identification and reporting of the money laundering activities is necessary for the reporting entity to comply with the Prevention of Money Laundering Act, 2002 (PMLA), and safeguard the business against exploitation.

In this article, let us explore these three stages of Money Laundering process, explicitly focusing on the layering stage of money laundering and how to detect the layering activities to curb financial crimes.

What Are The Three Stages Of The Money Laundering Process?

The following are the three core stages of the money laundering process:

1. Placement

Placement is the first stage of the money laundering process, where the criminals try to introduce their illegal money into the country’s financial system. Once the criminal proceeds are put into the economy, the money launderers start disguising their illegal funds and making them appear clean.

The launderers use various techniques to place the dirty money in the financial system. Some examples of the methods used during the placement stage are:

Structuring or Smurfing, wherein the large sum of cash is split into multiple smaller amounts, possibly below the PMLA reporting thresholds. These smaller amounts are deposited using various accounts to avoid inquiries from the financial institution or other reporting entity.
Further, for placing the illicit cash in the economy, money laundering may use other methods like casinos, purchasing real estate properties or other luxurious items, investing the money in the business to mingle the legitimate business proceeds with the illegal ones, etc.
One other preferred technique for placement is using “money mules” to physically move the illegal cash from one country to another, making it difficult for the country’s authorities where such criminal proceeds were generated to trace the origin or the owner.

2. Layering

The layering stage is the crucial stage of the entire process, where the money launderers do most of the disguising work. As the word suggests, in this process, the illegal money is routed through multiple transactions or accounts to distance the identity of the criminals and the source of the proceeds of crime. During the layering stage, the criminals aim to create a complex structure of transactions involving multiple persons, jurisdictions, accounts, etc., to make it difficult for the anti-money laundering authorities to locate the funds to their illegal origin.

Once the illicit money is placed into the system, the launderers use different methods for developing a complex web or layers of transactions, such as:

Using various bank accounts opened under different names and moving funds in between these accounts to complicate the audit trail.
Engaging in a series of financial transactions with parties across different jurisdictions without any business sense.
Creating fake business transactions, such as over-invoicing, under-shipment, etc., to mix illegal funds with legitimate business activities.
Creating shell companies in offshore jurisdictions with lax regulations to create a bogus layer of money transfers.
Using complicated financial instruments such as derivates to obfuscate the audit trail creates challenges for financial institutions to spot the source of illegal funds.
Using emerging technologies like anonymous wallets to transfer virtual assets across borders without adequately identifying the originator or beneficiaries.

3. Integration

Integration is the final stage of the money laundering process, where the illicit funds are put forth for final disposal. During the integration stage, the illegal funds are considered “clean”, allowing the launderers to use these proceeds as they wish without raising any suspicion or inquiries from the authorities.

Generally, once the funds are disguised as legal proceeds, the same are introduced in the legitimate business or used for the owners’ enjoyment, such as to buy luxurious properties or high-value antique items or precious metals or stones.

With the completion of the money laundering process, the money launderers use the proceeds of crime for personal benefits without drawing attention to the nature of its illegal source.

A clear understanding of the money laundering process is very pertinent to observe the unusual patterns or customer behaviour suggesting any of these three stages.

How To Detect And Prevent Money Laundering Attempts?

To detect and prevent money laundering activities, the reporting entities must implement a robust Anti-Money Laundering Program, considering the entity’s risk exposure, business profile, resources & tools available, etc.

Here are a few best practices that the reporting entities must adopt to ensure the effectiveness of the money laundering detection and prevention measures:

A. Assessing The Business Exposure To Financial Crime And Deploying A Customized AML Framework

The money laundering risk exposure of each reporting entity is different. To tailor-made the AML controls, the entity must identify and evaluate the possible money laundering exposure and its impact on the business. This will enable the entity to adopt the Risk-Based Approach and determine the required mitigation measures. This outcome of the Business Risk Assessment or the Enterprise-Wide Risk Assessment shall serve as a foundation for documenting the AML policies, procedures, and controls.

The AML program must provide for a detailed note on the following:

approach and methodology that the entity shall follow for customer onboarding (Customer Due Diligence, Customer Risk Assessment methodology, managing the high-risk customer with Enhanced Due Diligence),
Process for monitoring the business relationship and transactions on an ongoing basis,
Mechanism for detecting and reporting suspicious transactions internally and externally,
Process for complying with the sanctions regime,
Roles and responsibilities of the AML Principal Officer and senior management,
Details around AML Training requirements, etc.

With adequately crafted AML policies and procedures, the reporting entity shows a commitment to combat money laundering, complies with the regulatory landscape, and has dedicated measures to prevent the landing, onboarding the entire team to play their part.

B. Implementing The Right AML Solution

Managing the AML measures manually with too voluminous data is practically difficult, giving a loophole to criminals to exploit the economy. Further, money launderers are using emerging technologies to launder the funds. This calls for deploying advanced technologies and data analytics tools to stay ahead of criminals and spot red flags and suspicious transactions.

Right AML tools support customer screening to determine whether the customer is sanctioned or a Politically Exposed Person (PEP) or has some negative media suggesting the person’s background or connection with organized crimes like money laundering or terrorism financing. This screening outcome and the customer’s identification-related details can help the entity create a risk profile for the customer and maintain it as the business relationship progresses. This will enable the entity to stay aware of the changes in the customer’s risk profile and take timely action to mitigate the same without impacting the business.

With appropriate technology, the vast data analysis becomes quick, reducing false alerts and generating alerts for inconsistencies and unusual trends. Real-time transaction monitoring allows the reporting entity to stay on top of the business and spot suspicions immediately before it can impact the business, rather than investigating the already executed money laundering activity.

By leveraging the tools and technology, the reporting entity can timely detect the red flags, maintain the customer risk profile up-to-date, and effectively manage the money laundering risk.

C. Adequate AML Governance And Oversight

The reporting entities must appoint an AML Principal Officer or the AML Compliance Officer to ensure the effective implementation of the designed AML Program. Further, the oversight and involvement of the entity’s senior management is also essential to set the right tone at the top and seek their input and feedback to improve the AML efforts.

To manage the quality and relevance of the AML measures, an independent AML audit must be periodically conducted. This will help seek an unbiased opinion on the entity’s AML program and identify the areas that need to be enhanced for better compliance and risk mitigation.

D. Imparting AML Training

AML Principal Officer cannot solely manage the entire AML show – staying regulatory compliant and protecting the business against money laundering exploitation. Thus, the contribution and support from all the organization’s employees is required. The front-line employees play a significant part in detecting potential suspicion as they deal closely with the customer executing the transactions.

The entity must develop a comprehensive AML training program for the team, including senior management, to create appropriate awareness around AML, imparting knowledge about the implemented internal AML policies and procedures and making the team aware of their roles and responsibilities.

Only with a systematic and comprehensive approach can the reporting entity detect and prevent potential money laundering transactions from being conducted through the business. Further, with the joint strength of the AML compliance officer, senior management, technology, and employee support, the reporting entity creates a strong shield against money laundering.

Why Is Detection And Prevention Of Money Laundering Necessary?

Money laundering puts the business at a greater risk – associated with business operations, reputational damage, regulatory fines, and proceedings. Failure to detect, report, or prevent money laundering attempts will lead to heavy non-compliance penalties for the business. Further, when a business is exposed to money launderers, it is subject to frequent investigations by the authorities, adversely impacting its reputation in the market. This results in a loss of trust and confidence of the customers and other stakeholders in the business.

To avoid such non-compliance and potential exploitation by the criminals, the reporting entities must develop and maintain a comprehensive AML framework, covering the Customer Due Diligence process, identifying red flags and reporting the same with the FIU, implementing robust technology to support the AML policies, etc.

About the Author

Jyoti Maheshwari

CAMS, ACA

Jyoti has over 9+ years of hands-on experience in regulatory compliance, policymaking, risk management, technology consultancy, and implementation. She holds vast experience with Anti-Money Laundering rules and regulations and helps companies deploy adequate mitigation measures and comply with legal requirements. Jyoti has been instrumental in optimizing business processes, documenting business requirements, preparing FRD, BRD, and SRS, and implementing IT solutions.

Reach Out to Jyoti

Article India

Suspicious Transaction Reports (STRs) filing with goAML portal of FIU UAE

The UAE government has implemented several laws to combat money laundering and prevent financing of terrorism. As per the UAE Anti-money laundering law, Financial institutions and Designated Non-Financial Business Professionals known as DNFBPs must identify and file suspicious transaction reports (STRs) with goAML Portal of FIU UAE.

As per the Law, DNFBPs are categorised as firms involved in one or more of the following activities- the Real Estate agent, Dealer of precious metals and stones, Company Service Providers, Auditors and accountants, and Law firms. They have to report transactions that they deem suspicious as they have reasonable grounds to suspect that the transactions might be related to money laundering or terrorism financing.

Let us understand what should be included in an ideal AML program, what causes the AML program to fail, and what remedial measures are to be adopted to correct the failure and strengthen the AML Compliance Program.

What are Suspicious Transactions under the UAE AML?

The UAE Anti-Money Laundering Law has described Suspicious Transactions as those transactions related to money. The entities have reasonable grounds to suspect that the money has been obtained from criminal proceeds- from crimes associated with the financing of terrorism or criminal organisations, whether they have been committed or attempted.

Funds in the description mentioned above refer to tangible and intangible assets, movable and immovable. It includes national currency, foreign currencies, documents, or notes that provide proof of ownership of the assets or associated rights. The rights can be in any form- electronic or digital forms or any interests, profits, or income stemming or earned from these assets.

When do the entities report the Suspicious Transactions under the UAE AML?

If the DNFNPs suspect the transaction or attempted transaction involves criminal proceeds, and they have reasonable grounds to believe that the transactions are suspicious, they must report the transactions to the FIU. The suspicion might arise due to the unusual nature of the transactions or doubt about the person or group involved in the transaction.  

How to detect Suspicious Transactions?

Today AML software is being increasingly relied upon to generate alerts for suspicious transactions that immediately identify doubtful transactions/accounts. The financial institutions, DNFBPs, and other regulated entities need to rely on alerts or red flags that categorise a transaction as a suspicious transaction. They let the business know about the legitimacy of the accounts and the money involved in the transaction.

Entities need to choose the best AML software based on their unique business requirements, which will help them notice the red flags and take immediate steps to combat money laundering and terrorism financing activities. 

Who Receives the Suspicious Transaction Reports (STRs) under the UAE AML?

The Financial Intelligence Unit receives the Suspicious Transaction Reports from the entities who have reasonable grounds to believe that a transaction made or attempted is suspicious- might be criminal proceeds. The entities must report such transactions to the FIU on the goAML portal. The FIU analyses the reports received from different entities. 

Confidentiality is required on Suspicious Transaction Reports under the UAE AML.

Confidentiality is a critical factor while reporting suspicious transactions to the FIU. Entities need to maintain confidentiality for the information shared. No unauthorised person, including the customer of whom the transaction is being reported, should access the information and know that the information has been shared with the Financial Intelligence Unit. 

Duties of FIU- Financial Intelligence Unit under the UAE AML

The (UNODC)-United National Office on Drugs and Crime has developed the goAML portal to prevent money laundering and terrorism financing. The FIU is entrusted with the responsibility of analysing suspicious transactions and money laundering, terrorism financing, and keeping a tab on organisations involved in illegal activities. It analyses the STRs received from any entity on the goAML portal. The suspicious transaction reports must be submitted to the FIU on the goAML platform, which efficiently receives, analyzes, and disseminates the STRs. 

It also partners with DNFBPs by sharing information and creating collaborative platforms to deal with money laundering and terrorism financing. If the entities fail to register on the goAML portal, it will be considered that the entity has violated Article 20(2) as it has not followed the mandatory procedure to report the suspicious transactions.

Penalties for non-compliance with the Law on Suspicious Transaction Reports

The Ministry of Economy (MOE) may impose administrative penalties on the DNFBPs for non-compliance with the AML. Non-reporting of suspicious transactions is a criminal offense, and the offenders are subject to heavy fines and imprisonment, including DNFBPs and employees. Failure to report a suspicious transaction will attract a penalty of a minimum of AED 100,000 and not exceeding AED 1,000,000 and/or imprisonment. 

What are the exceptions to the Law on the filing of Suspicious Transaction Reports?

The government has announced some exceptions to the Law on Suspicious transactions reports considering the professional secrecy requirements for certain professionals such as notary publics, lawyers, independent legal auditors who have obtained the information while providing consulting services or defending the client in a legal proceeding. They are exempted from the Law on STRs and are not required to report suspicious transactions. 

If the information is shared in good faith, the DNFBPs board members, employees, and authorised representatives are not liable for any administrative, civil or criminal liability for reporting to the FIU- Financial Intelligence Unit.

I have filed an STR/SAR with the CBUAE FIU goAML portal. Can I provide additional information pertaining to the transaction that has already been reported?

The Compliance Officer/MLRO can submit the additional information in relation to an STR filed with the CBUAE FIU goAML portal. He needs to submit an Additional Information File (AIF) or Additional Information File with Transactions (AIFT) if additional transactions need to be reported.

The compliance officer must provide a web reference number of the original SAR/STR in the FIU reference field.

About the Author

Pathik Shah

FCA, CAMS, CISA, CS, DISA (ICAI), FAFP (ICAI)

Pathik is a Chartered Accountant with more than 26 years of experience in governance, risk, and compliance. He helps companies with end-to-end AML compliance services, from conducting Enterprise- Wide Risk Assessments to implementing the robust AML Compliance framework. He has played a pivotal role as a functional expert in developing and implementing RegTech solutions for streamlined compliance.

Reach Out to Pathik

Article UAE

The Challenges of The Sanction Screening Process

Sanction screening is an integral part of AML/CFT compliance processes. With the changing political-socio-economic scenarios worldwide, governments are emphasizing sanctions. With increased awareness and alertness about the sanctions, businesses across the globe are keen to know about the sanctions and implement the robust sanction screening process. Business organizations understand the sanctions and their implications on the company and realize the benefits of sanction screening to protect their organization from being exposed to financial crimes and safeguard its reputation from damage.

What is Sanction Screening?

A company must know who it is dealing with and whether its customers or business associates are law-abiding citizens, have a legitimate business, and carry out their business activities lawfully.

Thus, Sanction screening is a process whereby businesses screen their customers, suppliers, or any other business partner against the names of individuals/entities/organizations appearing on the sanction list. Individuals/groups who have violated the trade norms or are involved in financial crimes such as money laundering, financing of terrorism, the proliferation of financing of weapons for mass destruction, etc., are mentioned in such sanctions list. Such enlisted people are barred from trading with certain countries/groups. They are not allowed to do business because of violation of the trade agreements, and their involvement in grave offenses hampers the integrity and peace of the entire world.

AML regulations have laid down the detailed processes to be followed to mitigate the risk of money laundering and terrorism financing. As part of the Know Your Customer or Know Your Business process, the companies must know and confirm the counterparty’s identity. Sanction screening forms part of AML/CFT compliance through the KYC process.

Under sanctions screening, the customers/suppliers’ database is screened against the loal and international sanction lists. With sanction screening exercises, businesses can know about their business partner’s records related to financial crime or illegal activities and check if any country or group has boycotted them. With screening, they can learn with whom to establish a business relationship and continue to maintain it without worrying about compliance issues. Such a regular screening process helps them protect their organization from reputational damage, penalties, financial losses, and being vulnerable to financial crimes.

Are sanctions screening mandatory?

Yes, sanction screening is a mandatory process required by the governments as their effort toward curbing the evil of financial crimes and maintaining the economy’s stability. Different sanction lists are available in other countries. The HM sanction Treasury lists is a UK consolidated list of economic sanctions that pertains to individuals and legal entities operating within the UK’s territory.

Similarly, the OFAC sanction list applies to all nationals and entities that trade in the US and have a parent/ subsidiary or an affiliate company in the US. Any entity that uses US goods or components or works through a local agent operating in the US fall under the ambit of the OFAC sanction list. The EU Consolidated sanctions list applies to all EU citizens, irrespective of their location and entities established in the member state. Then, there is a sanction list issued by the United Nations Security Council, which is mandatorily applicable to all the UN member nations.

The Financial Actions Task Force (FATF) has also recommended the sanction screening process be implemented to adopt a risk-based approach in the AML compliance process.

Considering the sanction screening as a need of an hour, the government has imposed enormous penalties for non-compliance in implementing the financial sanctions. Sanction screening helps businesses identify customers with whom they can do business without legal repercussions. Violations of the sanction screening guidelines are a grave issue and a severe threat to the country and the world economy. Foreign relations are jeopardized, and national security is compromised if the sanction screening rules are not followed. Therefore, the government has implemented enormous fines for non-compliance with the sanction screening rules. Offenders can also face imprisonment for not complying with the sanction rules and regulations.

So, to avoid hefty fines and reputational damage, companies must comply with sanction screening and ensure adherence to the AML compliance process.

The challenges of sanction screening

The sanction screening process is full of challenges, and authorities must overcome them proactively.

1. Changing Sanction Rules

The sanction rules are ever-changing, so keeping pace with the updated guidelines is necessary. There might be additions of the sanctioned entities – individuals, particular businesses, or countries and some de-listing depending on the circumstances. Sanctions are dependent on the changing socio-economic-political events worldwide, so it’s vital to sync the sanction rules with such global updates. Further, the actions to be taken by the business entity also changes, wherein some may require freezing of fund while some call for reporting to the authorities.

A recent example is the Russia-Ukraine war which has prompted the banking sector to revise the guidelines on the sanctions. Thus, everyone has to stay updated with such amendments and updates to effectively comply with sanctions procedures.

2. Lack of Data

Sanction screening can be effectively implemented only when relevant data is available. It is essential to have quick and easy access to comprehensive information on sanction lists. Banks and financial institutions or any designated entities cannot afford to miss out on any update in the sanction lists. Therefore, they need access to real-time changes in the sanction screening guidelines.

Nowadays, various AML softwares offer real-time alerts to notify the changes in the already screened person or entities. Such screening software updates the database daily, with timely addition or deleting of the names of entities/individuals from the sanction lists. With continuous monitoring of the sanctions -local and international lists- organizations can keep their business AML compliant and free from financial crime risks.

3. Updated lists

Transactions are to be monitored regularly, whereby sanction screening is performed to check whether any person not listed on sanction continues the same status or is now sanctioned. Often organizations fail to comply with the sanction screening process due to the lack of updated lists and continue with the previous screening outcome. Thus, lack of access to the updated sanction lists often causes a delay in implementing the new changes, and business falls short of being fully compliant with the new rules. It may also end in transacting with a sanctioned person.

Rely on Experts for Sanction Screening Compliance

As sanction screening is mandatory, it is crucial to follow the proper process. More importantly, it is vital to take timely action to prevent businesses from being exposed to financial crimes. It would be best to rely on expert assistance for sanction screening compliance.

About the Author

Pathik Shah

FCA, CAMS, CISA, CS, DISA (ICAI), FAFP (ICAI)

Pathik is a Chartered Accountant with more than 26 years of experience in governance, risk, and compliance. He helps companies with end-to-end AML compliance services, from conducting Enterprise- Wide Risk Assessments to implementing the robust AML Compliance framework. He has played a pivotal role as a functional expert in developing and implementing RegTech solutions for streamlined compliance.

Reach Out to Pathik

Article UAE

What are Economic Sanctions?

Economic sanctions are a foreign policy tool that countries use to prohibit customary trade and financial relations with another country, group of nations, or individuals. Sanctions are imposed to coerce, deter or punish the nations that threaten their interest or violate international norms. The imposed trade barriers may be comprehensive and affect the entire country or targeted to block economic trade with particular businesses, groups, or individuals. The customary trade is withdrawn to protect the foreign and security policy.

What is a sanction? 

A sanction is defined as a penalty that one country imposes on another country or a foreign country, groups of governments, or individuals. The sanctions are commercial and financial penalties are applied by one or more countries on targeted countries, groups of nations, or individuals barring them from international trade. It is a weapon used to exert economic pressures to coerce them to comply with global trade and practices regulations. 

Sanctions Forms

Sanctions can be defined based on the number of countries issuing them. If a single government has imposed the embargo, it is a unilateral sanction. If a group of nations has imposed the sanction, it is a multilateral sanction. The former has much more severe consequences if the sanctions imposing country is more powerful, so the sanction will be highly effective and yield the desired results. The latter has less severe consequences as they implement multilateral sanctions, which do not hold one single country solely responsible for the sanction’s results.

Different Types of Sanctions

Export sanctions are imposed to prevent the entry of products into a country. The export sanctions will change consumer behaviour, and customers will opt for substitute products when the products are not available. Similarly, import sanctions put restrictions on the goods to leave the country. 

Economic Sanctions

Economic sanctions prohibit ordinary trade and financial transactions regarding foreign- and security policy objectives. The sanctions might come with a blanket approach that prohibits the nation on the whole, or sanctions may be narrow, restricting trade between and among specific countries, groups of governments, or individuals. Sanctions are implemented in the form of travel bans, arms embargoes, trade restrictions, asset freezes, etc. After 9/ 11, sanctions have become more intelligent, which prevents innocent citizens from being at the receiving end of the boycott.

When are sanctions implemented?

National governments and international organizations impose economic sanctions to coerce, discourage or impose fines or even shame businesses that break the international forms of behaviour or risk their interests. But sanctions have been considered a lower-risk alternative to diplomacy. It is a foreign policy tool used to successfully achieve several objectives, such as counter-terrorism and implementing anti-money laundering laws. It helps in promoting democracy and retaining human rights and resolving conflicts. 

What is the effect of sanctions?

The country witnesses an immediate impact of import sanctions as the target country cannot export goods, and the sales go down. The country that has imposed sanctions will not purchase the goods, affecting the trade between the two countries. The target country will face hardships if it depends on exports to a large extent to boost its economy. It can result in economic and political unrest.

The political and economic state of affairs will deteriorate and affect the public. The sanctions will strongly influence public opinion, and the citizens would want the ruling government to leave office. They would hold the ruling government responsible for the deteriorating state of affairs as they would bear the brunt of inflation and political unrest. Extremism may be followed, and the whole country can come on the verge of collapsing. The countries which issue the sanctions will witness a rise in the cost of the products.

The issuing nation will not be able to provide a wide variety of products to its citizens, and the consumers would have to meet their requirements with a limited range of products. The cost of operations for firms will increase as they need to source supply overseas. In the case of unilateral sanctions, the target country might depend on a third-party nation to lessen the embargo’s impact. It is crucial to follow the global AML regulations, considering the sanctions’ consequences.

About the Author

Pathik Shah

FCA, CAMS, CISA, CS, DISA (ICAI), FAFP (ICAI)

Pathik is a Chartered Accountant with more than 26 years of experience in governance, risk, and compliance. He helps companies with end-to-end AML compliance services, from conducting Enterprise- Wide Risk Assessments to implementing the robust AML Compliance framework. He has played a pivotal role as a functional expert in developing and implementing RegTech solutions for streamlined compliance.

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Article UAE

Significance of Employees’ contribution to foster AML Compliance

In today’s world of growing AML compliance regimes, the AML Compliance Officer or the AML principal Officer cannot manage the entire AML function in isolation. No doubt that the AML Compliance Officer would have developed the robust AML framework – the internal policies and procedures, but these are of no effectiveness unless these are adopted and implemented in their genuine sense across all the levels of the organization.

Compliance encompasses contributions from all the company’s departments, bringing in all the employees on a common understanding to make diligent efforts to combat financial crimes and safeguard the company and the economy.

In this context, we will discuss the significance of employee engagement and contribution to advancing the company’s AML compliance function.

Understanding The Concept Of Employee Engagement And Contribution From AML Perspective

Employee engagement or contribution is the level of staff’s involvement and dedication towards the organization’s work and goals. Engaged personnel are the employees who understand their roles and are committed to giving their best in fulfilling that role with a sense of ownership rather than a “working for others” approach. The engaged team always thrives on developing new skills that can contribute towards the sustainable growth of the business. With engaged employees or whole-hearted contributions from the employees, organizations tend to achieve their goals faster, building a solid brand while adhering to regulatory requirements.

Employers need to understand that when the employees feel engaged and contribute towards achieving the company’s targeted results, it boosts their morale and empowers them, developing a sense of pride in their work. Engaged employees strive to ensure compliance with the company’s policies and applicable regulations, putting the organization’s values and reputation at the highest priority.

When talking about AML Compliance, the employees’ contribution and engagement cannot be overlooked. When the engaged employees understand the AML regulations and internal AML/CFT policies, procedures, and controls, they can contribute towards its effective implementation.

AML principal Officer cannot singlehandedly ensure that the red flags are identified on a timely basis and accurately reported to the Financial Intelligence Unit. The employees’ awareness of compliance and their sense of responsibility to safeguard the company’s integrity is of utmost importance in identifying and preventing business exploitatio

In adverse cases, where the employees do not feel engaged, they may overlook the company’s AML program and adopt the “tick the box” approach to do their assigned tasks without understanding their responsibility of identifying and managing the financial crime risks.

Not just limited to performing own duties but engaged employees to contribute towards building a strong AML compliance culture. They participate in the AML training, discuss their observed cases, and encourage other employees to implement the AML measures effectively. They make deliberate efforts to encourage AML compliance through open communication and collaboration between the teams – internally and externally.

For employee engagement, the two critical aspects are the tone at the top, i.e., the effective leadership from senior management and their commitment towards compliance, and the second aspect is the recognition of the employee’s efforts and actions towards the AML program and self-motivation for safeguarding the business’ integrity. So, if the employees see that the management is investing their time and resources in adhering to the AML regulations and prioritizing the compliance functions over the business, they tend to follow that example to stay AML compliant and prevent any exploitation by financial crimes.

Given the appreciation of their contribution, the engaged employees invest their time in staying up to date with the regulatory amendments to ensure their efforts are in the right direction and aligned with regulations to avoid any non-compliance fines or reputational damages to the organization. Their knowledge and skills help the AML Principal Officer make informed decisions are AML compliance.

With employee engagement and contribution, the situation is favourable to both –

company, as the effectiveness of the AML program increases, the work environment adopts the compliance culture, better employee retention rate, and all the employees together work towards a common organizational goal,
the employees, as the job satisfaction and productivity of the employees are enhanced when employees feel engaged.

Contribution Of Engaged Employees Towards AML Compliance

The AML non-compliance calls for heavy penalties and loss of trust and confidence in the business. It tarnishes the organization’s reputation. The possibility of non-compliance can be minimized or even negated when all the company employees come together, understand their duties towards AML compliance and shield the organization’s integrity and diligently discharge their duties, taking complete ownership of the AML function.

With the knowledge and attention to detail, the engaged employees can contribute towards optimizing the existing AML policies and procedures implemented in the company. It is recommended that the AML Principal Officer seek employee feedback and input, promoting the sense of their efforts being valued. Not just policies, but rather the interviews with the employees and understanding their engagement with clients can help a lot in assessing the inherent risk of the business and evaluating the possible impact.

Further, with engaged employees, the process of Customer Due Diligence is smooth and accurate, ensuring the collection of complete identification details of the customers and evaluating the customer risk effectively. The employees know when the customer will be treated as high-risk and how to conduct Enhanced Due Diligence. Identifying and reporting suspicious transactions become easy and quick when the employees understand the AML compliance obligations and contribute towards the fight against financial crimes.

The engaged employees make the AML principal Officer’s task of imparting AML training simple and effective. Engaged employees understand their role towards AML compliance and attentively attend the AML training courses to stay alert towards ML/FT red flags and potential risk indicators while discharging their routine duties.

Employee engagement and contribution are essential for successfully implementing the AML policies, procedures, and controls to protect the business against financial crime vulnerabilities and non-compliance penalties and foster an AML compliance culture.

About the Author

Jyoti Maheshwari

CAMS, ACA

Jyoti has over 9+ years of hands-on experience in regulatory compliance, policymaking, risk management, technology consultancy, and implementation. She holds vast experience with Anti-Money Laundering rules and regulations and helps companies deploy adequate mitigation measures and comply with legal requirements. Jyoti has been instrumental in optimizing business processes, documenting business requirements, preparing FRD, BRD, and SRS, and implementing IT solutions.

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Article India

How do you do a Sanction Screening?

Customer Screening is a critical element in the AML compliance. According to the Cabinet Resolution, no 74 of 2020, financial institutions and Designated Non-Financial Businesses & Professions (DNFBPs) must conduct daily screening of their customers and match the names on the sanction lists- Local Terrorist List and the UNSC list. Companies should make themselves aware of the regular updates in the sanction lists and prevent the financing of terrorism.

The Cabinet Resolution, no 74 of 2020, applies to the Targeted Financial Sanctions (TFS). It refers to sanctions which are financial prohibitions- freezing funds or assets and preventing the customers from using them directly or indirectly.

There are guidelines provided that businesses can refer to while screening their customers, making the process highly efficient and gaining accurate results. Companies can quickly examine whether their customers are on the UN List or Local Terrorist List.

Guidelines for Sanctions Screening

Primary Requirement for TFS Screening 

As per the TFS guidelines, organisations obligated to conduct the screening must continuously monitor their customer databases to identify any possible match with names on the sanction list issued by the UN or in the UAE Local Terrorist List.

Companies under obligation include financial institutions and DNFBPs like accountants, auditors, lawyers and real estate agents. Other business persons include dealers of precious metals & precious stones. The trust & corporate service providers are also obliged to conduct the sanction screening.

When should the Initial Sanction Screening be conducted?

The companies have to conduct the initial screening before the customer onboarding process and/or carry out an occasional transaction. After that, they need to conduct screening daily. They need to update themselves on the changes in the sanctions list, which is regularly updated, so they need to check the website of the Executive Office or the UN website to go through the updated lists.

Which Databases should be checked for screening?

Companies under obligation should check different databases to conduct the TFS Screening:

Existing customer databases and names of parties to any transactions.
Potential customers.
UBOs.
Names of individuals or entities who are directly or indirectly related to them.
Customers before conducting any transactions or establishing a business relationship with any Person.
Individuals- Directors and/or agents acting on behalf of customers and persons authorised to act on behalf of the customers with a power of attorney.

Identifying a match to fulfil Targeted Financial Sanctions Requirements

Companies should conduct the screening process every day to determine any possible match to the names appearing on the Local Terrorist List or UN List. They can get the following information for screening purposes-

For Entities- information such as the Name or Names, Aliases, and Address of Registration and Address of branches.
For individuals, the screening information consists of the Date of birth, ID or passport information, and Last known address.

Potential Matches, Confirmed Matches & False Positives

During the screening process for the TFS, there might be a potential match to a name on the sanction list, a confirmed match, or a false positive. 

A potential match refers to a match between data in the Sanctions Lists with any name in the databases. However, it does not mean that the potential match is always subjected to Targeted Financial Screening.

A confirmed match is when a potential match has been confirmed to be the individual, group, or entity subject to TFS. Also, if there is suspicion that the potential match may match an individual, group, or entity subject to TFS, it is considered a confirmed match. The company has to immediately freeze the funds and share the information with the FIU via goAML Portal in such a case. The company must notify within five days from freezing the funds or attempts to do so.

If there is no matching result found in the sanctions list, then the company is free to conduct business as usual. Similarly, companies can enter into a business relationship with clients who were false positives.

AML Sanctions Screening Software

FIs and DNFBPS would be better off if they utilise AML Sanctions Screening Software. Such AML Software helps carry out screening, identifies PEPs and keeps the record of such screening. Further, it is updated regularly with the UAE local sanctions list and UNSC Sanctions list. It gets easy to comply with AML regulations as AML Software automatically screens the entire database of customers and suppliers on a daily basis.

About the Author

Pathik Shah

FCA, CAMS, CISA, CS, DISA (ICAI), FAFP (ICAI)

Pathik is a Chartered Accountant with more than 26 years of experience in governance, risk, and compliance. He helps companies with end-to-end AML compliance services, from conducting Enterprise- Wide Risk Assessments to implementing the robust AML Compliance framework. He has played a pivotal role as a functional expert in developing and implementing RegTech solutions for streamlined compliance.

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Article UAE

Role of FATF: The Financial Action Task Force

The global economy is rapidly growing by leaps and bounds, and so are the financial crimes. Money laundering is a worldwide concern as billions of dollars are laundered every year. The Financial Action Task Force (FATF), established in 1989, is an inter-governmental policy-making body that can be defined as the backbone of the fight against money laundering and terrorist financing.

The organisation makes policies – at the local and international levels to prevent money laundering and other financial crimes resulting from funding from illicit money.

The FATF has issued 40 recommendations to prevent money laundering and provided 9 special recommendations to prevent terrorist financing. Initially, the organisation was set up to combat money laundering, but recently, its scope has been widened to avoid funding weapons of mass destruction, corruption, and terrorist financing. A large number of developed countries are part of the FATF. 

This global organisation prevents financial crime and laundering of money to prevent financial terrorism. The objective of the FATF is to provide guidelines and ensure effective implementation of the legal, regulatory, and operational measures for containing money laundering, terrorist financing, and other financial threats that plague the society, the economy, and the world at large.

The organisation monitors the member countries’ progress and evaluates how effective they have been in implementing the anti-money laundering rules and regulations. It also reviews the anti-money laundering and terrorist financing mechanisms, tools, and countermeasures. It promotes global adoption of the AML/ CFT guidelines to enable countries to fight money laundering and terrorist financing. It also includes measures to prevent the financing of proliferation.

The FATF recommendations act as guidelines for member countries which they should have in their criminal justice and regulatory systems. These are preventative measures that financial institutions and other regulated entities should adopt to fight money laundering and terrorist financing. In this way, they also safeguard their reputation and avoid non-compliance and penalties. By following the recommendations, financial institutions and businesses can make their customer onboarding process more transparent and detect and deter criminals from misusing their organisation and the financial system to launder money obtained from fraudulent means.

The FATF provides recommendations on setting up relevant and competent authorities with specific functions and defines their powers and mechanism to cooperate with countries to fight against money laundering and terrorist financing. 

On Feb. 16, 2012, the FATF issued revised recommendations. The notable changes are mentioned as follows: 

The FATF lays emphasis on adopting a risk-based approach to implement the Anti-money laundering and combatting of terrorism financing. It will help the countries to employ a proactive approach to mitigate the risks. It has been fully enhanced within the Standards.
Get quick access to correct information on the beneficial ownership of the legal entities, and the arrangements for the same have been strengthened.
The Tax offences for money laundering have been made predicate offences (a crime which is a component of a more significant crime).
The powers and responsibilities of the FIU and law enforcement have increased. The coverage of international cooperation has been broadened.

The definition of PEP has been broadened. Now it includes PEPs- Politically Exposed Persons- domestic and international organisations.
The scope for financial group (or consolidated) supervision has been enhanced.
The transparency of wire transfers has been improved.
The FATF has added new standards for implementing targeted financial sanctions to prevent the accumulation of weapons of mass destruction.

Conclusion

 It is essential to follow the local AML rules and regulations and follow the recommendations provided by the FATF. Financial institutions need to be proactive in implementing the AML laws and protect their business from being misused by criminals. They can rely on professional AML consultants who offer a comprehensive range of AML compliance services.

About the Author

Pathik Shah

FCA, CAMS, CISA, CS, DISA (ICAI), FAFP (ICAI)

Pathik is a Chartered Accountant with more than 26 years of experience in governance, risk, and compliance. He helps companies with end-to-end AML compliance services, from conducting Enterprise- Wide Risk Assessments to implementing the robust AML Compliance framework. He has played a pivotal role as a functional expert in developing and implementing RegTech solutions for streamlined compliance.

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Article UAE

Money laundering and terrorism financing risks in Non-Profit Organisations (NPO)

Money Laundering and Terrorism Financing Risks in NPO

Non-Governmental organisations NGOs or NPOs- Non-Profit Organisations play a critical role in a crisis and contribute significantly to resolving issues and disputes. They provide humanitarian relief, sometimes even before the government can. But are they exposed to money laundering, and do they play a role in combatting money laundering and terrorist financing? Well, it’s a double-edged situation that they present. On the one hand, they help alleviate poverty and prevent situations from deteriorating, and on the other hand, they are prone to the risk of money laundering and financial terrorism.

Current Scenario Of Money Laundering and Terrorism Financing Risks in NPO

The FATF recommendation number 8 requires that countries review their laws and regulations to ensure that non-profit organisations are not misused for the financing of terrorism. The recommendation is directed toward eradicating terrorist funding in the non-profit sector. But the irony is that even after two decades, only 10 jurisdictions comply with the recommendations. This connection is inevitable and came to light after 9/ 11 when the role of a charitable organisation with terrorist organisations was unearthed. 

It is noteworthy that in the initial days, the FATF recommendations were not focused on non-profits. But after 9/ 11, the FATF extended its actions to the non-profits. The tricky part is to conduct financial surveillance without putting a question mark on the integrity of the charitable organisations.

Over-regulation has become a concern, so the FATF introduced a risk-based approach and adopted tactfulness to deal with money laundering cases. FATF has recommended that such measures should be taken that should not disrupt charitable activities and should not discourage legit philanthropic activities. 

These measures are applicable in scenarios in which government services do not reach, and non-profit organisations first reach the people to offer financial assistance.

So, they should not be unduly prevented from accessing resources so that they can carry out their legit charitable activities successfully.

The complexity lies in dealing with the charitable organisations and identifying the intention and ignorance of the non-profits. There might be organisations involved in the money laundering crime, and there are also some organisations that have been subject to exploitation without their knowledge.

There might be several reasons for this, such as depending on the goodwill of the donors, ignorance or oversight of the working of the concerned staff. The financial abuse might be the work of insiders for which increased governance and stringent financial control are required.

If there’s the involvement of the outsiders, it is best to depend on the authorities and share relevant and complete information so that they can take the appropriate and timely actions.

Charities can be based on cultural or religious beliefs, so some charities might receive huge donations in cash which might be a routine thing. But the authorities need to recognise the peculiarities. The non-profit sector is vulnerable, which is often considered a high risk as the terrorists can exploit that. 

Over-regulation to prevent the misuse of non-profits has become common, but it has led to a highly controlled environment for charities which they find hard to operate. They cannot access funds quickly and disperse them to provide humanitarian relief.

Such over-regulation has had adverse effects on the working of charities. So, the FATF accepted that de-risking without considering the level of risk associated with the customers and taking risk mitigation measures for customers within a particular sector can increase the risk. It will reduce the transparency required in the global financial system, and it will prevent the authorities from efficiently combatting money laundering and terrorist financing.

A risk-based approach helps thwart the challenges arising out of the vulnerabilities and the risk to which the non-profits are exposed. Charitable organisations need to focus on proper registration, sharing relevant information, and maintaining the correct records to help keep a tab on money laundering. They need to identify the beneficiaries and the sources of the distributed charitable funds.

Why are NPOs vulnerable to Money Laundering and Terrorist Financing?

Globalisation has made extreme changes in the way the NGOs were working, and it has brought them into the ambit of the terrorist organisation opening the doors for financial terrorism.

The charitable organisations work primarily on the strength of the volunteers, who are often not made to go through stringent identity verification checks. Moreover, the non-profits lack the technical expertise as they don’t have competent professionals to handle risk assessment and are not familiar with the legal framework. So, it becomes a vulnerable space that criminals can misuse easily. 

The public trust in the noble work of the NGOs often does not attract any scrutiny regularly. The criminals often try to hide their unlawful acts in the legitimate activities of non-profits.

Conclusion - Money Laundering and Terrorism Financing Risks in NPO

Targeted risk assessment requires better assimilation of information and identifying the processes that criminals use to launder money. So, there needs to be a thorough understanding between the authorities and the non-profits. The required knowledge and information should be shared, and both parties benefit from the actions taken.

It is noteworthy that in the fight against money laundering, the authorities can also include the public. A good example of such a collaboration is the public advice and awareness carried out in the UK and Denmark. It helps the citizens to donate to Syria safely.

Collaboration between the government and NGOs will continue to help fight money laundering. It creates a network of organisations, including micro-financial institutions, that can help fight against money laundering. The authorities can strengthen their fight against money laundering and terrorist financing with collaboration and cooperation. Mutual learning and coordinated fight can undoubtedly deter criminals from indulging in financial crime. 

About the Author

Pathik Shah

FCA, CAMS, CISA, CS, DISA (ICAI), FAFP (ICAI)

Pathik is a Chartered Accountant with more than 26 years of experience in governance, risk, and compliance. He helps companies with end-to-end AML compliance services, from conducting Enterprise- Wide Risk Assessments to implementing the robust AML Compliance framework. He has played a pivotal role as a functional expert in developing and implementing RegTech solutions for streamlined compliance.

Reach Out to Pathik

Article UAE