The UAE Central Bank has issued the latest guidelines to prevent money laundering and terrorist financing with virtual assets such as cryptocurrencies and non-fungible tokens (NFTs). The guidelines provide instructions for licensed financial institutions (LFIs) on due diligence processes when dealing with virtual asset clients and counterparties.

New Guidelines Aim to Combat Financial Crime and Ensure Stability

The updated rules, which take into account the FATF criteria, are intended to strengthen the Central Bank’s supervisory and regulatory structures. Within a month, they will be binding on a variety of financial institutions. It includes banks, finance firms, payment service providers, insurance agencies, and brokers.

The UAE was placed on the FATF’s “grey list” for increased monitoring in March 2022. Since then, the UAE has stated its intention to work closely with the FATF to implement reforms. The new guidelines are part of the UAE’s efforts to de-risk the financial system. The Central Bank is assisting with training programs, a governance structure, and record-keeping procedures.

In addition, central bank governor Khaled Balama emphasized the guidelines’ importance in strengthening the country’s ability to combat financial crime. The goal is to protect and stabilize the financial and monetary system, as well as to raise awareness among licensed financial institutions about financial crime prevention.

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Through stringent legislation and rule enforcement, the UAE has been actively working to combat financial crime, money laundering, and terrorism funding. Fines totalling over Dh115 million were imposed on 76 entities in the first quarter of 2023 alone, with the value of confiscated assets exceeding Dh925 million between November 2022 and February 2023.

UAE Director General Stresses Commitment to AML/CFT Measures

Hamid Al Zaabi, the Director General for AML/CFT, emphasized the UAE’s status as a major international centre for commerce and investment. The federal government is collaborating closely with authorities and the business sector to ensure that all companies implement effective anti-money laundering and counter-terrorism financing procedures.

In January, the Central Bank announced updated rules for LFIs, emphasizing the use of digital identity systems to fulfil their client due diligence responsibilities. Moreover, the new guidelines build on these measures and strengthen the UAE’s efforts to combat financial crimes involving virtual assets.