UAE lays out updated AML policy in compliance with FATF Travel Rule

The Abu Dhabi Global Market’s (ADGM) financial regulator has announced an update to its anti-money laundering (AML) rulebook to crack down on terrorism financing and other shady financial activity.

The ADGM’s Financial Services Regulatory Authority (FSRA) disclosed key amendments to the Anti-Money Laundering and Sanctions Rules and Guidance, reflecting the changes introduced by the United Arab Emirates in 2023 following previous criticisms of its AML rules by global financial watchdogs.

The FSRA says the updates are an attempt by the ADGM to achieve compliance with the rest of the UAE and will apply to digital asset service providers, banks, and designated non-financial businesses and professions as listed in the rulebook.

The new rules confirm that the Financial Action Task Force’s (FATF) Travel Rule affects
digital currencies. Under the latest updates, users of digital asset service providers, including exchanges and over-the-counter (OTC) traders, must share information for transactions exceeding $1,000.

Other tweaks to the FRSA’s 97-page rulebook include changes to the definition of digital assets, including the asset class as a payment alternative. The revisions go on to make amendments to the provisions relating to wire transfers, bringing them well within the purview of the Travel Rule, with the bulk of the updates being “minor drafting changes.”

The UAE’s new AML rules came to light in November, mandating financial institutions to ramp up their monitoring of suspicious transactions while stifling the activities of unregistered digital currency firms.

“Furthermore, reporting entities that demonstrate wilful blindness in their dealing with unlicensed VASPs and have weak AML/CFT and Counter Proliferation Financing controls may be subject to enforcement action,” read the UAE’s new guidelines in November.

Leaving the FATF’s Grey List

Pundits have described the UAE’s latest steps as a valiant attempt to exit the FATF’s grey list. The steps appear to yield substantial benefits following a recent statement by the FATF’s officials that the new measures are bringing the oil-rich nation closer to full compliance.

Experts are pointing to the second quarter of 2024 for the UAE’s removal from the grey list, following its streak of legal reforms and neutral stance in the Russian-Ukraine conflict. Following the exit of Panama by the Paris-based FATF, Barbados, Uganda, and Gibraltar are all angling to be removed from the grey list in the next batch of reviews.

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