UAE Central Bank Brings New Digital Assets AML Rules for Banks

Licensed financial institutions (LFIs) in the United Arab Emirates (UAE) need to comply with the new anti-money laundering (AML) obligations. Following the AML rules expected to come into effect by the end of June 2023, financial institutions require verification from all their customers.

The Central Bank of the United Arab Emirates (CBUAE) issued certain guidelines on Wednesday, May 31. The LFIs explained the risks involved in virtual assets, and also the service providers related to them. This way, the institutions were told the rules and asked to follow them when dealing with cryptocurrencies.

While curating the Anti-Money Laundering and combating the Financing of Terrorism rules, the Central Bank took the global standards of the Financial Action Task Force into consideration.

LFIs will need to file with the central bank a non-objection request before opening any account for each virtual asset service provider (VASP). The guideline noted that any VASP who would not be holding a national license from the bank would be prohibited.

Along with the customers’ general verification process, LFIs will also need to get information on the nature of the business their customers are involved in. This is intended to assist in the profile creation of the customer. Their transaction types and volumes are the factors to be considered.

Primarily, the LFIs are the entities involved in non-crypto activities, although they are also engaged in establishing a relationship with VASPs which includes banks, exchange firms, payment service providers, finance and insurance companies, etc.

The LFIs are responsible for overseeing the volumes of crypto transactions made by individual and non-institutional customers, primarily if the transactions have links with the VASPs.

Countries Keen Towards Digital Assets

TheCoinRepublic reported earlier that the representatives from the UAE and Hong Kong Central Banks attended a bilateral meeting. The meeting organized in Abu Dhabi on Monday, May 29, had an agenda to work towards enhancing the partnership between the financial services of both countries.

Both countries are working on individual levels to leverage the growth of the burgeoning asset class and cutting-edge blockchain technology.

The UAE aspires to position itself as a crypto and digital innovation hub. CBUAE reportedly announced that they plan to introduce their own central bank digital currency (CBDC) in the month of February. The bank launched the Financial Infrastructure Transformation (FIT) program under the country’s National Digital Economy Strategy and “We the UAE 2031” vision.

Hong Kong, on the other hand, also aspires to set an environment suitable for the growth of crypto, and its crypto companies. Along with the decisions to help crypto firms to settle in the region and expand their businesses, it also looks for the operations to function under proper regulations. The unlicensed entities, for instance, were said to operate until June 1 to promote licensing with the Securities and Futures Commission (SFC), according to Hong Kong’s financial authority.