Risks & Policies

NATIONAL RISK ASSESMENT

What is The National Risk Assessment (NRA)

The National Risk Assessment (NRA) identifies the primary concern for ML/TF/PF risks that countries face. The NRA is a comprehensive process to help a country identify, assess, and understand the risks that arise from vulnerabilities that facilitate ML/TF/PF. It assists in the prioritization and efficient allocation of resources by authorities.

Currently:

For the second time, the UAE conducts a national risk assessment using the methodology of the World Bank Group (WBG). It is a self-assessment that uses WBG methodology consisting of a risk assessment tool and a systematic and multidisciplinary process, with the broad participation of public and private sector stakeholders. This way, the UAE will continue to build capacity for the longer term and enhance our process to regularly updating the understanding of the country’s risk.

Central to the WBG methodology is the risk assessment tool. The tool comprises several modules, which focus on money laundering/ terrorist financing threats and vulnerabilities. Threat assessment focuses on the scale and characteristics of the proceeds of crime or financing of terrorism in the UAE, and vulnerability assessment focuses on weaknesses or gaps. Threats or vulnerabilities may exist at national or sectoral level.

The tool enables the UAE to assess and understand the ML/TF risks at national level and sectoral level and to develop actions to mitigate these risks. At the end of the assessment all the sectors are located on a risk map that constitutes the broad framework for the design of risk-based approach.

Finally, the risk assessment is organized, led and owned by the UAE through establishing working groups. The working groups include representatives of all authorities concerned with combating money laundering and terrorist financing (the UAE FIU, the UAE Central Bank and other supervisory authorities, prosecutors, law enforcement agencies, tax and customs authorities, plus other relevant authorities) as well as the private sector. Together these entities contribute to building a complete picture of national ML/TF risks and assist the assessment process as either sources of information or by having representatives participating directly in some aspects of the process.

Will Result in:

Adopting a new AML/CFT National Strategy and policies will enable UAE to demonstrate commitment to the international AML/CFT standards and also provide a clear roadmap of how the national system will develop and deliver effective outcomes. The strategy will specify strategic goals in thematic areas, including; policy, coordination and cooperation; prevention, detection and reporting; detection, disruption, prosecution and sanction, confiscation.

Each strategic goal will have a series of action measures identified and designed to deliver effective outcomes, particularly in the areas of high risk. The action measures will be further elaborated in an accompanying Action Plan, which will include responsible departments, timescales and resource considerations.

LPA RA

Brief:

The risk assessment of Legal Persons & Legal Arrangements aims to identify the extent and level of exploitation of these entities in ML/TF operations at the national level. The assessment is designed to determine the understanding of relevant entities of the level of risk resulting from misuse, the types of entities most vulnerable to this exploitation, as well as the activities and channels that have been exploited, and the registration authorities most susceptible to this risk.

Most important recommendations:

• Enhancing Understanding in the Public Sector: Continuously enhancing understanding of Legal Persons and their misuse mechanisms, particularly focusing on crimes perpetrated by professional third parties, trade-based money laundering, foreign and domestic tax evasion, foreign crimes, cash smuggling, drug trafficking, and sanctions evasion.
• Preserving necessary statistics and data by law enforcement agencies and the financial intelligence unit regarding Legal Persons and conducting investigations according to a risk-based approach.
• Sharing red flags by the financial intelligence unit with law enforcement agencies, registrars, and the private sector regarding complex issues related to money laundering and terrorist financing operations.
• Enhancing sources of verified information by law enforcement agencies through data requests from Gate Keepers such as lawyers, legal advisors, accountants, and registration service providers to verify the data of the ultimate beneficial owner

VA & VASP RA

Brief:

The FATF standards require countries to identify, assess, understand and mitigate their risks associated with virtual asset financial activities and providers, license or register providers and subject them to supervision or monitoring by competent national authorities. UAE conducted the very first virtual assets risk assessment in consideration with the recently released FATF Interpretive Note on Recommendation 15. As a result of the risk assessment, a national framework for regulating virtual assets and distributing supervisory powers among regulatory authorities has been developed. VASPs are now subject to the same relevant AML/CTF measures that apply to financial institutions and DNFBPs in the UAE.

Most important recommendations:

• Effectively and Consistently Identify, Investigate, and Prosecute Unlicensed VASP Activity Throughout the UAE.
• Increase Understanding of VA/VASP Risks Among Public Authorities and the Private Sector.
• Increase Investigations and Prosecutions of ML Involving Virtual Assets.
• Improve Understanding of and Response to Potential TF Threats Involving VA/VASPs.
• Establish an Appropriate VASP Regulatory and Licensing Regime, and Clearly Delineate Regulatory Boundaries for VA/VASPs in the Mainland.

NATIONAL OUTREACH

Outreach and engagement based on the identified risks are an essential element of the UAE’s AML/CFT regime to enhancing effectiveness and understanding of risk, as this allows to allocate resources to detect or disrupt ML/TF/PF.

In October 2022, the Executive Office of AML/CTF hosted a two-day workshop attended by over 230 representatives from the public and private sector. A wide range of public sector agencies attended the workshop including the Ministry of Interior, Ministry of Justice, Customs, Federal Authority for Nuclear Regulation, the FIU, Dubai Police, Ministry of Economy, Federal Tax Authority, and all UAE registrars. The workshop focused on the abuse of legal persons and arrangements for ML/TF purposes and ways that legal persons and arrangements can and have been misused for illicit purposes, including money laundering, terrorism financing and proliferation financing. As part of expanded outreach to a wider range of public sector stakeholders, such as law enforcement, the Executive Office of AML/CTF held two workshops in collaboration with Abu Dhabi and Dubai Police forces General Command in November 2022 to discuss the outcomes and findings of the Legal Persons and Arrangements Risk Assessment and examine in detail the case studies presented by Abu Dhabi Police and Public Prosecution authorities demonstrating the patterns of misuse of legal persons in the emirate of Abu Dhabi.