AML regulations for digital assets to be implemented in UAE

Licenced financial organisations must check customer IDs.

LFIs must verify client identification under new CBUAE guidelines. By June, the upgrade will take effect.

The CBUAE advised LFIs on risks “related to virtual assets and virtual assets service providers” on May 31. UAE financial institutions that use crypto must follow new anti-money laundering and terrorism financing laws in a 44-page document. It follows FATF specifications.

Banks, finance businesses, exchange houses, payment service providers, licenced hawala providers, and insurance companies are considered LFIs by the central bank.

LFIs must ask the central bank for permission to create accounts for each VASP, per the guidelines. VASPs without national licences cannot collaborate.

LFIs must also “understand the nature of the customer’s business” before developing a connection. This phase advises developing a client profile with predicted transaction kinds and volumes.

LFIs must additionally track non-institutional, individual clients’ crypto transactions with VASPs from “high-risk jurisdictions.” For instance, one could only transfer virtual assets to his own account outside the UAE-licensed VASP network.

The Hong Kong Monetary Authority and CBUAE met to discuss virtual asset laws. The two central banks also promised to assist “joint fintech development initiatives and knowledge-sharing efforts” with each region’s innovation centres.

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