Central Bank of UAE Issues AML guidance for Cryptocurrencies
In the latest development, the UAE Central Bank issued a fresh guidance for anti-money laundering (AML) and counter-terrorism financing while dealing with virtual assets, non-fungible tokens (NFTs), and cryptocurrencies.
The new guideline, which will be effective a month from now will be applicable to all licensed financial institutions such as finance companies, banks, payment service providers, exchange houses, insurance companies, registered hawala providers, agents and brokers.
The guidance issued by the UAE central bank discusses the risks linked to virtual assets as well as virtual assets services providers (VASPs). It also signifies the effective implementation of legal obligations for licensed financial firms. Additionally, the guidance also provides a clear definition of virtual assets, VASPs, and other business models.
The guideline from the UAE Central Bank also outlines due diligence procedures which the financial institutions need to follow while dealing with the customers of virtual assets service providers (VASPs). Additionally, they have also highlighted proper channels and mechanisms using which the financial institutions can interact with virtual asset service providers.
His Excellency Khaled Mohamed Balama, Governor of the CBUAE, said: “The new guidance related to the virtual assets sector contribute to strengthening the supervisory and regulatory frameworks of the Central Bank to combat money laundering and the financing of terrorism. “We are constantly working to enhance efforts and strengthen the awareness of licensed financial institutions to prevent all kinds of financial crime activities, and reduce potential risks to protect the financial and monetary system and maintain its soundness and stability, in line with the Financial Action Task Force standards”.
The development comes at a time when central banks across the world have been working have been working with the country’s financial regulators to frame proper rules and guidance for digital assets.
The UAE is one of those crypto-friendly nations having a progressive approach towards digital assets. Dubai, which is one of the seven emirates, has also established a dedicated regulator who’s overseeing the virtual assets industry.
Last month in April 2023, Abu Dhabi-based federal agency, the Securities and Commodities Authority, started accepting license applications for cryptocurrency services.
The UAE Central Bank emphasized that the recently issued guidelines align with the standards set by the Financial Action Task Force (FATF). In March of the previous year, the FATF included the UAE in its 'grey' list, leading to heightened scrutiny of the jurisdiction. The UAE responded by expressing its commitment to collaborate with the FATF in addressing the identified concerns.