The guidance, which came into effect immediately, requires LEH to demonstrate compliance with its requirements within one month.
The new regulation for LEH is subsequent to recent guidance issued by the CBUAE on transaction monitoring and sanctions screening for its licensed financial institutions (LFIs).
The latest regulation will assist LEH’s understanding of risks and effective implementation of their statutory AML/CFT obligations, and takes Financial Action Task Force (FATF) standards into account, the CBUAE said in a statement.
“The CBUAE takes its regulatory and supervisory duties extremely seriously. We want to ensure that all licensed exchange houses in the UAE understand their AML/CFT responsibilities, have adequate programmes to identify and mitigate AML/CFT risks in their operations, and comply fully with their statutory obligations,” said Governor of the CBUAE Khaled Mohamed Balama.
As per the guidelines, LEH must maintain an effective AML/CFT programme designed to prevent misuse of their business to facilitate money laundering or terrorist financing.
The Apex bank said LEH must take a risk-based AML/CFT approach by conducting “a regular risk assessment process that covers all commensurate risks to their exchange business, including customer, products and services, delivery channel, new technologies, geographic, counterparty and illicit finance risks.”
The regulator said the risk assessment findings should inform the programme’s comprehensive policies, procedures, internal controls and employee training to mitigate risks effectively.
The exchange houses sector is weighted as highly important in terms of risk and materiality in the UAE, which is increased notably by their exposure to cash and cross-border transactions.
Other essential components of the AML/CFT programme include dedicated compliance function, strong customer due diligence, continuous transaction monitoring and full compliance with the UAE’s requirements on “Targeted Financial Sanctions” and “Suspicious Transaction Reporting.”
Source: Khaleej Times.