ICAEW: Risk-Based Approach Is Key To Mitigating Money Laundering In UAE

The UAE’s Sub-Committee for Public Private Partnerships to Combat Money Laundering & Terrorist Financing, in association with the ICAEW (the Institute of Chartered Accountants in England and Wales), the UAE Ministry of Economy, and the Accountants & Auditors Association (AAA); convened a panel discussion on 27 September, to discuss the role that chartered accountants must play in managing and mitigating the risk of money laundering.

As the UAE seeks to strengthen the integrity of its financial system, the four organisations joined forces to guide organisations on how they should comply with their obligations in respect of combating money laundering, terrorist financing, as well as adhering to financial crime legislation.

As the UAE is a major international hub for finance and trade, economic crime risk is high and threatens the security and the prosperity of the nation. In response, the UAE has taken significant steps to mitigate economic crime risk, including engaging with the private sector and highlighting their important role in this regard. The panel of experts urged professional accountants and auditors to uphold their responsibility to act in the public interest and be the first line of defence in identifying and responding to financial crime by putting in place comprehensive risk assessments. The panellists included:

• Mohamed Jawad Shalo, Chairman of the UAE’s Sub-Committee for Public Private Partnerships to Combat Money Laundering & Terrorist Financing and Director of National Policies and Risks at the UAE Executive Office of Anti-Money Laundering and Counter Terrorism Financing (AML/CTF).
• Mohammed Janahi, Head of AML Supervision Section, AML Department, UAE Ministry of Economy
• Amna Almhari, Director General, UAE Accountants and Auditors Association
• Sophie Wales, Director of Trust and Ethics, ICAEW
• Michael Armstrong, Regional Director, Middle East, Africa and South Asia, ICAEW
• Punit Jain, Senior Manager Financial Crime Compliance, PwC Middle East

To properly understand which customers and services are high, medium and low risk, the speakers advised companies to set up a firm-wide risk assessment methodology that considers potential misuse of their products or services, the customer base and their locations, supply chain and delivery routes. Businesses should also have a system in place for alerting authorities of any suspicious activity.

The speakers agreed that AML client risk assessments must be reviewed on a case-by-case basis, and cautioned companies not to rely on uniform approaches since the level of customer due diligence necessary will vary depending on the risk they present (i.e.: higher risk customers are subject to enhanced due diligence and lower risk customers undergo simplified due diligence).

Making a suspicious activity report (SAR) to the UAE Financial Intelligence Unit (FIU) – an SAR is information that alerts authorities of potential money laundering or terrorist financing – will also ensure firms meet their AML legal obligations.

Mohamed Jawad Shalo, Chairman of the UAE’s Sub-Committee for Public Private Partnerships to Combat Money Laundering & Terrorist Financing, said: “We urge the wider private sector, particularly real estate brokers/agents, dealers of precious metals/stones, and trusts/corporate services providers; to form sector-specific associations such as the Accountants & Auditors Association. Such associations ensure that a particular sector’s interests are well represented and heard in forums such as the recently established Sub-Committee for Public Private Partnerships to Combat Money Laundering & Terrorist Financing”.

Safeya Al Safi, Director of the Anti-Money Laundering Department, UAE Ministry of Economy, said: “The UAE maintains a strong AML system in an effort to protect against the possibility of money laundering and terrorist financing in the country. We encourage our supervised firms and the general public to report actual or potential breaches of the Money Laundering Regulations and will continue to raise awareness of the importance of adhering to financial crime legislation.”

Sophie Wales, Director of Trust and Ethics, ICAEW, said: “As the global business landscape grows more connected and complex, money laundering and wider economic crime are taking increasingly diverse forms. We are encouraged to see the steps the UAE is taking to combat money laundering, but it remains a significant risk to organisations in the country.

“Criminals are attracted to the accountancy sector as a way of giving legitimacy to businesses that are fronts for money laundering. As chartered accountants, we have a responsibility to act in the public interest and we must ensure the integrity of the accountancy sector is not compromised by enabling business activity that facilitates money laundering.”

Amna AlMahri, General Director, UAE AAA, said: “The digitalisation of the financial sector continues to bring with it new money laundering threats. To remain ahead of these threats, accountants must perform thorough due diligence by continuously assessing risks, keeping appropriate records, meeting regulatory obligations, ensuring compliance and reporting suspicious activities both internally and externally. In this regard, we will continue to interact with accounting professionals through our conferences, workshops and events to better understand their needs and seek guidance from UAE Ministry of Economy on best AML practices.”

The webinar was attended by UAE based auditors and accountants, ICAEW members, and senior business representatives from major global and regional financial organisations.