NAMLCFTC Releases Guidance on Combating the Use of Unlicensed Virtual Asset Service Providers

He National Committee against Money Laundering and Combating the Financing of Terrorism and the Financing of Illegal Organizations (NAMLCFTC), in collaboration with UAE supervisors, has published guidance on combating the use of unlicensed virtual asset service providers, which is prepared by the supervisory subcommittee.

The guide, which aims to educate licensed financial institutions (LFIs) and the general public sector about the risks associated with unlicensed virtual asset service providers, was issued pursuant to Federal Decree Law No.20 of 2018 on Anti-Money Laundering (AML). ) and Fight against the Financing of Terrorism (CFT) and Illegal Organizations. It aligns with the Financial Action Task Force (FATF) publication on updated guidance for a risk-based approach to virtual assets and virtual asset service providers.

The guidance provides reporting entities, including LFIs, Designated Non-Financial Companies and Professions (DNFBPs), and Authorized Virtual Asset Service Providers (VASPs), with a comprehensive roadmap to improve their governance and operational processes. It also highlights how to identify and address governance challenges and emerging risks, underlining the importance of compliance with regulatory obligations under AML legislation and the regulations, instructions, guidelines, notices and rules issued by Supervisory Authorities.

The guidance directs reporting entities to consult the FATF Report on Money Laundering and Terrorist Financing Warning Indicators with Respect to Virtual Assets. It specifically requires them to remain vigilant about the various fraudulent methods adopted by unlicensed VASPs; continue to effectively manage money laundering, terrorist financing and proliferation financing risks; ensure that emerging risks are taken into account in your business and customer risk assessments; and ensure that due diligence is carried out to identify cases of falsified documents and sanctions evasion.

Supervisors remind the sector that VASPs operating in the UAE without a valid license will be subject to civil and criminal sanctions, including, but not limited to, financial sanctions against the entity, owners and senior management. Additionally, reporting entities that demonstrate willful blindness in their dealings with unlicensed VASPs and that have weak AML/CFT and counter-proliferation financing controls may be subject to enforcement action.

Khaled Mohamed Balama, governor of CBUAE and president of NAMLCFTCsaying,

“The new guidance to combat the use of unlicensed virtual asset service providers comes at a time when virtual assets become more accessible through digital channels. As our digital economy matures, our work to combat all types of financial crimes is intensified by raising awareness about its risks and emphasizing the importance of compliance with relevant regulations and laws to ensure the integrity of the UAE financial system.”

News source: Emirates News Agency