In Dubai, weak regulation, poor enforcement, and relatively high levels of secrecy and anonymity create a welcoming environment for global kleptocrats, money launderers, and other illicit entrepreneurs seeking to hide ill-gotten earnings. With global pressure for stricter enforcement on the rise, UAE authorities recently introduced new laws and regulations on beneficial ownership and customer due diligence disclosure. The effectiveness of these measures will depend on the strength of enforcement, especially in the UAE’s free trade zones where—as described in Chapter 3—the extent and effectiveness of enforcement varies widely from one zone to the next.
In 2020, amid numerous public disclosures of misuse of the global financial system by criminal syndicates, terrorism financiers, kleptocrats, and other illicit actors, the intergovernmental Financial Action Task Force (FATF) delivered the results of the UAE’s second mutual evaluation conducted in 2019. Public pressure for states to align their anti–money laundering, financial transparency, and tax policies with international norms is currently at an apex. Transparency advocates have long called for the public disclosure of ultimate beneficial owners, as well as rigorous policing of corporate ownership vehicles such as shell corporations, trusts, and nominee companies. In 2018, partly in anticipation of the FATF evaluation, UAE authorities introduced a new anti–money laundering and counterterrorism finance (AML/CTF) law that aims to expand and strengthen beneficial ownership and customer due diligence requirements, including by aligning some of its existing standards with FATF standards.1 According to the FATF’s findings, however, major or fundamental improvements are still required in ten of the eleven areas it assessed. Nevertheless, the task force acknowledged the UAE’s 2018 legal reforms and that insufficient time has passed for their full implementation and thus put the UAE under a year-long observation.2 At the year’s end, should the FATF deem the UAE’s progress “insufficient to address its strategic deficiencies,” it will develop an action plan to address the deficiencies and consider requiring enhanced due diligence for financial transactions with the UAE or even eventual blacklisting.3
Some of the newly created compliance and enforcement measures now apply to both financial institutions—the more traditional targets for anti–money laundering and counterterrorism finance scrutiny—and nonfinancial service providers, such as lawyers, real estate brokers, and precious metal dealers. This is because various monitoring bodies—including the Middle East and North Africa Financial Action Task Force, which coordinates anti–money laundering and counterterrorism finance efforts regionally—have formally identified these providers as designated nonfinancial businesses and professions (DNFBPs) and recognized them as potential gateways for illicit financial flows.4 In 2008, FATF evaluators had found that DNFBPs in the UAE were at a heightened risk of money laundering and terrorism finance due to the heavy use of cash transactions, the increase in foreign investment, and the overall allure of the country’s luxury markets.5
While it is unclear how much illicit finance transited through Dubai’s real estate market in the pre-2018 period, the 2019 FATF evaluation found it was too early to accurately measure the impact of the UAE’s 2018 AML/CTF law on beneficial ownership declarations in real estate and on DNFBPs throughout the country more generally. It will take yet more time to assess whether the new law has had a broader deterrent effect on illicit financial flows. While beneficial ownership disclosures are not a panacea for disrupting illicit flows through DNFBPs, they do lower the existing discovery barrier and raise the risk of public disclosure and noncompliance penalties. These deterrent effects may be further enhanced by making beneficial registries fully transparent and publicly accessible—something not addressed by the UAE’s 2018 law.
The Allure of International Trade and Finance Hubs
Since the universe of global illicit actors is vast, diverse, and increasingly dispersed, global kleptocrats, terrorism financiers, and weapons proliferators often operate across borders and in concert with other criminal groups, high-end money launderers, and other financial facilitators. This illicit ecosystem generates millions in black and gray revenues—earnings that must be laundered before they can enter the licit financial system. As a result, many of these criminal actors gravitate to international trade and financial hubs, where weak financial regulation, low transparency standards, and stable investment vehicles (from luxury real estate to precious metals) create attractive opportunities.
Illicit actors’ attraction to the world’s foremost financial and commercial trade centers is age-old. As demonstrated by the 2015 Panama Papers, illicit actors often flock to tax and financial havens to operate beyond the scrutiny of enforcement agencies.6 And in the five years since the Panama Papers’ release, public disclosures on illicit schemes and activities have erupted into the public consciousness. Other investigative organizations, such as Transparency International, the International Consortium of Investigative Journalists, and the Organized Crime and Corruption Reporting Project, have documented similar illicit capital flows to other metropolitan capitals and financial hubs, including Hong Kong, London, New York, Singapore, Toronto, and Vancouver.7
The most vulnerable jurisdictions offer vibrant banking systems, generous tax incentives, low commercial trade barriers, and accommodations and inducements designed to attract foreign investments.
While locations and jurisdictions have varied, each new report highlights a set of characteristics and vulnerabilities that make some financial and commercial capitals more susceptible to criminal and illicit infiltration than others.8 The most vulnerable jurisdictions offer vibrant banking systems, generous tax incentives, low commercial trade barriers, and accommodations and inducements designed to attract foreign investments. Such jurisdictions are also plagued by low transparency standards that allow foreign investors to purchase or hold real property, establish trading companies, and conduct business and financial transactions without declaring the origin of their finances and/or the beneficial owners of their investments. These benefits also facilitate the use of anonymous ownership vehicles—shell corporations and shelf companies, trusts, nominee companies, and service providers—all of which can hide illicit investments from regulators, enforcement agencies, and the general public.
Illicit Investments Through Nontraditional Financial Sectors
Public attention on illicit financial flows has historically targeted the misconduct of financial sector entities, including banks, money exchange companies, and financial service companies. As a result, these entities have been subject to the greatest amount of scrutiny by government regulators and transparency advocates, while the equally important activities of nonfinancial businesses and professions have flown largely under the radar.
As the timeline in Table 6 demonstrates, though the UAE began to open up its markets in the 1970s, its compliance with AML/CTF standards lagged. In the UAE’s 2008 mutual evaluation, FATF assessors found that domestic authorities lacked specific anti–money laundering requirements for each type of nonfinancial business and profession.9 Evaluators also found that many of these providers were unaware of the requirements, while others were not captured by the current AML/CTF law.10 This mismatch in expectations and requirements, as well as the UAE’s overlapping jurisdictional arrangements, complicated any enforcement efforts.11 The FATF highlighted many of these same shortcomings in its 2020 evaluation. For instance, outside of free trade zones, the FATF noted that there was “very limited activity” for supervision beyond some initial registration of DNFBP entities, and the UAE was not due to have its supervisory regime in place before 2021. Its evaluation also noted a lack of basic knowledge of beneficial ownership registration and other obligations to combat money laundering and terrorism financing and that the UAE’s various competing corporate registries led to confusion and “regulatory arbitrage.”12
In 2012, the FATF formally classified these types of providers as DNFBPs and recognized the particular risks they pose. The task force added new recommendations to its 2012 plenary report, which was last updated in June 2019.13 Thus, since 2012, the task force has applied the same AML/CTF requirements to both financial sector entities and DNFBPs.14
|Table 6. Timeline of Dubai’s Anti–Money Laundering and Counterterrorism Finance Laws and Regulations|
|1971||The UAE is formed after the emirates receive independence from Great Britain; by convention, the ruler of Dubai holds the position of vice president and prime minister of the UAE.|
|1975||Dubai allows offshore banking, but significant banking does not take off there until the 1990s.|
|1979||Dubai sets up its first free zone, the Jebel Ali free trade zone.|
|1991||Dubai’s oil production peaks, forcing Dubai to focus on alternative economic sectors, including banking.|
|2002||In response to international pressure following the role of UAE territory in financing the September 11, 2001, terrorist attacks, UAE passes its first federal AML/CTF law.|
|2002||Dubai opens its real estate market to foreign ownership.|
|2004||The Dubai International Financial Center financial free zone opens.|
|2004||The UAE places all free trade zones subject to the 2002 AML/CTF legislation.|
|2008||The global financial crisis bursts bubbles in the finance, trade, tourism, and real estate sectors; in return for substantial financial bailouts, Abu Dhabi gains significant influence over Dubai affairs.|
|2008||The first FATF mutual evaluation on the UAE finds significant shortcomings in UAE’s AML/CTF standards, especially related to DNFBPs.|
|2010||The UAE’s Central Bank signs an agreement with the Dubai Multi Commodities Centre requiring the free trade zone to share information on financial transactions suspected of links to money laundering for the purposes of terrorism financing.|
|2011||The United States threatens to cut UAE-based firms from the U.S. financial system due to sanctions busting associated with Iran; the UAE begins to crack down on Iran-related transactions.|
|2012||The FATF formally classifies DNFBPs as AML/CTF risks and applies the same financial standards to financial and nonfinancial entities.|
|2014||The UAE passes a new AML/CTF law that introduces the first beneficial ownership requirements, strengthens business records requirements, and requires financial institutions to confirm the source of wealth for politically exposed persons.|
|2018||The UAE introduces a new AML/CTF law to expand and strengthen beneficial ownership and customer due diligence requirements more in line with FATF standards; it is the first time the term DNFBP officially appears in UAE law and broadens what types of nonfinancial entities fall under AML/CTF regulations.|
|2018||The DIFC introduces its own, more stringent, beneficial ownership standards than those of other free zones or businesses outside those zones.|
|2019||The UAE issues a decree to implement the 2018 UAE AML/CTF law; it adds specific requirements for DNFBPs on handling politically exposed persons, suspicious activity reports, and high-risk countries, as well as supervising foreign branches and subsidiaries and keeping better records. It also adds the regulation of corporate service providers and trusts to the UAE standards passed in 2014.|
|2019||The FATF updates its AML/CTF recommendations.|
|2019||The second FATF mutual evaluation on the UAE commences.|
|2020||Results of the second FATF mutual evaluation on the UAE made public; the FATF stated that improvements in ten of the eleven areas they evaluated are still insufficient and thus put the UAE under a one-year observation.|
Dubai’s Risky DNFBP Sector
DNFBPs in the UAE currently include real estate agents and brokers, precious metals traders, company service providers, trust services providers, lawyers, notaries, and other independent professionals that support the purchase and sale of real estate and commercial entities, among other services.15 These DNFBPs operate both inside and outside of commercial free trade zones. Though UAE authorities failed to provide the exact breakdown of where DNFBPs operate at the time of the 2008 FATF evaluation, the 2020 report documented a total of 28,144 DNFBPs. The bulk of these—20,485—operated outside of free zones, while 181 were registered in financial free zones. The remainder did business in one of the UAE’s other free zones.16 Because the total number of commercial free zones has grown from twenty-three in 2013 to twenty-nine in 2019, it is likely that the number of DNFBPs in Dubai has also increased.17 This expansion complicates an already-fraught enforcement environment, whereby the extent and effectiveness of enforcement varies from one free zone to the next.
In 2008, FATF evaluators identified the variation in enforcement as a substantial money laundering and terrorism finance vulnerability.18 Their evaluation found that while national anti–money laundering and counterterrorism finance laws applied universally to all businesses—whether inside or outside of free trade zones—enforcement fell to each zone’s independent regulators rather than the national bodies that administer traditional financial institutions. This split in supervisory authority created a mismatch in the level of enforcement found inside the free trade zones versus outside the zones.19
For example, in 2008, outside the free trade zones, most traditional financial institutions were being regulated by the Central Bank.20 However, inside the Dubai International Finance Centre (DIFC), these traditional financial institutions were being regulated by the Dubai Financial Services Authority, the independent regulatory authority of that free zone.21 This allowed firms to be able to select a regulatory environment, rather than falling under universal regulation and enforcement.
The DIFC, which has its own regulatory and judicial system based on an English common law framework (including laws and regulations written in English), abides more closely to international standards than many areas outside of the DIFC. DNFBPs outside the DIFC were, at the time, only subject to the UAE’s 2002 AML/CTF law, which fell short of existing FATF recommendations on beneficial ownership requirements and enforcement measures. 22 These businesses were therefore operating under a lower compliance threshold than those inside the DIFC, thereby heightening the risk of money laundering and terrorism finance.23 While this mismatch was reportedly addressed by the 2018 AML/CTF law, DNFBPs in the intervening period were potentially vulnerable to illicit financial infiltration.24 The 2008 and 2020 FATF evaluations cited the heavy use of cash in the UAE generally—and in the DNFBP sector specifically—as a money laundering and terrorism finance risk.25
While supervision within free zones—such as the DIFC [Dubai International Finance Centre] financial free zone—seems to have improved, oversight outside of those zones has been minimal at best.
Unfortunately, the 2020 evaluation cited similar problems. While supervision within free zones—such as the DIFC financial free zone—seems to have improved, oversight outside of those zones has been minimal at best. As the report noted, though checks completed by financial institutions are “comprehensive,” for DNFBPs, “outside of the [financial free zones] and [commercial free zones] these controls are not particularly comprehensive or not yet fully in place, and do not adequately address the issue of foreign directors, shareholders, or beneficial owners.”26 Given these regulatory shortfalls outside free zones—where the bulk of DNFBPs are located—significant vulnerabilities to illicit activity remain.
Post-2008 Changes to DNFBP Regulation
Since its 2008 FATF evaluation, the UAE has passed new AML/CTF laws in 2014 and 2018.27 Both laws introduced new beneficial ownership and DNFBP requirements. They redefined and expanded money laundering definitions and predicate offenses (crimes that are components of more serious criminal offenses) and also increased incarceration and financial penalties for offenders.28 The 2014 law introduced beneficial ownership requirements for the first time, modified customer due diligence requirements to include mandatory maintenance of records for corporate entities that own more than 5 percent of a business, and added a requirement for financial institutions to confirm the source of wealth for politically exposed persons and their families.29 Prior to 2018, the term DNFBP did not appear in either the 2002 or 2014 AML/CTF laws. Both laws identified this category of actors as “other financial, commercial and economic establishments” licensed and supervised by agencies other than the Central Bank (2002 law) or those licensed by entities other than Central Bank and the Securities and Commodities Authority (2014 law).30
The 2002 law had a rather limited definition of these establishments that included “insurance companies, stock exchanges, and others.” This list expanded in 2014 to include “real estate brokers, jewelry, precious metals and stone traders, lawyers, legal consultants, private notaries, and accountants.”31 The 2018 law expanded the definition of DNFBPs and further broadened the list to include “anyone who conducts one of several of the activities or operations” identified by the 2019 cabinet decree that implemented the 2018 law.32 The decree added corporate service providers and trusts to the list and also gave the minister of finance additional discretion to designate additional professions and activities as DNFBPs.33 The 2019 implementation decree also added specific requirements on vetting politically exposed persons, filing suspicious transaction reports, working with clients from high-risk countries, maintaining records, and supervising foreign branches and subsidiaries for both traditional financial institutions as well as DNFBPs.
While some free zones have operated in line with higher AML/CTF [anti–money laundering and counterterrorism finance] standards, other free zones, as well as entities outside of these zones, have not.
A surface-level assessment of the 2019 decree suggests that if implemented and enforced, the new regulations would eliminate any compliance gaps between traditional financial institutions and DNFBPs. The regulations seem to align the UAE’s 2018 AML/CTF framework with existing FATF requirements and were likely subject to scrutiny as part of the 2019 evaluation. The regulations appear to raise the minimum compliance threshold for all entities operating inside and outside of the free trade zones.34 While some free zones have operated in line with higher AML/CTF standards, other free zones, as well as entities outside of these zones, have not. With the new standards established by the 2018 national law, all businesses must now operate at a higher compliance threshold than has existed before. Nonetheless, because the FATF could not adequately assess implementation of the 2018 regulations, it is unclear whether enforcement gaps within free zones require further reform.
Post-2008 Changes to Ultimate Beneficial Ownership
The 2014 and 2018 laws include slightly different definitions of a beneficial owner. The 2014 law refers to the ultimate beneficial owner as a “real beneficiary” and defines that actor as a “natural person in actual control of the client or performs transactions on his behalf, including the person that actually controls a corporate person or legal arrangement.”35 Both the 2014 and 2018 standards emphasize the centrality of a natural person—in other words, an actual individual—as a beneficial owner as opposed to a legal person, which could be a business entity, nongovernmental organization, or public body.36 The 2018 law does not, however, further define “effective ultimate control” and may therefore allow free trade zones to determine their own standards. Some zones, such as the DIFC and the Dubai Creative Clusters Authority, appear to have independent regulations that modify the national beneficial ownership standard.37
The DIFC is one of the more regulated free zones in the UAE and has at least ten independent regulatory and judicial authorities and at least twenty-seven different laws and regulations that govern operations therein. In November 2018, the DIFC enacted its own beneficial ownership regulations requiring that each “registered person” within the DIFC maintain a beneficial ownership register and that entities with one or more nominee directors maintain a Register of Nominee Directors.38 The new DIFC regulation modified the 2018 ultimate beneficial ownership definition to include natural persons with 25 percent ownership or voting rights, as well as the authority to appoint or remove a majority of directors.39 While some exemptions exist for some foreign companies, nonprofit organizations, and government-run entities, the DIFC’s beneficial ownership standards appear to go beyond the national requirements set by the 2018 law.
The [Financial Action Task Force’s] placement of the UAE under a one-year observation will heighten international scrutiny on the nation—and Dubai specifically.
It is, however, currently unclear whether the other free zones will alter and implement their own versions of beneficial ownership requirements and whether gaps across the various free zones will continue to provide opportunities for illicit exploitation. According to the 2020 FATF evaluation, however, such opportunities will remain because the UAE still has thirty-nine different entities responsible for registering beneficial ownership in different ways. Indeed, the report specifically noted that “the risk of criminals being able to misuse legal persons in the UAE for money laundering/terror finance remains high, particularly through concealment of beneficial ownership information via complex structures, which may be controlled by unidentified third parties, or the use of informal nominees.”40 The report’s public release and the placement of the UAE under a one-year observation will heighten international scrutiny on the nation—and Dubai specifically—until they harmonize beneficial ownership requirements and improve training and enforcement related to DNFBPs.
As states tighten enforcement measures around money laundering and terrorism financing through financial institutions, DNFBPs will continue to provide savvy illicit entrepreneurs with alternative avenues. And while the 2018 AML/CTF framework reduces the risk of illicit infiltration by establishing a national baseline for beneficial ownership and customer due diligence requirements, complete deterrence will require strict enforcement of these standards, especially in the free trade zones. By aligning the country’s compliance standards to FATF requirements, UAE authorities have telegraphed their willingness to confront the many challenges posed by the free movement of illicit capital through the country’s often touted commercial and financial sectors.
The UAE’s introduction of stricter beneficial ownership and customer due diligence requirements in 2014, and again in 2018, was a welcome start. However, UAE authorities should work to more closely align the regulatory frameworks of all free trade zones across the country. While some zones have, at least on paper, transparent compliance regulations and standards, many more zones operate behind a veil of secrecy. The implementation of uniform standards across all free trade zones will not only level the playing field for both existing and incoming investors but also simplify the regulatory environment as a whole. It will also help to improve transparency and reduce enforcement burdens. The UAE is now under enormous pressure to ramp up its enforcement efforts during the FATF’s one-year observation period.
1 Tom Arnold, “UPDATE 1-UAE Passes Law to Combat Money Laundering, Terror Financing,” Reuters, October 30, 2018, https://www.reuters.com/article/emirates-lawmaking/update-1-uae-passes-law-to-combat-money-laundering-terror-financing-idUSL8N1XA2N4; and Federal Decree-law No. 20 of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Financing of Illegal Organizations.
2 Cornwell, “UAE Doing Too Little to Stem Money Laundering and Terrorist Finance: Watchdog”; and “United Arab Emirates’ Measures to Combat Money Laundering and Terrorist Financing.”
3 “High-Risk and Other Monitored Jurisdictions,” accessed May 14, 2020, https://www.fatf-gafi.org/publications/high-riskandnon-cooperativejurisdictions/more/more-on-high-risk-and-non-cooperative-jurisdictions.html?hf=10&b=0&s=desc(fatf_releasedate).
4 “Designated Non-Financial Businesses and Professions (DNFBPs) in Relation to AML/CTF,” Middle East & North Africa Financial Action Task Force, November 10, 2008, 3–4, http://menafatf.org/sites/default/files/Newsletter/DNFBPs_in_relation_to_AMLCFT.pdf; and “Objectives,” MENAFATF, 2018, http://www.menafatf.org/about/objective.
5 “Mutual Evaluation Report: Anti-Money Laundering and Combating the Financing of Terrorism—United Arab Emirates,” FATF and MENAFATF, April 9, 2008, 47, http://www.fatf-gafi.org/media/fatf/documents/reports/mer/MER%20UAE%20full.pdf.
6 “The Panama Papers: Exposing the Rogue Offshore Finance Industry,” International Consortium of Investigative Journalists, 2019, https://www.icij.org/investigations/panama-papers/.
7 “No Reason to Hide: Unmasking the Anonymous Owners of Canadian Companies and Trusts,” Transparency International Canada, 2016, https://www.yumpu.com/en/document/read/58031165/no-reason-to-hide/5; “Opacity: Why Criminals Love Canadian Real Estate (And How to Fix It),” Transparency International Canada, 2019, https://www.readkong.com/page/opacity-why-criminals-love-canadian-real-estate-9000884?p=1; Caroline Binham “UK Money Laundering Reports Hit Record Level in 2018,” Financial Times, January 10, 2019, https://www.ft.com/content/15aebf9e-0548-11e9-99df-6183d3002ee1; and “Towers of Secrecy: Piercing the Shell Companies,” New York Times, 2019, https://www.nytimes.com/news-event/shell-company-towers-of-secrecy-real-estate.
8 Alison Fitzgerald and Marina Walker Guevara, “New Leak Reveals Luxembourg Tax Deals for Disney, Koch Brothers Empire,” International Consortium of Investigative Journalists, December 9, 2014, https://www.icij.org/investigations/luxembourg-leaks/.
9 “Mutual Evaluation Report: Anti-Money Laundering and Combating the Financing of Terrorism—United Arab Emirates,” paragraph 22.
11 Ibid., paragraph 9.
12 “Anti-Money Laundering and Counter-Terrorist Financing Measures: United Arab Emirates Mutual Evaluation Report,” 5, 10.
13 “International Standards on Combating Money Laundering and the Financing of Terrorism & Proliferation: The FATF Recommendations,” Financial Action Task Force, June 2019, https://www.fatf-gafi.org/media/fatf/documents/recommendations/pdfs/FATF%20Recommendations%202012.pdf.
14 Ibid. According to the 2019 update to the FATF International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation, DNFBPs are required to comply to FATF recommendations 10, 11, 12, 15, 17, 18, 19, 20, and 21—all of which apply to traditional financial service providers.
15 “Cabinet Decision No. (10) of 2019 Concerning the Implementing Regulation of Decree Law No. (20) of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Illegal Organisations,” Central Bank of United Arab Emirates, February 10, 2019, 7–8, https://www.centralbank.ae/sites/default/files/2019-07/Cabinet%20Decision%20No%20%20%2810%29%20of%202019%20CONCERNING%20THE%20IMPLEMENTING%20REGULATION%20%20%20.pdf.
16 “Mutual Evaluation Report: Anti-Money Laundering and Combating the Financing of Terrorism—United Arab Emirates,” paragraph 49; and “Anti-Money Laundering and Counter-Terrorist Financing Measures: United Arab Emirates Mutual Evaluation Report,” 32.
17 “Free Zones in the UAE 2018,” PKF International, 2018, https://www.pkf.com/media/10038961/free-zones-v5-digital.pdf; and M Hazem Shayah and Yang Qifeng, “Development of Free Zones in United Arab Emirates,” Proceedings of the First Middle East Conference on Global Business, Economics, Finance and Banking, October 2014, 5.
18 “Mutual Evaluation Report: Anti-Money Laundering and Combating the Financing of Terrorism—United Arab Emirates.”
19 Ibid., paragraph 14.
20 Ibid., paragraph 13.
21 The Dubai Financial Services Authority is an integrated regulator responsible for the authorization, licensing, and registration of institutions and individuals who wish to conduct financial and professional services in or from the Dubai International Finance Centre.
22 “Cabinet Resolution No. 38 of 2014 Concerning the Executive Regulation of Federal Law No.4 of 2002 Concerning Anti-Money Laundering and Combating Terrorism Financing,” Federal Reserve Cabinet United Arab Emirates, 2014,
23 FATF evaluators reported that “AML/CFT regulation or guidance had been issued for DNFBPs operating in the commercial FTZs [outside the DIFC] at the time of the evaluation mission. See “Mutual Evaluation Report: Anti-Money Laundering and Combating the Financing of Terrorism—United Arab Emirates,” paragraph 514.
24 “Federal Decree-law No. (20) of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Financing of Illegal Organisations,” United Arab Emirates, 2018, https://www.mof.gov.ae/en/lawsAndPolitics/govLaws/Documents/EN%20Final%20AML%20Law-%20Reviewed%20MS%2021-11-2018.pdf.
25 “Mutual Evaluation Report: Anti-Money Laundering and Combating the Financing of Terrorism—United Arab Emirates,” paragraph 47.
26 “Anti-Money Laundering and Counter-Terrorist Financing Measures: United States Mutual Evaluation Report,” 11.
27 “Federal Law no. (7) of 2014 on Combating Terrorism Offences; Federal Decree-law No. (20) of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Financing of Illegal Organizations,” United Arab Emirates, 2018, https://www.mof.gov.ae/en/lawsAndPolitics/govLaws/Documents/EN%20Final%20AML%20Law-%20Reviewed%20MS%2021-11-2018.pdf; and “The Updated UAE Federal Anti-Money Laundering Framework,” Briefing Note, Clifford Chance, May 2015, 1, https://financialmarketstoolkit.cliffordchance.com/content/dam/cliffordchance/briefings/2015/05/the-updated-uae-federal-antimoney-laundering-framework.pdf.
28 Predicate offenses are crimes underlying money laundering and terrorist finance activity; drug-related crimes, for instance, are predicate offenses. See “Cabinet Resolution No. 38 of 2014, concerning the Executive Regulation of Federal Law No.4 of 2002 Concerning Anti-Money Laundering and Combating Terrorism Financing”; “Federal Law no. (7) of 2014 on Combating Terrorism Offences,” 2014, https://www.ilo.org/dyn/natlex/docs/ELECTRONIC/98658/117474/F399649256/LNME-FED-LAW-7-2014.pdf; and “Federal Decree-law No. (20) of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Financing of Illegal Organizations.”
29 Politically exposed persons (PEPs) are those entrusted with a prominent public function and are thereby at higher risk for potential involvement in corruption by virtue of their position and/or influence. PEPs include senior government leaders and their families, for example. The introduction of this report highlights a number of PEPs with significant financial and other holdings in Dubai, including Isabel dos Santos and Dan Etete; “Cabinet Resolution No. 38 of 2014, Concerning the Executive Regulation of Federal Law No.4 of 2002 Concerning Anti-Money Laundering and Combating Terrorism Financing,” 2014, articles 4 and 5, https://www.adgm.com/-/media/project/adgm/operating-in-adgm/financial-crime-prevention-unit/aml-tab/05-eng-cabinet-resolution-no-38-2014-concerning-the-executive-regula.pdf.
30 “Federal Law No- (4) of 2002 Regarding Criminalization of Money Laundering,” United Arab Emirates, 2002, https://www.cftc.gov/sites/default/files/idc/groups/public/@otherif/documents/ifdocs/dmea5-4.pdf; and “Cabinet Resolution No. 38 of 2014, Concerning the Executive Regulation of Federal Law No.4 of 2002 Concerning Anti-Money Laundering and Combating Terrorism Financing,” article 5.
31 “Federal Law No- (4) of 2002 Regarding Criminalization of Money Laundering”; “Cabinet Resolution No. 38 of 2014, Concerning the Executive Regulation of Federal Law No.4 of 2002 Concerning Anti-Money Laundering and Combating Terrorism Financing,” article 5.
32 “Cabinet Decision No. (10) of 2019 Concerning the Implementing Regulation of Decree Law No. (20) of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Illegal Organisations.”
35 In the 2014 AML/CTF law, a “client” is defined as “any natural or corporate person that the financial institution and other financial, commercial and economic establishments deal with, such as opening an account in the name of such person or providing as service to him”; “Cabinet Resolution No. 38 of 2014, Concerning the Executive Regulation of Federal Law No.4 of 2002 Concerning Anti-Money Laundering and Combating Terrorism Financing,” article 5.
36 “Federal Decree-law No. (20) of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Financing of Illegal Organizations,” 3.
37 “Circular 308: DCCA to Dubai Development Authority,” Dubai Development Authority, January 6, 2019, https://dda.gov.ae/wp-content/uploads/2019/02/308-1.pdf.
38 The DIFC regulation requires that the following information is maintained as part of the Beneficial Ownership and/or Nominee Director Registry: full name, residential address, address for service of notices (if different), date and place of birth, nationality, and details of passport or government issued ID. A nominee director is a director appointed to the board of a company to represent the interests of his or her appointer on that board. The nominee director can be a shareholder, a creditor, or another stakeholder. Registering companies with nominee directors rather than with the ultimate beneficial owners of a company can be a means to ensure anonymity of the ownership of the firm.
39 “Ultimate Beneficial Ownership Regulations,” Dubai International Finance Centre, November 12, 2018, https://www.difc.ae/files/7815/4200/4130/UBO_Regulations_2018.pdf.
40 “Anti-Money Laundering and Counter-Terrorist Financing Measures: United Arab Emirates Mutual Evaluation Report,” 11.