The Central Bank of the United Arab Emirates (CBUAE) and other regulators in the country have issued new joint guidance for virtual asset service providers (VASPs).
- The Central Bank of the United Arab Emirates (CBUAE) and other regulators in the UAE have jointly issued new guidance for virtual asset service providers (VASPs).
- The guidelines outline penalties for VASPs operating without proper licenses within the jurisdiction.
- The “Red Flags” list includes indicators such as the lack of regulatory licenses, unrealistic promises, poor communication, and absence of regulatory disclosures to identify suspicious parties.
- Supervisory authorities expect licensed financial institutions, non-financial businesses, and licensed VASPs to report transactions involving suspicious parties.
The Central Bank of the United Arab Emirates (CBUAE) and other regulatory authorities in the UAE have jointly issued new guidance that includes penalties for virtual asset service providers (VASPs) operating without proper licenses in the country.
Identifying “Red Flags” for Suspicious Parties
The guidance introduces a list of “Red Flags” to identify suspicious parties, including the absence of regulatory licenses, unrealistic promises, poor communication, and a lack of regulatory disclosures.
Licensed financial institutions, designated non-financial businesses and professions (DNFBPs), and licensed VASPs are expected to report transactions involving suspicious parties. Whistleblowing mechanisms can be used to report information related to unlicensed virtual asset activities.
Unlicensed VASPs operating in the UAE may face civil and criminal penalties, including financial sanctions against the entity, owners, and senior managers. Institutions cooperating with unlicensed VASPs may also face legal actions.
CBUAE’s Commitment to Combating Financial Crimes
His Excellency Khaled Mohamed Balama, governor of the CBUAE and chairman of the National Anti-Money Laundering and Combating Financing of Terrorism and Financing of Illegal Organizations Committee (NAMLCFTC), emphasizes the importance of intensifying efforts to combat financial crimes, especially as virtual assets become more accessible.
The new guidance is part of the UAE’s broader efforts to be removed from the Financial Action Task Force’s (FATF) “grey list.” The UAE was placed on the list in March 2022 due to deficiencies in its Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) regimes.
The UAE’s introduction of penalties for unlicensed VASPs and its commitment to strengthening AML and CTF frameworks align with its goal of being removed from the FATF’s grey list. This move underscores the UAE’s dedication to enhancing regulatory standards in the face of evolving financial challenges, particularly in the virtual asset sector.