UAE Imposes AML Measures on Cryptocurrency Transactions

The Central Bank of the United Arab Emirates (CBUAE) is set to enforce stringent Anti-Money Laundering (AML) regulations on cryptocurrency transactions, affecting all Licensed Financial Institutions (LFIs) within the country.

The CBUAE published detailed guidance for LFIs on May 31st concerning the potential risks associated with virtual assets and their service providers.

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The 44-page document sets the new AML and Counter Financing of Terrorism (CFT) standards for institutions engaging with cryptocurrency in the UAE, in line with global standards set by the Financial Action Task Force.

Under the definition of the Central Bank, LFIs include non-crypto financial institutions such as banks, exchange houses, payment service providers, finance companies, registered hawala providers, and insurance companies that are in business with Virtual Asset Service Providers (VASPs).

The new regulations mandate LFIs to submit a proposal to the Central Bank for a non-objection letter before opening accounts for each VASP, evaluated on a case-by-case basis. The LFIs are prohibited from collaborating with any VASPs lacking a national license.

LFIs are not just required to authenticate the identity of their customers, but they also need to understand their business nature. This could involve creating a customer profile that details the types and volumes of transactions they are expected to undertake.

Moreover, discussions about digital asset regulations took place between representatives of the CBUAE and the Hong Kong Monetary Authority. Both central banks committed to facilitating discussions on “joint fintech development initiatives and knowledge-sharing efforts” with the innovation hubs of their respective regions.

On top of that, crypto exchange Gemini revealed plans to acquire a crypto service license in the United Arab Emirates (UAE).

The UAE is poised to impose stringent AML regulations on crypto transactions to mitigate potential risks associated with digital assets. As these new rules take effect, they exemplify the nation’s proactive approach to aligning its financial institutions with international AML standards, demonstrating a commitment to safeguarding the financial sector from the illicit use of cryptocurrencies.

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• Source: https://www.bitdegree.org/crypto/news/strict-aml-regulations-for-cryptocurrencies-to-be-introduced-in-the-uae