Designated Non-Financial Businesses & Professions (DNFBP's)

Compliance Guide for UAE Businesses

Designated Non-Financial Businesses and Professions (DNFBPs) in the UAE must comply with Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) regulations. This guide provides step-by-step instructions, templates, and best practices for DNFBPs to meet their regulatory obligations effectively.

Intro

Who Are DNFBPs?

DNFBPs include businesses and professions that may be vulnerable to money laundering or terrorism financing. These include:

• Real estate agents

• Dealers in precious metals and stones

• Lawyers, notaries, and legal consultants

• Auditors and accountants

• Company service providers

       Actionable Steps:

• Step 1: Ensure your business has an AML/CFT policy that outlines how your company identifies and reports suspicious activities.

• Step 2: Appoint a Compliance Officer responsible for implementing and overseeing AML/CFT measures.

Understanding Your AML/CFT Obligations as a DNFBP

Key Responsibilities:

DNFBPs must implement specific measures to ensure compliance with AML/CFT regulations. These include:

• Customer Due Diligence (CDD)

• Ongoing Monitoring of Transactions

• Record Keeping

• Filing Suspicious Transaction Reports (STRs)

• Appointing a Compliance Officer

• Training Staff

Actionable Steps:

• Step 1: Conduct CDD for all new clients before establishing a business relationship. This includes verifying the customer’s identity, business activities, and source of funds.

• Step 2: Apply Enhanced Due Diligence (EDD) for high-risk clients, such as politically exposed persons (PEPs) or clients from high-risk countries.

Record Keeping Requirements

Under AML/CFT regulations, DNFBPs are required to keep records of all CDD information, transactions, and reports for a minimum of 5 years.

Customer Due Diligence (CDD): Know Your Customer (KYC)

Customer Due Diligence (CDD) is one of the most important obligations for DNFBPs. It requires verifying the identity of customers, understanding their business relationships, and assessing their risk.

Actionable Steps:

• Step 1: Store all client records, transaction histories, and CDD documents for at least 5 years from the end of the business relationship.

• Step 2: Ensure records are stored securely, either digitally or in hard copy, and are accessible for regulatory audits.

Filing Suspicious Transaction Reports (STRs)

If you suspect that a customer or transaction may be linked to money laundering or terrorism financing, you must file an STR with the Financial Intelligence Unit (FIU) immediately.

Actionable Steps:

• Step 1: Monitor all transactions for red flags, such as unusual large transactions, structuring to avoid reporting thresholds, or activity from high-risk jurisdictions.

• Step 2: If suspicion arises, complete and submit an STR to the FIU within 5 working days of identifying the suspicious activity.

• Step 3: Do not inform the customer about the STR submission.

Appointing an AML/CFT Compliance Officer

Every DNFBP must appoint a Compliance Officer who will oversee the company’s AML/CFT efforts and ensure regulatory compliance. This person will act as the main point of contact for authorities.

Pro Tip: The Compliance Officer should have direct access to the company’s senior management to ensure that AML/CFT measures are prioritized.

Actionable Steps:

• Step 1: Appoint an individual with sufficient knowledge of AML/CFT regulations as the Compliance Officer.

• Step 2: Ensure the officer has the authority and resources to enforce compliance within the organization.

• Step 3: Provide ongoing AML/CFT training to the Compliance Officer and relevant staff.

AML/CFT Training for Staff

Regular training is essential for ensuring that all employees understand their responsibilities under AML/CFT regulations

Actionable Steps:

• Step 1: Schedule AML/CFT training sessions at least once a year for all staff, especially those involved in onboarding customers or processing transactions.

• Step 2: Ensure that training covers key topics such as how to identify suspicious transactions, CDD procedures, and reporting requirements.

• Step 3: Document all training sessions, including the attendees and materials covered.

Monitoring High-Risk Transactions and Clients

Some customers or transactions may be considered high risk due to factors such as their geographic location, occupation, or transaction patterns. DNFBPs must apply Enhanced Due Diligence (EDD) in such cases.

Actionable Steps:

• Step 1: Classify customers into risk categories (low, medium, high) based on factors such as nationality, business type, and transaction history.

• Step 2: For high-risk clients, gather more information on the source of funds and monitor their transactions more frequently.

• Step 3: Keep a High-Risk Customer Register to track the enhanced monitoring of these clients.

Periodic Reviews and Audits

To ensure continuous compliance, DNFBPs must conduct internal audits and reviews of their AML/CFT policies and procedures. This helps to identify any gaps in compliance and ensure that controls are effective

Actionable Steps:

• Step 1: Conduct annual internal audits of your AML/CFT program to ensure that all requirements are met.

• Step 2: Review the effectiveness of CDD, monitoring, and reporting processes.

• Step 3: Report any findings to senior management and implement corrective actions as necessary.

Common Mistakes and How to Avoid Them

Common Pitfalls:

1. Failing to submit STRs in time – STRs must be filed promptly to avoid penalties.

2. Inadequate CDD procedures – Ensure that all required documents are collected and verified.

3. Lack of ongoing monitoring – Regularly monitor transactions, especially for high-risk clients.

How to Avoid Them:

• Step 1: Regularly review and update AML/CFT policies to ensure they reflect current regulations.

• Step 2: Automate monitoring systems where possible to flag suspicious activity in real-time.

• Step 3: Keep all staff trained and up-to-date on regulatory changes.