Frequently Asked Questions

Combating the Financing of Terrorism (CFT)

Questions & Answers

1. What is the purpose of Cabinet Decision No. 74/2020?
   The Cabinet Decision No. 74/2020 aims to implement the UN Security Council Resolutions (UNSCRs) regarding the prevention and suppression of terrorism financing and the proliferation of weapons of mass destruction. It establishes procedures for freezing assets linked to terrorism and enforcing sanctions against individuals and organizations listed under the UN Security Council Sanctions Committees​.

2. What are the key obligations under the CFT regulations for financial institutions?
   Financial institutions must ensure freezing measures are implemented immediately for individuals and entities listed on the UN and domestic sanctions lists. They must also perform enhanced due diligence on clients with links to high-risk countries or individuals involved in terrorism financing or proliferation activities. Any suspicious activity must be reported to the relevant authorities, including the Financial Intelligence Unit (FIU)​.

3. What is a Sanctions List, and how is it created?
   The Sanctions List includes individuals, groups, and entities associated with terrorism or the proliferation of weapons of mass destruction. The list is created based on UN Security Council Resolutions, and the UAE Cabinet has the authority to include or delist persons/entities on domestic lists following thorough investigation and coordination with international bodies​.

4. Who oversees the implementation of CFT measures in the UAE?
   The Executive Office of the Committee for Goods Subject to Import and Export Control, along with the Ministry of Foreign Affairs and International Cooperation, is responsible for overseeing the implementation of CFT and non-proliferation measures. They coordinate with other supervisory bodies to ensure compliance with the freezing of assets, sanctions, and reporting obligations​.

5. What is meant by the term "freezing of assets"?
   Freezing of assets refers to the restriction on transferring, converting, disposing of, or using funds or other assets owned by individuals or entities listed on the Sanctions List. This measure is aimed at preventing these resources from being used to support terrorism or the proliferation of weapons of mass destruction​.

6. How does Cabinet Decision No. 74/2020 comply with UN Security Council Resolutions?
   The UAE ensures full compliance with UN Security Council Resolutions by incorporating their requirements into domestic law through Cabinet Decision No. 74/2020. This includes freezing assets, prohibiting financial transactions with listed persons or entities, and enforcing travel bans. The decision aligns UAE’s domestic policies with international standards to combat terrorism financing and proliferation​.

7. What are the consequences for failing to implement freezing measures?
   Institutions or individuals who fail to implement freezing measures as required under the CFT regulations may face severe penalties, including fines, suspension of licenses, or even criminal prosecution. The decision enforces a zero-tolerance policy for non-compliance, ensuring the UAE's international obligations are met​.

8. How can individuals or entities request removal from the Sanctions List?
   Individuals or entities listed on the Sanctions List can submit a grievance or request for removal to the Executive Office. The request is reviewed in coordination with the relevant Sanctions Committee, which evaluates whether the individual or entity continues to meet the criteria for listing. If the committee determines that delisting is warranted, the freezing measures and other sanctions are lifted.

9. What is the role of DNFBPs in preventing terrorism financing?
   Designated Non-Financial Businesses and Professions (DNFBPs), such as real estate agents, lawyers, and jewelers, are required to monitor their clients and transactions for any signs of terrorism financing. They must also verify whether their clients are listed on Sanctions Lists and immediately report any suspicious activity or matching names to the relevant authorities​.

10. What are the reporting obligations for financial institutions under the CFT regulations?
    Financial institutions must regularly review their client databases and transactions against the Sanctions Lists and immediately freeze any assets linked to listed persons or entities. They are also required to report these actions, including attempted transactions, to the Executive Office and relevant authorities, typically within five working days​.

11. How does the UAE ensure compliance with asset freezing across all sectors?
    The UAE implements a robust system to ensure compliance with asset freezing across financial institutions, DNFBPs, and other sectors. This involves regular inspections, audits, and reporting obligations, along with cooperation between the Executive Office, law enforcement agencies, and supervisory bodies. Institutions are also required to maintain systems to detect and freeze assets linked to terrorism or proliferation without delay​.

12. What penalties apply to DNFBPs for failure to comply with the freezing measures?
    DNFBPs that fail to comply with freezing measures can face administrative penalties, including fines, suspension of operations, or even criminal charges. Depending on the severity of the violation, the institution or individual may be fined up to AED 1,000,000 or face other legal consequences​.

13. How are the rights of third parties protected when freezing assets?
    The regulations ensure that the rights of bona fide third parties are protected during the freezing of assets. This means that legitimate parties who unknowingly have financial dealings with a listed person or entity are not penalized, provided they can demonstrate their good faith. However, they must cease any further transactions once a match is identified and report the issue to authorities​.

14. How does Cabinet Decision No. 74/2020 address the financing of proliferation of WMDs?
    In addition to combating terrorism financing, the decision also addresses the proliferation of weapons of mass destruction (WMDs) by enforcing sanctions on individuals or entities linked to WMD development or transfer. These sanctions include asset freezes, prohibitions on providing financial services, and other restrictions aimed at preventing the spread of dangerous technologies​.

15. What measures are in place for handling errors in freezing measures (e.g., mistaken identity)?
    If a person or entity is mistakenly subjected to freezing measures due to a name match or other error, they can file a grievance with the Executive Office. Upon verification, the office can cancel the freezing measures and notify the relevant institutions to unfreeze the assets. This process ensures that errors are rectified swiftly while maintaining the integrity of the sanctions system​.