The Central Bank issues new guidelines to counter money laundering and combat the financing of terrorism

Local bank deposits rise 11% to 610 billion dirhams by the end of May

Government deposits with the banking system amounted to 322.1 billion dirhams by the end of May 2022. Photo: Ashok Verma

Cash deposits with banks operating in the country rose to 610.3 billion dirhams at the end of last May, an increase of 11.1%, compared to the same period in 2021.

In addition, the Central Bank issued new guidelines to counter money laundering and combat the financing of terrorism for licensed financial institutions regarding risks related to risky political persons.

In detail, statistics issued by the Central Bank yesterday showed that cash deposits with banks operating in the country rose to 610.3 billion dirhams at the end of May 2022, compared to 549.2 billion dirhams at the end of May 2021, an increase of 61.1 billion dirhams on an annual basis, an increase of 11.1%. .

Government deposits with the banking system amounted to 322.1 billion dirhams by the end of May 2022, recording an annual increase of 30.4 billion dirhams, an increase of 10.4%.

The statistics indicated that the issued cash rose by four billion dirhams on an annual basis to reach 116.1 billion dirhams at the end of May 2022, compared to 112 billion dirhams in May 2021, an increase of 3.7%.

The cash balance with banks increased by 1.5 billion dirhams to 16.3 billion dirhams, compared to 14.8 billion dirhams in May of last year, an increase of 10.1%.

And the “Central” indicated that the cash circulating outside banks with the two transactions increased from 97.2 billion dirhams at the end of May 2021 to 99.8 billion dirhams at the end of last May, an increase of 2.7%.

According to statistics, the foreign assets of the Central Bank rose to 442.3 billion dirhams at the end of May 2022, compared to 402.3 billion dirhams at the end of May 2021, an increase of 40 billion dirhams, or about 10%.

This came as a result of an increase in bank balances and deposits with banks abroad to 259.7 billion dirhams at the end of last May, compared to 252.2 billion dirhams during the comparison period.

Other foreign assets increased to 53.3 billion dirhams, compared to 41.8 billion dirhams at the end of May 2021, and foreign securities held to maturity increased to 129.2 billion dirhams, compared to 108.2 billion dirhams at the end of May 2021.

In addition, the Central Bank issued new guidelines to counter money laundering and combat the financing of terrorism for licensed financial institutions regarding risks related to risky political persons.

The Central Bank said in a statement yesterday that the new guidelines contribute to developing the licensed financial institutions' understanding of risks and the effective implementation of their legal obligations related to combating money laundering and combating terrorist financing, as well as enhancing their compliance with the standards and directives issued by the Financial Action Task Force (FATF).

He added that authorized financial institutions must demonstrate compliance with the requirements in the new guidelines within one month from the date of issuance.

Under the new guidelines, authorized financial institutions are required to carry out specific mandatory due diligence measures for political risk persons, their immediate family members, or close partners, in addition to the required due diligence towards all customers, as authorized financial institutions may be exposed to increased risks of money laundering and financing. Terrorism and the financing of other illegal activities by clients of risky political persons and their financial transactions related to them.

Licensed financial institutions that provide services to clients of PEPs should develop risk-based policies in their anti-money laundering programs to ensure that clients and the identity of appropriately PEPs or related clients are identified prior to initiating a business relationship. Classify risks and apply appropriate due diligence procedures with clients, as well as continuous monitoring of their business relationship.

Licensed financial institutions must also maintain transaction monitoring systems equipped to identify patterns of unusual and potentially suspicious activities, as they must report any suspicious behavior potentially related to money laundering, terrorist financing or a criminal offense, by submitting a report to the Financial Information Unit of the UAE using the “goAML” portal.

According to the Central Bank, these preventive measures must be integrated into the compliance program of financial institutions licensed to counter money laundering and combat the financing of terrorism and support them with appropriate governance and training.

The Governor of the Central Bank, Khaled Muhammad Balama, said: “We are keen to enhance and ensure a comprehensive understanding of all licensed financial institutions of their role and responsibilities in mitigating risks related to countering money laundering and combating terrorist financing, and protecting the financial system in the country from illegal activities.”

He added that "these new guidelines contribute to providing more requirements and measures that help authorized financial institutions to fulfill their obligations in this regard before and after the start of business relationships with political risk persons."

Balama continued, "We will continue our efforts to issue similar regulatory guidelines to ensure enhancing the efficiency and robustness of the financial system in the country, in line with international standards related to combating money laundering and combating terrorist financing."

 Khaled Balama:

"The new guidelines contribute to providing more requirements that help financial institutions to meet their obligations."

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One billion dirhams increase in foreign assets of the Central Bank within a year.

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