The licensed financial institutions would be required to identify and verify the identities of all customers.
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Under the new rules from the Central Bank of the UAE (CBUAE), the licensed financial institutions (LFIs) would be required to identify and verify the identities of all customers. The update will come into effect “within a month,” that is, by the end of June.
On May 31, CBUAE published a guidance for LFIs on risks, “related to virtual assets and virtual assets service providers.” A 44-page document specifies the news rules on Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) for banking institutions, dealing with crypto in the Emirates. It takes into account Financial Action Task Force (FATF) global standards.
LFIs, in the Central Bank definition, are essentially all the non-crypto financial institutions, establishing a relationship with virtual asset providers (VASPs): banks, finance companies, exchange houses, payment service providers, registered hawala providers and insurance companies.
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According to the guidance, LFIs should submit a request to the central bank for non-objection to open accounts for each VASP on a case-by-case basis. Any collaboration with VASPs without national license is prohibited.
Apart from the general verification process of customers prior to any relationship, LFIs would also be required to “understand the nature of the customer’s business.” This step suggests creating a profile of the customer, including the types and volumes of transactions the customer is expected to engage in.
The LFIs would also have an obligation to monitor the volumes of non-institutional, individual customers’ crypto transactions with the VASPs from “high-risk jurisdictions.” In these cases, for example, one could only transfer the virtual assets to his own account outside the UAE-licensed VASP ecosystem.
Meanwhile, CBUAE representatives met with their counterparts from the Hong Kong Monetary Authority to discuss their cooperation on virtual asset regulations. The two central banks also pledged to facilitate discussions on “joint fintech development initiatives and knowledge-sharing efforts” with each region’s respective innovation hubs.
