The United Arab Emirates (UAE) Central Bank has unveiled new anti-money laundering (AML) and counter-terrorism financing guidelines for crypto businesses and financial institutions dealing with digital assets. This move aims to help licensed financial institutions (LFIs) mitigate risks associated with handling digital assets while adhering to AML and combat financing of terrorism (CFT) regulations.
UAE Central Bank‘s recent announcement outlines the required customer due diligence and enhanced due diligence for LFIs when dealing with potential virtual asset service providers (VASPs). This includes providing necessary training programs, governance systems, and record-keeping mechanisms. Scheduled to take effect in July, these guidelines are a step towards reinforcing the Central Bank’s supervisory and regulatory frameworks.
The introduction of these guidelines comes as the UAE actively makes an effort to establish itself as a global hub for the crypto industry. With a regulatory framework for digital assets introduced in January, the UAE has been known for its collaborative approach with digital assets businesses. Major crypto firms are expanding or moving their operations to the UAE, includingCoinbase, which is considering the UAE as its international hub, andGemini, who is in the process of acquiring a license.
The UAE Central Bank has also been strengthening ties with the central bank of Hong Kong, the Hong Kong Monetary Authority (HKMA), with a focus on crypto regulation. This partnership exemplifies the country’s push for a more robust regulatory environment within the crypto space.
However, potential risks still exist for institutions setting up shop in the UAE. In March 2022, the Financial Action Task Force (FATF), an international group focused on combating money laundering and terrorism financing, added the UAE to its “grey” list. This categorization means the country will be subject to increased monitoring. The silver lining is that the UAE Central Bank’s recently introduced guidance takes FATF standards into account, aiming to ensure adherence to international best practices in the digital assets domain.
The new set of guidelines brings forth essential questions about how the UAE will balance its drive to become a global crypto hub with the need to maintain robust regulatory frameworks to alleviate concerns associated with digital assets. With the implementation of these rules, it remains to be seen how the country’s ambitious plans will be impacted in the ever-evolving global crypto landscape.
Source: Cryptonews
