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UAE Central Bank Cancels Another Insurance Broker’s Registration

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UAE Central Bank Cancels Another Insurance Broker’s Registration

Another Insurance agent’s license was canceled on Thursday by the Central Bank of the UAE (CBUAE). On Tuesday, the registration of BH Insurance Brokerage had also been canceled in accordance with the applicable regulations. The reason for the cancellation was not revealed in both case but said that it expects all the insurance companies and related professions to work according to the UAE laws and regulations.

Anyone who is found to have broken these will face immediate action and their license will stand revoked. In order to preserve the integrity and transparency of the UAE financial structure and the insurance sector, the CBUAE will monitor the activities of the different insurance companies operating in the UAE.

all firms must comply within a month

The central bank has been in charge of the regulation from the time of the merger with the UAE Insurance Authority in 2020. 

The CBUAE released its updated Anti-Money Laundering (AML) guidelines and measures to deal with Combating the Financing of Terrorism(CFT) for companies working in the insurance sector. The new guidelines expected compliance from all the insurance companies within one month of the release.

UAE Central Bank

The firms are expected to know the requirements of the customers and also the nature of the business the customer is involved in. The companies will also need to speculate and understand what uses the customer will be engaging with the products and services offered by them and also monitor them throughout the tenure of the business relationship.      

One of the main purposes of the new guidelines is to assist licensed financial institutions (LFIs) in making more effective sense of their AML/CFT obligations. The LFIs will also be part of the Financial Action Task Force (FATF) by which the standards of the FATF will also be taken into account for performing the activities of the LFIs.

The FATF actively assesses and monitors the money laundering and terrorism financing angles of the various economic structures inside the finance sector. The Emirate nation had been placed on the FATF gray list so that the nation can address the various strategic deficiencies around the problem of money laundering. 

Within these parameters, the various Insurance sector branches like brokers, firms, agents, etc. are required to regularly assess and identify possible scenarios and mitigate them to avoid any future charges of ML/TF. They are also required to maintain proper records, documents, and an enterprise risk assessment log which will also aid in the effective prevention of misallocation of funds.

Any sort of suspicious behavior, unusual transactions, or an off-the-chart pattern of financial activity must be reported to the UAE’s Financial Intelligence Unit through the goAML portal. These companies must also register with the goAML portal and failure to do so will result in heavy penalties from the Ministry of Economy.              

According to the UAE Ministry of Economy, money laundering can be referred to as any sort of financial or banking transaction that is meant to hide or cover up the real source of the illegally obtained money.

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It will allow the depositor to avoid being detected by the banking system and at the same time will be able to re-invest the funds to make it perform like legal income. Money laundering basically works in three phases. The Ministry of the economy has warned the regulatory entities to look for these three stages to understand if any financial activity is suspicious or needs investigation. The three phases are: 

  1. Placement- This is the process by which illegal funds are deposited into the financial institution. 
  2. Layering- In this phase, efforts will be made to hide or conceal the source of the illegal income. 
  3. Integration- This is the final stage where a proper legal cover will be created for the criminal proceeds to make it look like a legal transaction.  

These three phases can be observed in most money laundering cases and the UAE decree-law observes that a person who is aware of the illegal origins of the funds and intentionally tries to hide the fact will be seen as a possible culprit under the money laundering case.

If a person tries to aid another individual who has committed this crime, then the helper also will become part of the crime and will be convicted. Those who are found to be part of the money laundering crime can be fined up to amounts ranging from AED 50,000 to AED 1,000,000 followed by further legal proceedings.

Some of the critical points under the newly updated guidelines of the Central bank are:

  1. Regular Risk Assessments should be conducted to have a clear idea about the payment products, relationships, and information on foreign payment participants. 
  2. All the transactions conducted through the LFIs should be duly processed and monitored using the FATF standards. 
  3. If any sort of suspicious transaction is recorded, then it should be immediately reported to the UAE Finance Intelligence Unit. 
  4. No such correspondent payments should be processed unless the LFI company is confident about the profile of the correspondent and also if the correspondent has done proper screening.                    

Content writer and social science researcher with 5 plus years of experience in research. He has published academic and non-academic articles on several online platforms covering wide-ranging subjects. He is also a tech enthusiast, bibliophile, and an avid fan of video games.

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