After being taken off the list of money-laundering havens dubbed gray along with a bunch of long-standing laws to boost investor confidence, UAE has acted proactively and introduced new laws. These legal reforms are in line with the UAE’s 2024-2027 National Strategy to Anti Money Laundering UAE (AML), Combating the Financing of Terrorism (CFT) and Proliferation Financing.
This strategy, approved by the cabinet under the supervision of Sheikh Abdullah bin Zayed, and the foreign affairs minister is an 11-point agenda that outlines how the cabinet intends to strengthen implementation measures. It emphasizes increased global coordination with the Financial Action Task Force (FATF) and mainly focuses on combating new threats such as cybercrime and exploitation of virtual assets. Khairallah Law Firm.
Enhancing Compliance Measures and Global Cooperation in Anti-Money Laundering UAE
The national AML UAE strategy will be overseen by two high-level entities established by the new legislation, namely the National Committee for Anti-Money Laundering UAE and Combating the Financing of Terrorism and the Supreme Committee. The committees strive towards simplifying the AML UAE and CFT compliance and enforcement procedures, and eliminating red tape which enhances communication between businesses and regulatory bodies.
UAE’s Latest Measures to Tackle Financial Crimes
To ensure its removal from FATF’s gray list earlier this year, the UAE swiftly implemented robust legal frameworks and controls, resolving this significant burden in record time.
In an interview with The National, Hamid Al Zaabi, director general of the Executive Office of Money Laundering UAE and Counter-Terrorism Financing, reported that the UAE confiscated over Dh5.4 billion ($1.4 billion) between December 2021 and June 2023, primarily from cases of professional and trade-based money laundering. FATF had previously highlighted money laundering UAE and terrorist financing risks within sectors like banking, the diamond and gold trade, and real estate.
The UAE has intensified its efforts to combat money laundering UAE in the gold sector, which has faced increased scrutiny due to links to illicit activities. In August, the government suspended 32 gold refineries after Ministry of Economy inspections uncovered 256 AML violations. These refineries account for about 5% of the country’s gold sector.
This crackdown forms part of the UAE’s broader initiative to align with international financial regulations and address concerns, especially regarding the unregulated flow of precious metals. Additionally, the UAE has been enhancing its AML UAE framework, with recent amendments to federal decree laws aimed at tackling financial crimes.
Understanding the Legal Implications of Interest on Borrowed Money Under UAE Law
The charging of interest on borrowed money is regulated in the UAE under Federal Decree-Law No. 31/2021 (the Crimes and Penalties Law). This is a new law that is designed to protect yourself from being taken advantage of. It describes what will be the terms of punishment for those who lend interest outside of financial institutions. Khairallah Law Firm states that this law is largely important for compliance, especially when it comes to bank loans UAE. The aim of ensuring this is nothing but to have proper and transparent financial transactions which would be very helpful for the borrowing parties.
Factors Leading to Aggravation
Article 458 recognizes that it exacerbates the situation where a lender exploits a borrower who needs or is weak under given circumstances. Thus, increasing the negative legal consequences. This provision seeks the prevention of exploitation through a financial transaction and bank loans UAE lawyers enforce this measure
Legal Punishments
Those convicted of lending with interest under Article 458 could be imprisoned for a minimum of one year and fined not less than AED 50,000. The law also identifies implicit interest, which is where you ask for any extra charge or benefit whatsoever can not be linked to a real service provided by the lender.
The parties who had the loan and the project must exhibit evidence to show that authentic asset partition exists and assembled implicit interest, and they must also be accustomed to document proof of a kind. Prosecution can result only if it is shown that these charges are not made in exchange for a real and legal service/service. This aspect becomes more relevant in the case of loans like UAE business loans, where transparency plays a crucial role.
Conclusion
The UAE has introduced robust legal reforms to combat money laundering and terrorism financing, aligning with its 2024-2027 National Strategy. The country strengthened its regulatory framework, quickly addressing FATF concerns and seizing over Dh5.4 billion from trade-based money laundering. Special attention has been given to the gold sector, with refineries suspended for AML violations.
Additionally, Federal Decree-Law No. 31/2021 regulates interest on borrowed money, aiming to ensure transparent financial transactions and prevent exploitation, particularly in UAE business loans. Khairallah Law Firm plays a crucial role in advising clients on these legal developments.
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*Disclaimer: our blogs, law updates, and FAQs are freely distributed for educational purposes and to showcase recent updates and regulations in the UAE’s framework.
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