The Central Bank of the United Arab Emirates (CBUAE), along with other regulators in the country, has recently published new joint guidance for virtual asset service providers (VASPs) operating within the country. The new guidelines include penalties for VASPs operating without proper licenses within the jurisdiction.
The National Anti-Money Laundering and Combating Financing of Terrorism and Financing of Illegal Organisations Committee (NAMLCFTC), in collaboration with UAE supervisors, has issued guidance on combating the use of unlicensed virtual asset service providers, which is prepared by…
— Central Bank of the UAE (@centralbankuae) November 6, 2023
On Nov. 6, the National Anti-Money Laundering and Combating Financing of Terrorism and Financing of Illegal Organisations Committee (NAMLCFTC) and the CBUAE published a list that they described as “Red Flags” for VASPs. The list included the lack of regulatory license, unrealistic promises, poor communications, lack of regulatory disclosures and more indicators that could identify suspicious parties.
According to the new guidance, the supervisory authorities expect all licensed financial institutions (LFIs), designated non-financial businesses and professions (DNFBPs) and licensed VASPs to report transactions from suspicious parties. The guidance wrote:
“Any information related to unlicensed virtual asset activities can be reported through whistleblowing mechanisms, to help regulatory authorities in their efforts to uphold the law and protect the UAE financial system.”
Within the new document, the central bank also noted that VASPs operating in the UAE without a valid license will be subjected to “civil and criminal penalties including, but not limited to, financial sanctions against the entity, owners and senior managers.” In addition, the document also highlighted that LFIs, DNFBPs and licensed VASPs that demonstrate willingness to deal with unlicensed VASPs will also be subject to actions from law enforcement.
In a press release, His Excellency Khaled Mohamed Balama, governor of the CBUAE and chairman of the NAMLCFTC, said that the new guidance comes at a time when virtual assets have become more accessible. The CBUAE executive explained that as the digital economy matures, their work on “combating all kind of financial crimes intensifies.” This ensures the integrity of the financial system in the UAE, according to Balama.
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