UAE Unveils Crypto Anti-Money Laundering Guidance Taking Effect June

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UAE Unveils Crypto Anti-Money Laundering Guidance Taking Effect June
  • UAE Central Bank tightens regulations with new guidelines for virtual assets.
  • The rules are for anti-money laundering and counter-terrorism financing concerns.
  • It applies to banks, exchanges, payment providers, insurance firms, and brokers.

In a move aimed at strengthening its regulatory framework, the UAE Central Bank has released new guidelines for handling virtual assets, including cryptocurrencies and non-fungible tokens (NFTs).

The guidance, announced on Wednesday, focuses on anti-money laundering (AML) and counter-terrorism financing (CTF) measures for financial institutions operating in the country.

The UAE Central Bank recognized the potential risks associated with virtual assets and virtual asset service providers. It emphasized the importance of due diligence for licensed financial institutions when dealing with customers and counterparties involved in such transactions.

The new guidance is scheduled to take effect within a month. It applies to various financial entities, including banks, finance companies, exchange houses, payment service providers, registered hawala providers, insurance companies, agents, and brokers.

The objective is to ensure appropriate measures are in place to prevent illicit activities such as money laundering and terrorist financing. The guidance acknowledges the Financial Action Task Force (FATF) standards and incorporates them into the UAE’s regulatory framework.

The FATF, an international organization that sets global standards for combating money laundering and terrorist financing, placed the UAE on its “grey” list in March 2022, subjecting it to increased monitoring. However, the UAE responded promptly to the designation, reiterating its commitment to collaborating closely with the FATF to enhance its AML efforts.

Early this year, Bitzlato, a Chinese crypto exchange, was labeled a money laundering concern by the US Treasury Department’s Financial Crimes Enforcement Network due to its alleged involvement in illicit financing from Russia, as reported by Coin Edition.

According to the U.S. Justice Department, Bitzlato conducted trades exceeding $700 million with Hydra Market, the largest darknet marketplace, until its recent closure.