UAE Central Bank Released Guidelines for Virtual Assets to Deter Money Laundering

UAE Central Bank Released Guidelines for Virtual Assets to Deter Money Laundering

Recently, new guidelines to prevent terrorism financing (AML/CFT) and money laundering have been released by the UAE Central Bank for LFIs or “licensed financial institutions”. The focus of the guidelines is on the risks associated with dealing with virtual assets.

New Virtual Asset Guidelines

The United Arab Emirates has taken strict measures to prevent money laundering and terrorism financing by implementing stringent regulations. The government has released several guidelines over the years to combat financial crime. The most recent guidance focuses on the virtual assets industry and is a significant move towards strengthening the Central Bank’s supervisory and regulatory frameworks in the battle against money laundering and terrorism financing.

The newly released guidelines address the risks associated with virtual asset (VA) transactions and dealings with virtual asset service providers (VASPs), while also providing clear definitions of VAs, VASPs, and their respective business models. The regulatory body has outlined the mandatory customer due diligence and enhanced due diligence procedures that financial institutions (LFIs) must follow when dealing with potential VASP customers and counterparts. This directive will be enforced in just one month and applies to a wide range of financial institutions.

These recent guidelines, according to the bank, rely on the latest Financial Action Task Force (FATF) criteria, which were revised in March 2022 to encompass the UAE in its “grey” list of jurisdictions that are subject to increased inspection. As a result, the UAE committed to partnering with FATF to tackle these issues raised by FATF.

The UAE Crypto Market 

 The Cryptocurrency market in the UAE is anticipated to expand by 11.59% between 2023 and 2027, leading to a market size of US$372.00m in 2027. In terms of volume, the UAE stands third among the countries in the region, transacting around $25 billion worth of cryptocurrency each year, with Lebanon and Turkey leading the way.

The cryptocurrency industry is witnessing the Middle East’s swift emergence, with a 7% share in global trading volumes in crypto. The United Arab Emirates is spearheading the efforts to establish itself as a center for digital currencies by launching various programs to promote the acceptance of blockchain technology in various industries.