Economic Exchange Centre's Policy

Our Policy has always been to conduct our business in compliance with all applicable laws and regulations.The fight against money laundering and terrorist financing is a priority for Economic Exchange Centre services. We recognize that is a team effort.

We support the major international organizations, which collectively set and enforce standards for antimoney laundering (AML) and combating terrorist financing policies and programs such as FATF (Financial Action Task Force), United Nation (UN), The European Union (EU), The organization of American States – The Office of Foreign Assets Control (OFAC) and the Local Regulatory Authority.

These organizations are increasingly insistent that compliance be assessed in terms of implementation and not simply concurrence with the policies standards or guidelines established.Proper due diligence is carried out prior to Economic Exchange Centre enters into any transaction of Currency / TC buy / sell and Remittances.

The Central Bank of UAE is the regulatory body in the UAE for the remittance and exchange business. It has issued its AML/KYC guideline through Federal Law No. 20 of 2018 and the Cabinet Decision 10 of 2019.

These guidelines issued by the Central bank of UAE are comprehensive and extensive to cover all aspect of AML procedures and regulations. Central Bank of UAE regularly conducts thorough audits of all Exchange Houses in UAE of their business, especially the AML /KYC procedures followed by all of them.

Overview of Money Laundering

Money laundering is a fundamental requirement for organized crime. It allows individuals and organized crime groups to satisfy their primary motivation of profiting from their crime, and enables them to finance further criminal activity quickly, efficiently and conveniently.

Organized crime generates wealth, primarily in the form of cash. This either remains in the form for the duration of the laundering process, or is used to purchase a tradable asset, or is placed into economy. Once in the banking system the proceeds of crime may be subject to various techniques to further obscure its origins and improves its accessibility, security & profitability. The Money will reach its final stage, and may be placed into a long-term investment or fund further criminal activity. Money laundered by organized criminals may not always pass through each stage, but will often use more than one stage.

It appears that organized criminals use the same money laundering methodologies. This typically means that investment in property, high value goods, the use of financial products, manipulation of ownership and the use of legitimate trade and cash are all major areas where hidden assets are likely to be located.

The new international approach to detecting and preventing money laundering within the financial sector is the application of a proportionate risk based approach. The Financial Action Task Force (FATF), the Third European Money Laundering Directive and the Basel Customer Due Diligence paper all advocate such an approach which ensures that cost are proportionate and that the system does not become over burdensome for clients and financial businesses alike.

A risk based approach places the responsibility of identifying, assessing and managing the risks with the company board members and senior managers. Risks should be assessed in relation to firms customers, products their geographic areas of operation and delivery channels.

Money Laundering

Money laundering is the process whereby criminals attempt to hide and disguise the true origin and ownership of the proceeds of their criminal activities thereby avoiding prosecution, conviction and confiscation of the criminal funds. The source of the proceeds may include drug trafficking, terrorism, organized crime, fraud and many other crimes.

This process involves in 3 steps:
  • Placement – Physical placing cash proceeds.
  • Layering – Piling of layers through complex financial transactions to separate the proceeds from illicit and / or criminal activity.
  • Integration – Giving legitimate but false explanations as to the origin of the illicit monies.

This definition covers a wide range of activity. Money launderers use a variety of means to launder money so that it cannot be easily detected. One of those means Remittance may be is to convert currency into Remittance. The purpose of this manual is to give you information that will help you identify money laundering and to help prevent it from occurring.

Terrorism and Terrorist Funding

Terrorism can be defined as the unlawful use of force against persons or property to intimidate or coerce a government, the civilian population or any segment thereof, in the furtherance of political or social objectives. Terrorist acts are criminal in nature and constitute a serious threat to the individual’s lives and freedom.

Terrorist funding relates to provision or collection of funds to carry out an act of killing or seriously injuring a civilian with the objective of intimidating a section of people or compelling a government to do or to abstain from doing any act.

Combating terrorist funding is one the highest priorities for all the financial institutions across the world. The events of September 11th have placed the world’s financial institutions on the front line in the battle against terrorist funding. The worldwide efforts to combat terrorist funding are gaining importance day by day. Terrorist funding is a global problem that not only threatens security but also compromises the stability, transparency and efficiency of the financial system.

ELEMENTS OF TERRORIST FUNDING

The primary objective behind terrorism funding is to intimidate or force a government or population to do or abstain from doing any act. In money laundering the objective is monetary gain. The volume of remittances for terrorist funding need not have to be large as compared to money laundering. They will vary according to the strategies and methods adopted by the terrorists. Terrorist funds need not be from illegal sources always. In some cases, funds are also sourced from legal income.

What can we do to fight the Terrorist Funding?

Prevention – We have to prevent our products and services from used by terrorists for transferring their money. This can be done by applying appropriate “Know Your Customer” Policies and Procedures.

Pursuit – We have to track down the terrorist transactions by blocking their names. In case you come across any blacklisted names, it has to be immediately reported to the concerned authorities.

Protection – We have to protect our institution, our reputation, customers, our jobs and our communities where we operate. We have to protect by being responsible in our duties. If a counter staff does a money transfer transaction for a customer and has reasonable cause to suspect that it may be used, in whole or in part for the purpose of terrorism, and then it should be immediately reported to the concerned Compliance Officer for necessary action.

The fight against money laundering & terrorist financing is an evolving and never-ending process. Money laundering not only harms the public as a whole, but it taints the financial services industry. It is clearly for the best interest of the financial industry to take all feasible action to prevent money laundering. Therefore, we need to work together and co-operate to fight against the challenges posed by this social evil.

"Know Your Customer (KYC)"

The Know Your Customer (KYC) principle constitutes the basis of the AML/CFT framework and is the key to effective protection of financial institutions against financial crime. Knowing your customer before executing transactions is the foremost tool of AML/CFT policies and procedures and involves making all reasonable efforts to determine the true identity of customers and the beneficial ownership of accounts and ensuring, to the extent possible, that the funds involved in the transactions are originating from legitimate sources and being used for legitimate purposes. The KYC principle comprises the following elements, which complement one another:

The KYC principle comprises the following elements, which complement one another:
  • Customer acceptance (e.g., verifying that the customer is not on sanctions or restrictions lists issued by the competent authorities)
  • Customer identification and verification
  • Customer business information
  • Customer transaction profile
  • Customer and Enhanced Due Diligence measures according to the customer risk rating.
  • Continuous monitoring of accounts and transactions (e.g., against the customer’s recorded profile and his transaction history)
  • Assessment of the customer’s overall profile
  • Detection, management and reporting of unusual or suspicious transactions
  • To ensure that at the time of on boarding a customer a unique identification number (UIN) is issued to the customer

EEC shall implement an appropriate KYC process depending on the risks associated with each customer or transaction. EEC should be able to demonstrate to the CBUAE examiners that the KYC process we have put in place is aligned with UAE Central Bank Standards, their AML/CFT risk profile and is proportionate with the ML/FT and related financial crime risks we face. EEC shall review and update KYC details at frequent intervals according to the customer risk classification, to ensure that the customer information and documents are valid and that any changes are recorded on time. Maintaining up-to-date information assists the Licensed Person with its monitoring obligations as it enables to understand whether the transactions being conducted are consistent with the known business of the customer, his profile and his source of income.

KNOW YOUR CUSTOMER (KYC) PROCESS:

The process was outlined for the same.

  • Customer Identification Process (CID)
  • Customer Due Diligence (CDD)
Customer Identification (CID) Process:

For any natural person who performs a foreign exchange transaction of value AED 3,500.00 to AED 34,999.75 Customer Identification process must be undertaken as per the Central Bank of UAE standards which includes;

  • Customer Identification and verification of natural person’s original identity and
  • Recording basic information in point of scale system.
  • Customer legal name, residential status, mobile number, nationality, DOB, ID type and ID number should be record in the point scale system.
  • The following information should be printed on the transaction receipt –
  • Full legal name;
  • Residential status (whether UAE Resident or UAE Non-Resident);
  • Mobile number;
  • Nationality;
  • Country of birth;
  • ID type (whether Emirates ID or Passport or GCC national ID); and
  • ID number
CUSTOMER DUE DILIGENCE (CDD)

The Customer Due diligence policy must be applied to all-natural persons who performs Foreign Exchange or Money Transfer payments in line with below criteria.

  • Foreign currency exchange transactions, either one off or multiple in ninety (90) calendar days, of value between AED 35,000 and AED 54,999.75.
  • Money transfers whether inward or outward (Remittance) of value between AED 1 and AED 54,999.75.

    In Customer Due Diligence process, customer facing staff of Economic exchange is expected to collect additional information about its customer and payment before engaging in any type business activity. It’s the employee responsibility who performs transaction to collect all necessary information which is required under this chapter.

    At EEC, we create a customer profile by recording the customer information in its Point-of-Sale system and then provide a permanent “Unique Identification Number (UIN)” to the customer. The customer must be allowed to carry out transactions at the branch(es) of EEC only by using the UIN.

  • Customer Due Diligence is the process of understanding the customer profile, its expected activity and purpose of transaction with intended nature of business relationship.
  • Expected activity and number of transactions expected annually is mandatory field in customer registration module.
  • Under Customer Due Diligence, Economic Exchange staff must create a customer profile by recording the customer information in their application and should assign a unique identification number to the customer. The customer must allow to perform transactions with the same UIN number through his/her business relationship with Economic Exchange.
  • A copy of the ID must be retained from the original identification document which must be certified (i.e., certified copy) as “Original Sighted and Verified” under the signature of the employee who carries out the customer due diligence process.
  • For resident customers, Emirates ID must be scanned using emirates ID reader for registering the customer.
  • The customer profile must be reviewed and updated either annually or upon the expiry of the Identification Document whichever comes first.
  • Information on the “source of funds” and “purpose of transaction” must be captured in the Point-of-Sale system for each transaction and every transaction irrespective of the transaction amount, this is an additional risk mitigation tool under Economic Exchange’s Risk based approach.
  • Under Central Bank of UAE guidelines, the following information must be collected and captured in the application system in addition to verification of the original IDs.
  • Full legal name;
  • Residential status (whether UAE Resident or UAE Non-Resident);
  • Address in the UAE (for UAE Residents);
  • Temporary address in the UAE and the permanent address in the home country (for UAE Non-Residents);
  • Mobile number;
  • Email, if available;
  • Date of Birth;
  • Nationality;
  • Country of Birth;
  • ID type (whether Emirates ID or Passport or GCC national ID);
  • ID number;
  • ID place of issue;
  • ID issue date;
  • ID expiry date;
  • Profession; and
  • Expected annual activity (i.e., expected annual value and number of transactions for future transaction monitoring).
ENHANCED DUE DILIGENCE (EDD)

Enhanced Due Diligence should be carried out on customer which is determined to be in high-risk category during risk assessment. EDD sets out more controls compare to Know Your Customer process as it demands to identify & verify the purpose and source of fund of transaction with additional parameters which are mentioned in Customer Due Diligence policy. It’s very important to note that a client which falls under CID or CDD risk mitigation factors but during ongoing monitoring its risk appear to be high than assigned rating than such client(s) should be monitored as per Enhanced Due Diligence measures.

All the Foreign politically Exposed Persons are subjected to Enhanced Due Diligence measures and it’s recommended to have strong monitoring with such clients irrespective of their transaction profiles. Further, any corporate entity whose partner(s) belongs to nations which are identified as high risk in risk assessment are subjected to enhanced due diligence. The following are threshold of enhanced due diligence for natural person;

  • Foreign currency exchange transactions of value equal to or above AED 55,000, either one off or multiple in ninety (90) calendar days: - Evidence for the source of funds (example: bank statements, salary certificate, property sale documents) must be collected for verification in case the customer pays cash. Complete information of the purpose of the transaction must be collected. Appropriate evidence must be collected for the verification of the purpose of transaction in case there is any doubt or suspicion about the information provided by the customer.
  • Outward money transfers of value equal to or above AED 55,000, either one off or multiple in forty-five (45) calendar days: - Evidence for the source of funds (example: bank statements) must be collected for verification if the customer pays cash. Complete information on the purpose of the transaction must be collected. Appropriate evidence must be collected for the verification of the purpose of transaction in case there is any doubt or suspicion about the information provided by the customer.
  • Inward money transfers of value equal to or above AED 55,000, either one off or multiple in forty-five (45) calendar days: - Full information for the source of funds and the purpose of transaction must be collected and recorded. Appropriate evidences must be collected for the verification of the purpose of transaction in case there is any doubt or suspicion about the information provided by the customer.
For Transactions subjected to EDD, following should be printed at minimum on transaction receipt
  • UIN of the customer;
  • Full legal name of the customer;
  • Address in the UAE (required when the customer is a UAE Resident) - P.O Box number and street (if available), city, Emirate;
  • Permanent address in the home country (required only when the customer is a UAE Non- Resident) - P.O Box number and street (if available), city, state or province, country;
  • Mobile number;
  • Nationality;
  • ID type (whether Emirates ID or Passport or GCC national ID);
  • ID number;
  • ID place of issue;
  • ID issue date;
  • Method of payment (whether cash or cheque, etc.);
  • Source of funds;
  • Purpose of transaction; and
  • Beneficiary’s name and bank account details (wherever applicable).
Enhanced Due Diligence for legal person or legal arrangement

Legal Entities which are determined to be in high risk during risk assessment phase should undergo Enhance Due diligence procedure before onboarding or establishing any kind of business relationship. EDD for legal entities includes collection and verification of documents and a physical visit to entity premises to verify its existence and nature of business. The Compliance staff must collect the ownership structure of the legal entity/arrangement and must verify identity of its ultimate beneficial owner(s). In case when the UBO is legal arrangement/entity then identity of UBO of that entity must be taken into consideration. Please note each document that is collected for customer identification purpose must be signed by compliance or alternate compliance officer as “Original Sighted and verified”.

For Legal entities, the Economic Exchange’s compliance staff must follow below process at minimum:

  • Economic Exchange’s KYC Questionnaire must be completed and signed by the legal entity.
  • Ownership structure of the legal entity “customer” must be collected including the purpose and nature of the intended business relationship should be recorded in system as well as on files;
  • Collect copies of valid permissions/licenses of the customer from competent authorities to carry out the business (examples: certificate of incorporation, trading license or equivalent, license issued by the Central Bank or other competent authorities where applicable, etc.). Certify these copies as “Original Sighted and Verified”.
  • Collect copies of the powers that regulate and bind the legal person
  • Compliance Staff should collect the list of Authorized Signatory for the legal entity and must collect and verify their identity.
  • Apply Sanctions screening checks on entity name, owners, partners and representative names and retain the findings in corporate booklet.
  • Apply PEP search on Ultimate Beneficial owners of legal entity.
  • Assess and record the expected annual activity for future activity.
  • Compliance Staff should collect the Letter of Authorization for representative who carries out transaction on its behalf and verify its identity.
  • Both Manager in charge and Compliance officer should approve the business relationship with any legal entity.
  • The Customer facing staff must collect appropriate documents to confirm the source of fund & purpose of transaction which must be verified by compliance officer before engaging in any kind of business activity.
The Following information must be collected and recorded in our POS application for Legal entities;
  • Full legal name of the legal person or legal arrangement;
  • Residential status (whether incorporated/operating within the UAE or outside the UAE);
  • Address (P.O Box, Shop No., Building name, Street, City, Emirate, Country);
  • Phone numbers;
  • Fax number;
  • Email;
  • Date of establishment;
  • ID type (whether trade license or the equivalent);
  • Trade license number;
  • Trade license place of issue;
  • Trade license issue date;
  • Trade license expiry date;
  • Type of business of the legal person or legal arrangement;
  • Names and ID details, such as ID types and ID numbers, of BOs of the legal person or legal arrangement;
  • Names and ID details, such as ID types and ID numbers, of persons authorized to carry out transaction on behalf of the legal person or legal arrangement; and
  • Expected annual activity (i.e. expected annual value and number of transactions for future transaction monitoring).