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.
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 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 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 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.
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.
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.
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:
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.
The process was outlined for the same.
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;
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.
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.
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;
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: