DFSA: High-Risk Jurisdictions and FATF Public Statements

The Dubai Financial Services Authority (DFSA) issued a letter on 10 March 2021 requiring Relevant Persons to update their compliance with the UAE's anti-money laundering framework and the Financial Action Task Force's (FATF) Public Statements regarding High-Risk Jurisdictions and Jurisdictions under Increased Monitoring.

The letter was issued following announcements made by the UAE National Committee for Combatting Money Laundering and Financing Terrorism and Illegal Organisations Committee (NAMLCFTC) and has a direct application in the DIFC for Authorised Firms (other than Credit Rating Agencies), Authorised Market Institutions, Designated Non-Financial Businesses and Professions and Registered Auditors (collectively referred to as 'Relevant Persons').

Following the issuance of the letter, all Relevant Persons in the DIFC must immediately action six items:

1. adopt and implement the measures required by the FATF Public Statements in relation to High-Risk Jurisdictions subject to a Call for Action and Jurisdictions under Increased Monitoring;

2. implement the specific enhanced due diligence and countermeasures set out in the FATF Public Statement on High-Risk Jurisdictions Subject to a Call for Action;

3. implement customer due diligence or enhanced due diligence measures on a proportionate basis to the risk level that might arise from business relationships and transactions with all types of persons in the jurisdictions listed in the FATF Public Statement on Jurisdictions under Increased Monitoring;

4. monitor, on an ongoing basis, the FATF Public Statements announcements and make necessary adjustments to the Relevant Person's AML/CTF compliance procedures and measures;

5. report to the Financial Intelligence Unit (FIU) all proposed transactions involving any person in a high-risk jurisdiction and only proceed if the FIU has not raised any objection in the three working days following that report; and

6. terminate all correspondent relationships with the Democratic People's Republic of Korea (DPRK) banks, where required by a UN Security Council Resolution.

The above announcements mandate that Relevant Persons monitor the statements of the FATF, with particular regard to High-Risk Jurisdictions and Jurisdictions under Increased Monitoring.

As of March 2021, Jurisdictions under Increased Monitoring (often referred to as the "grey list") include, but are not limited to, the Cayman Islands, Ghana, Iceland, Morocco, Pakistan, Panama, Syria and Yemen and High-Risk Jurisdictions are the Democratic People's Republic of Korea and Iran. For Jurisdictions under Increased Monitoring, Relevant Persons should consider the information provided by the FATF when considering their risk analysis when dealing with jurisdictions on the grey list.

Whilst all Relevant Persons must review and consider the application of the above, it is particularly noteworthy that Relevant Persons will now be obliged to follow and directly implement the measures outlined in the FATF's Public Statements. These Public Statements are issued three times a year and are documents that outline when countermeasures should be applied against jurisdictions with strategic deficiencies in their anti-money laundering and combatting the financing of terrorism framework.

The DFSA also refer to interested parties to the UAE NAMLCFTC website which has recently been updated and provides information concerning current UAE National AML/CTF initiatives, including updates on AML/CTF developments (eg for 'high-risk countries').

For further detail regarding the information above or guidance on anti-money laundering and combatting the financing of terrorism in the UAE please contact Muneer Khan or Adam Wolstenholme.