Money laundering poses a serious threat to global economies, undermining financial stability and security. As a key international financial hub, UAE enforces rigorous AML measures to combat money laundering and terrorist financing, ensuring transparency and compliance. But is money laundering a criminal or civil offence in the UAE? The blog explores how UAE laws classify money laundering while examining punishment severity and the enforcement bodies dedicated to anti-money laundering (AML) regulations.
Legal Distinction Between Criminal and Civil Offences
A criminal offence takes place when state laws are violated, which can result in prosecution through legal systems and potential penalties such as monetary sanctions, prison time, or both. Society-breaking activities such as robbery alongside fraud together with different forms of violence function as criminal conduct.
In contrast to this, Civil offences start as conflicts between individuals or organizations that require financial compensation or non-criminal legal actions as opposed to criminal prosecution. Property disputes together with contractual disputes and personal injury cases follow the civil system that operates as part of the legal framework in the UAE.
The question “Is money laundering a criminal or civil offence in the UAE?” Money laundering functions as a major criminal offense under UAE law. The legal repercussions within UAE laws arise from money laundering offences which jeopardize national security and financial systems.
Money Laundering As A Criminal Offence in the UAE
The government of the UAE has established comprehensive processes that enable them to prosecute money laundering activities as criminal offence. Money laundering serves as a punishable criminal offense under UAE law after the Federal Decree-Law No. 20 of 2018 introduced statutes in 2018 and received additional amendments through Federal Decree-Law No. 26 of 2021.
According to the law there exists no direct connection between money laundering cases and predicate offenses which means illegal fund handlers may receive legal charges regardless of their involvement in the primary criminal enterprise. The existing laws have established various illegal activities which include:
- Individuals hide the illicit origin of their funds by moving money among different locations in order to conceal or disguise its original criminal nature.
- Anyone involved in illegal finance operations seek to disguise both their crime proceeds and funding origins and ownership details of their assets.
- Criminal prosecution results when one obtains criminal funds through acquisition and possession after deriving money through illegal activities.
- The criminal actions of offenders receive help from these individuals to avoid legal prosecution.
An individual engaged in money laundering activities could become subject to legal prosecution even if they did not participate in the underlying criminal offense that produced their funds. Stay one step ahead of financial crime, ensure your business is fully protected with Xpert Advisory’s AML consultancy services today!
Legal Framework Governing Money Laundering in the UAE
The United Arab Emirates created an extensive system of laws and regulations that prevent money laundering crimes by international standards. Key laws and regulations include:
- Federal Decree-Law No. 26 of 2021 amended Federal Decree-Law No. 20 of 2018, the primary money laundering legislation of the UAE. This legislation, and specifically this amendment, defines the money laundering offenses and their corresponding repercussions.
- Cabinet Decision No. 10 of 2019 requires the reporting obligations for Decree-Law legislation as well as necessary preventive measures.
- Federal Law No. 4 of 2002 stands as the foundation for money laundering legislation which has received additional amendments through subsequent rule changes.
- The UAE adheres to Financial Action Task Force (FATF) Standards to combat money laundering.
Companies as well as financial institutions and other non-financial entities have to follow rigorous reporting procedures including both risk assessment tools and reporting suspicious transaction and anti-terrorism funding criteria. The entities need to establish performance-based compliance frameworks that protect regulatory compliance.
With the help of Xpert Advisory, safeguard your business from penalties by maintaining strict AML compliance in the UAE.
Dedicated Authorities Combating Money Laundering in the UAE
The United Arab Emirates (UAE) has developed a complete program to fight financial offenses. The strategic approach requires multiple dedicated state entities that begin by verifying legitimate sources of funds and implement thorough observation and both enforcement and regulatory oversight to maintain compliance and reduce financial risks. Under the following order authorities take part in the processes:
Anti-Money Laundering Department (Central Bank of the UAE)
The Central Bank of the UAE developed its anti-money laundering department during August 2020. As a regulator, it is responsible to ensure compliance of AML/CFT requirements by the financial institution with a license which underpins the integrity of the financial system.
Federal Anti-Money Laundering Courts
The specialized money laundering courts based in Sharjah and its nearby areas of Ajman together with Umm Al Quwain and Fujairah use the four distinct judicial districts to expedite legal cases and improve AML law enforcement.
Local Anti-Money Laundering Court (Abu Dhabi)
The local Anti-Money Laundering Court in Abu Dhabi focuses on financial crimes like money laundering and tax evasion.
Executive Office of Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT)
Formed in December 2020, this office works to support global financial crime cooperation and maintain international AML/CFT standards for the UAE.
National Committee for Combating Money Laundering (NAMLCFTC)
The committee performs three key functions by assessing national risks and creating AML policies while establishing partnerships with international cooperations to protect UAE compliance.
Financial Intelligence Unit (FIU) & ‘goAML’ Platform
The FIU operates the ‘goAML‘ digital platform, developed by the UNODC, to conduct digital monitoring of suspicious financial transactions while requiring all financial entities to join the oversight system.
Fawri Tick
This advanced system unites financial crime data between federal and local authorities to perform simultaneous real-time surveillance and quick implementation of enforcement procedures for illegal transactions.
Collectively, these government bodies collaborate to maintain financial integrity alongside enhanced transparency as they establish the UAE as a global leader in anti-money laundering (AML) operations.
Conclusion
Money laundering stands as a strictly illegal criminal offence within the UAE with repercussions including extensive prison sentences as well as monetary penalties and property seizures and forced departure from the country for foreign offenders. The UAE has created detailed financial crime legislation while establishing various authorities that handle criminal activities to observe international AML/CFT requirements. The UAE’s financial institutions and businesses need to follow strict regulations when dealing with suspicious transactions because the country maintains a commitment to financial transparency and safety through this system.
Safeguard your business from the risks of money laundering with Xpert Advisory. Our expert AML consultancy services are tailored to ensure your business stays compliant with the latest UAE regulations. Contact us today for professional guidance and stay ahead of compliance challenges!
FAQs
Is Money Laundering a Criminal or Civil Offence in UAE?
Money laundering stands as a criminal offence. The perpetrator undertakes criminal misconduct to conceal illegal funds by making deposits into banking establishments for money laundering purposes.
What Measures Can Be Implemented to Prevent Money Laundering in UAE?
The prevention of money laundering requires the UAE to implement thorough regulations on shell companies combined with enhanced due diligence procedures to stop illegal activity facilitation through such entities. The prevention of money laundering depends heavily on transparent financial institution cooperation with government authorities.
Which Regulatory Authorities are Responsible for Combating the Financing of Illegal Organizations?
The combating authorities who work with terrorism and illegal organization finances aim to stop drug trafficking activities that facilitate illegal money transfer. The regulatory authorities both monitor financial transactions with strict oversight while enforcing regulations that impede illegal networks.
