UAE publishes ‘Red Flags Guidance’ for terrorist and proliferation financing
The United Arab Emirates has published its ‘Terrorist and Proliferation Financing Red Flags Guidance,’ this month, coinciding with a visit by US, EU and UK officials to discuss export controls and the trade of potential dual-use products in light of sanctions on Russia.
The Executive Office for Control & Non-Proliferation said the purpose of the publication ‘is to provide a consolidated list of Terrorist Financing (TF) and Proliferation Financing (PF) red flags that aim to assist financial institutions (FIs), designated non-financial businesses & professions (DNFBPs), and virtual asset service providers (VASPs) in identifying and detecting suspicious TF and PF activities, including those that may be related to the evasion of targeted financial sanctions (TFS) imposed under United Nations Security Council Resolutions (UNSCRs) or by local designations.’
It explained, ‘The red flag indicators listed in this document aim to assist FIs, DNFBPs, and VASPs in identifying suspicious sanctions evasion activities related to both TF and PF and to report such activities as per the reporting requirements.’
Some of the red flags specific to terrorist financing cases related to the UAE and other regional countries listed in the guidance include:
- Carrying out of multiple ATM cash withdrawals in short succession (potentially below the daily cash reporting threshold) across various locations in territories where sanctioned people have influence or in the border of sanctioned countries.
- Transactions involving certain high-risk jurisdictions such as locations in the midst of or in proximity to, armed conflict where terrorist groups operate or locations, which are subject to weaker ML/TF controls.
- The use of virtual assets to send funds to a few select wallets at unregulated virtual assets exchanges (or exchanges in territories where sanctioned people have influence or sanctioned jurisdictions).
- Dealings, directly or through a client of your client, with sanctioned countries6 or territories where sanctioned persons are known to operate.
- The use of shell companies through which funds can be moved locally and internationally by misappropriating the commercial sector in the UAE.
Earlier this month, senior officials from the United States, United Kingdom and the European Union were in the UAE to discuss export controls and the trade of potential dual-use products, according to official reports.
The United States has led a global push to ensure that sanctions on Russia are not circumvented, with envoys jointly travelling to countries to emphasise that the West’s sanctions on Moscow must be enforced.
The UAE is among countries considered to be ‘circumvention hubs,’ with reports of wealthy Russians using loopholes in the country to evade the US and European sanctions.
In the 5 September meeting, the visiting Western envoys spoke with UAE representatives from the Executive Office for Control and Non-Proliferation, the Ministry of Justice, the Ministry of Economy, the Central Bank of the UAE, and the Ministry of Foreign Affairs, WAM said.
‘As one of the world’s most important trade and investment hubs, the UAE welcomes the opportunity to build on the constructive conversations held in February to strengthen our partnership and coordination on export controls and sanctions regimes,’ said Saeed Al Hajeri, Assistant Minister for Economic and Trade Affairs at the Ministry of Foreign Affairs.
‘The visit was an opportunity to highlight the UAE’s export control framework, as well as outline in detail the clear and robust processes in place,’ he added. ‘The UAE has a legal export control framework and is continuously monitoring the export of dual-use products. We reiterated our commitment to remain in close dialogue with our international partners.’
