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Anti-Money
Laundering
Combatting
Terrorism Financing
& Fraud Awareness
AAE/HRD/L&D/PRE/012 Version 3 July, 2023 All trademarks, trade names, service marks, copyrights of AAE, shall remain
the exclusive property and right of Al Ansari Exchange.
Contents

1. Introduction 18. Responsibilities of Senior Management

2. ML & TF 19. Roles of the CO and ACO
3. Products and services – AAE 20. KYC
4. Terms and Concepts to Familiarize 21. Adopted KYC Process at AAE
5. ML/TF Typologies 22. Due Diligence Measures
6. Targeted Financial Sanctions 23. Customs Declaration Form
7. Dual Use Goods 24. Third Party Transactions
8. ML/TF Risks 25. Sanction & PEP Screening Procedures
9. High Risk Customers 26. Record Retention Policy
10. Cash Intensive Business 27. Disciplinary procedures
11. EMBARGO/FATF High Risk 28. Criminal Offences and Penalties
12. Three Lines of Defense 29. Tipping Off
13. Regulatory Responsibilities & Obligation of 30. TBML
Employees 31. Fraud Related Risks
16. Non- Compliance Charges 32. Reference to industry guidance and
17. Red flags other sources of information
18. UPS, STR & SAR

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Acronyms

AML / CFT Anti-Money Laundering / Countering the Financing of Terrorism

ML Money Laundering TF Terrorist Financing

CDD Customer Due Diligence EDD Enhanced Due Diligence

MSB Money Service Business FIU Financial Intelligence Unit

PEP Politically Exposed Person TBML Trade Based Money Laundering

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Introduction

The nature of our business is

classified as ‘Financial Services
Provider’ and therefore all
transactions of the following
products and services that we
conduct under the umbrella of
AAE are subject to AML Law and
Regulation and internal policies
and procedures.

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Financing of Illegal Organizations

Any physical or legal action

aiming at providing funding to
an illegal organization, or any of
its activities or its members.

Crime: ML crime and related

predicate offences, or financing
of terrorism or illegal
organizations.

Enterprises, gangs, mafias, and

syndicates that are involved in
organized crime.

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Products and Services offered by Al Ansari Exchange List

Global Fund Transfer Demand Drafts

Cash Express – Send &

Receive (Instant Transfers) WPS

Western Union – Send & Travel Card

Receive (Instant Transfers) Sale & Reload

E-Exchange &
Cash Collection
Mobile app

Domestic Transfer
National Bonds
(Instant Transfers)

Other Special
FCY Sale & Purchase
Products/Services

Export/Import of
Currencies

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 ML and TF Typologies

Illicit fund transfer ML through

through normal ML through Foreign Use of business
Purchase & sale of Trade Based Money
remittance systems exchange structures (shell
precious goods Laundering
and instant transfer transactions companies)
systems

Physical transport of illicit ML through

cash across countries crowdfunding claiming VAT/carousel
and ML through stored Identity fraud / false Real estate-based ML
financial assistance fraud and other
value systems. (Travel identification fraud schemes
card, international and medical
mobile top up) requirements

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 ML and TF Typologies

Underground banking Conversion of fiat

Use of Wire Transfers ML through Non- Investment in
/ unlicensed Life/General currency (normal
or Electronic Fund profit organizations Capital Markets
remittance services Insurance Products currency) to virtual
Transfer
currency.

Utilization of individual Transactions by multiple remitters to

Use of foreign Concealment of Transactions between account for business single beneficiary and transaction by
bank accounts Beneficial Ownership individuals with no activities to conceal the single remitter to multiple
apparent relationship UBO information and beneficiaries
and purpose business activities

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 Recent Trends/Emerging Risks in ML

Utilization of single withdrawal Flipping in real estate

slips as source of fund Hawala settlements Transactions between
transactions and
document to conduct through Exchange houses friends/relatives claiming
subsequently conducting
multiple remittances through having wide network in UAE ‘repayment of old borrowings’
cross border transfers
multiple financial institutions or ‘lending money’

Reloading of travel card by Remittance & subsequent Private donations Professional Money
third party with unknown cancellation. Laundering
source of funds (Fraud Scenario)

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Stages of ML

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Methods of Money Laundering

Structuring
Micro
Structuring

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ML - Structuring and Microstructuring
• Designing a transaction to evade triggering a reporting or recordkeeping
requirement is called “structuring”.
• Structuring is possibly the most commonly known money laundering
method.
• The individuals engaged in structuring may be runners hired by the
launderers. These individuals go from bank to bank depositing cash and
purchasing monetary instruments in amounts under reporting thresholds.
• Structuring can be done in many settings or industries, including banking,
money services businesses and casinos.
• A common technique involved in structuring is called ‘smurfing,’ which
involves multiple individuals making multiple cash deposits and/ or buying
multiple monetary instruments or bank drafts in amounts under the
reporting threshold in an attempt to evade detection.
• Another method of placing large amounts of illicit cash into the financial
system is “microstructuring”. Microstructuring is essentially the same as
structuring, except that it is done at a much smaller level. Instead of taking
$18,000 and breaking it into two deposits to evade reporting requirements, the
microstructurer breaks it into 20 deposits of approximately $900 each, making
the suspicious activity extremely difficult to detect.

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ML and TF

Terrorism Financing refers

to processing of funds to
sponsor or facilitate
terrorist activity.

A terrorist group builds

and maintains a network
to facilitate sourcing and
channelizing of funds as
well as financing terrorist
activities.

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Financing of Terrorism (FT)

The AML-CFT Law designates the financing of terrorism as a

criminal offence. It defines the financing of terrorism as:

• Committing any act of money laundering, being

aware that the proceeds are wholly or partly owned by
a terrorist organisation or terrorist person or intended to
finance a terrorist organisation, a terrorist person or a
terrorism crime, even if it without the intention to
conceal or disguise their illicit origin.
• Providing, collecting, preparing or obtaining proceeds
or facilitating their obtainment by others with intent to
use them, or while knowing that such proceeds will be
used in whole or in part for the commitment of a
terrorist offense, or committing such acts on behalf of a
terrorist organisation or a terrorist person while aware
of their true background or purpose.

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ML and TF

The AML-CFT Federal Decree Law No. 20 of 2018 defines ML

as engaging in any of the following acts willfully,
having knowledge that the funds are the proceeds of a
felony or a misdemeanor:

• Transferring or moving proceeds or conducting any transaction with the aim of concealing
or disguising their Illegal source.
• Concealing or disguising the true nature, source or location of the proceeds as well as the
method involving their disposition, movement, ownership of or rights with respect to said
proceeds.
• Acquiring, possessing or using proceeds upon receipt.
• Assisting the perpetrator of the predicate offense to escape punishment.

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Proliferation Financing & Proliferation of
Weapon of Mass Destruction

The term proliferation of weapon of mass destruction (proliferation) does

not limit itself to providing or allowing chemical, biological, radiological,
or nuclear material or equipment to build weapons, but it also involves
the transfer and export of technology, goods, software, services or
expertise that could be used in nuclear, chemical or biological weapons-
related programs. The targeted financial sanctions aim to prevent the
financing of proliferation.

Proliferation financing is providing financial services to those related

programs for the transfer and export of nuclear, chemical, or biological
weapons, their means of delivery, and related materials. It also involves
the financing of trade in sensitive goods needed to support or maintain
those programs, even if those goods are not related to any nuclear,
chemical, or biological material, such as oil, coal, steel, and military
communication equipment.

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Customer

A customer is any person (natural or legal) who enters into a business relationship
or carries out an occasional financial transaction with a financial institution.
A customer can be an individual, a corporation, a partnership, a trust or any other
entity recognized as a legal entity.

Individual customers Corporate customers

(natural persons) (legal entities)

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Know Your Customer (KYC)

KYC is the process of

verifying the identity
and profile of the
customer along with
the identification/
assessment of
potential ML/TF &
sanctions risk.

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Importance of KYC Process

KYC Process is the first and crucial step

in any financial institutions.

The primary objective of this process is

to manage risks and prevent financial
frauds and money laundering.

The KYC guidelines have been

introduced by CBUAE in the context of
recommendations made by FATF.

Cabinet decision 10/2019 requires all

financial institutions must ensure that
they follow certain minimum KYC/CDD
(customer due diligence) standards.

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Acceptable IDs (Individual)

• Emirates ID (EID) (Grace period of 30 days is allowed)

• Passport with Valid Visa
• GCC ID for GCC Nationals only (KSA, Kuwait, Oman, Bahrain & Qatar)

Note: Identification documents such as drivers’ license, labor card, other countries’ identification
documents, GCC ID for non-GCC nationals, etc. are not acceptable We may accept Seaman’s
Pass/ID along with the passport copy in order to complete the KYC Process, from Individual
customer who carry out the following transactions.

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Types of KYC

01 02 03

Customer Customer Due Enhanced Due

Identification Diligence Diligence
(CID) (CDD) (EDD)

Individual Customer
Individual Customer Individual Customer FCY & Remittance
FCY FCY & Remittance
Corporate Customer
FCY & Remittance

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Sanctions Screening

FRONT-END BACK-END

1. Real time front-end 1. Back-end screening

screening 2. Executed by
Compliance & AML
2. Interdiction Process
team

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Unwrapping of Ultimate Beneficial Owner

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Shell and Shelf Company

SHELL COMPANY SHELF COMPANY

Exists only on paper A corporation that has

and has no office had no activity. It has
and no employees been created and put on
but may have a the shelf. This corporation
bank account or is then later sold to
may hold passive someone who prefers a
investments or be the previously registered
registered owner of corporation over a new
assets. one.

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Politically Exposed Persons (PEPs)

Individuals who are or have PEPs can be either:

been entrusted with prominent
public functions by a country. 1. Foreign PEPs
For example, heads of state or 2. Domestic PEPs
of government, senior
politicians, senior government,
judicial or military officials,
senior executives of state-
owned corporations,
important political party
officials.

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PEP Screening (by Compliance & AML Department)

PEP Screening happens during onboarding/review of customers and on transactions.

If the customer is identified to be a PEP (Name, DOB & nationality/place of birth
match), Compliance Official should action the alert as true PEP.

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PEP Screening (by Compliance & AML Department)

• In financial regulation, a politically exposed person (PEP) is one who has

been entrusted with a prominent public function. A PEP generally presents
a higher risk for potential involvement in bribery and corruption by virtue of
their position and the influence that they may hold.

• PEP screening (PEP list is sourced from Refinitiv World-Check)

happens during onboarding/review of customers and on
transactions. If the customer is identified to be a PEP (name, DOB &
nationality/place of birth match), Compliance Official marks the
customer profile as PEP.

• As a result, risk template of the customer will be updated

with PEP Status for heightened monitoring and risk
assessment/profiling purposes.

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Prepaid Cards and Corporate Organizations

Prepaid Cards (Travel Cards)

• Prepaid cards have the same characteristics that make cash attractive to
criminals: they are portable, valuable, exchangeable and anonymous.
Typically, prepaid products require the consumer to pay in advance for
future purchases of goods and services. Each payment is subtracted from
the balance of the card or product until the total amount is spent.
• Identified potential risk factors: Anonymous card holders, anonymous
funding, anonymous access to funds, global access to cash through ATMs,
and substitute for bulk-cash smuggling.

Corporate Organizations/Entities
• Corporate vehicles can be misused for money laundering, bribery and
corruption activity, sheltering assets, and tax evasion, among other uses.
Vehicles such as corporations, partnerships, and trusts are all excellent
methods to maximize anonymity of ownership as well as its actual
purpose.

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Correspondent Banking

Correspondent Banking Transaction Example

(Single Correspondent)

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Correspondent Banking

Correspondent banking is the provision of banking services by one bank (the “correspondent
bank”) to another bank (the “respondent bank’”). By establishing multiple correspondent
relationships globally, banks can undertake international financial transactions for themselves
and for their customers in jurisdictions where they have no physical presence. Large
international banks typically act as correspondents for thousands of other banks around the
world.
1. By their nature, correspondent banking relationships create a situation
in which a financial institution carries out financial transactions on
behalf of customers of another institution. This indirect relationship
Correspondent means that the correspondent bank provides services for individuals or
banking is entities for which it has neither verified the identities nor obtained any
vulnerable to first-hand knowledge.
ML for two 2. The amount of money that flows through correspondent accounts can
pose a significant threat to financial institutions, as they process large
main reasons:
volumes of transactions for their customers’ customers. This makes it
more difficult to identify suspicious transactions, as the financial
institution generally does not have the information on the actual parties
conducting the transaction to know whether they are unusual.

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Used Cars/Vehicle Dealers

Trading in vehicles and

conducting successive Used Car valuation can
transactions of buying and easily be manipulated.
selling new and used It’s a high risk business
vehicles to produce as it still cash intensive
complex layers of business.
transactions.

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Why are Exchange Houses targeted by Money Launderers?

An EH may carry out one or more of the following services such as

The services offered by Exchange Money Remittance, FCY Transactions, Prepaid Cards, and other
Houses are attractive to criminals special products.
who want to transfer illicit cash • As per the National Risk Assessment conducted by the CBUAE,
the risk of money laundering and terrorist financing is to be high
in the services offered by Exchange Houses / Money Service
Businesses. Where illicit cash is involved, criminals may use MSBs
to move money out of their hands into the financial system.
The services provided by MSBs can also be attractive to those
financing terrorism, who exploit the same vulnerabilities.

All MSBs need to be aware of the following risks

common to such businesses:
• The widespread use of cash by criminals
• Organised crime groups trying to infiltrate the MSB or
corrupt its employees
• The use of anonymous ways to deposit cash
• Criminals taking advantage of weak or inadequate
policies, controls and procedures

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Designated Non-Financial Business and Profession

Examples for Designated Non-Financial Business and Professions (DNFBPs) are :

Lawyers, notaries
Dealers in
Real estate other independent
precious
agents legal professional,
metals
accountants, & others

Verify that the customer is supervised as a DNFBP by the appropriate supervisor

Obtain information
sufficient to
Verify that the Person before
PROCESS

determine that the Take additional

customer is establishing the
customer is steps to understand
supervised as a business
compliant with the the customer’s
DNFBP by the relationship or
AML/CFT preventive business and its
appropriate processing any
measures required customer base
supervisor transactions
under AML-CFT
Decision

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Real Estate

An attractive channel for laundering

illicit funds because: Red Flags for Real-Estate Customers:
• Can be purchased with cash
• The ultimate beneficial ownership 01 Complex Structure for concealing the UBO
can be disguised
• Stable and reliable investment
• Value may be increased through 02 Cash Intensive Business
renovations

03 Under- or over-valued transactions.

Example: A money launderer might find a
cooperative property seller who agrees to a Location of client’s and/or customer’s
reported purchase price well below the actual 04
value of the property and then accepts the
source of funds
difference under the table. This way, the launderer
can purchase a $2M property for $1M, secretly Unusual sources, e.g. funds obtained from
05
passing the balance to the cooperative seller. After unknown individuals or unusual organizations
holding the property for a time, the launderer sells it
for its true value of $2M. This arrangement is called
‘reverse flip’. 06 Purchase with large amounts of cash

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Dealers in Precious Metals

Red Flags for Dealers in Precious Metals:

01 Changes to the business name of entities
registered to deal in gold

02 Trading company registration in a tax haven,

even though its business relates to another
jurisdiction

03 Movement of abnormally large sums of money in

individuals’ and companies’ accounts, unrelated to
the nature of their business.

04 Numerous sole proprietorship businesses/private limited

companies set up by seemingly unrelated people
(proxies), but controlled by the same group of people.
False addresses are used to register such businesses

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Trusts / Legal Arrangements

The significance of a trust

account in the context of
money laundering - it can
be used in the first stage of
converting illicit cash into
less suspicious assets.

It can help disguise the

criminal ownership of funds
or other assets.

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Trusts / Legal Arrangements

A trust is a fiduciary relationship in which one party, known as a trustor, gives

another party, the trustee, the right to hold title to property or assets for the
benefit of a third party, the beneficiary. Trusts are established to provide legal
protection for the trustor’s assets.

1. It can be used in the first stage of converting illicit

The cash into less suspicious assets
significance of 2. It can help disguise the criminal ownership of funds
a trust account or other assets;
in the context 3. It is often an essential link between different money
of money laundering vehicles and techniques, such as real
laundering: estate, shell and active companies, nominees and
the deposit and transfer of criminal proceeds.

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WAQF

• WAQF is a special kind of philanthropic

deed according to Islamic Law in the
mainland.
• WAQF allows a settler (Donor/Property
owner) to donate fixed assets for the benefit
to the family members or specific
categories of beneficiaries or for a
charitable cause, with no intention of
reclaiming the assets. Under this
arrangement the settlor (person who
donated the property) loses control on the
donated assets and ownership of the assets
will be formally supervised by the
government authority/charitable trust.

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Charities / Non-Profit Organizations (NPOs)

Vulnerable to misuse for TF:

• Enjoying the public trust
• Having access to considerable sources
of funds
• Being cash-intensive
• Frequently having a global presence,
often in or next to areas exposed to
terrorist activity
• Often being subject to little or no
regulation and/or having few
obstacles to their creation
• Proper utilization of funds cannot
be determined

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Requirements for NPOs

Non-Profit Organisations (NPOs) can often pose increased risks in regard to money laundering, the
financing of terrorism, and the financing of illegal organisations. As part of an effective risk-based
approach to AML/CFT, FIs that enter into or maintain Business Relationships with NPOs should take
adequate CDD measures that are commensurate with the risks involved.
• Ensuring that the NPO (including charitable) is properly licensed or registered. In particular, when opening
any accounts to collect or receive donations for any entity, FIs licensed by the Central Bank must obtain a
letter from the Minister of Community Development or her authorized representative or from the head of
the local authority concerned with the organisation of donations or his/her authorized representative,
which allows opening of such accounts.
• Note that conducting financial transfers out of the UAE through these accounts must be done via the
Ministry of Foreign Affairs.
• Obtaining information about and assessing the adequacy of the NPO’s AML/CFT policies, procedures and
controls
• Obtaining sufficient information about the NPO’s legal, regulatory and supervisory status, including
requirements relating to regulatory disclosure, accounting, financial reporting and audit (especially where
community/social or religious/cultural organisations are involved, and when those organisations are based,
or have significant operations, in jurisdictions that are unfamiliar or in which transparency or access to
information may be limited for any reason)

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Requirements for NPOs – cont.

• Obtaining sufficient information about the NPO’s ownership and management structure (including taking
into consideration the possibility of PEP involvement); the nature and scope of its activities; the nature of its
donor base, as well as of that of the beneficiaries of its activities and programmes; and the geographic
areas in which it operates, so as to be in a position to identify, assess, and manage or mitigate the
associated ML/FT risks;
• Performing thorough background checks (including but not limited to the use of internet searches, public
databases, or subscription information aggregation services) on the NPO’s key persons, such as senior
management, branch or field managers, major donors and major beneficiaries, to screen for possible
matches with targeted and other international financial sanctions lists, indications of criminal activity
(including financial crime), or other adverse information.

FIs that enter into or maintain relationships with NPOs should also use a risk-based approach to
determine the appropriate internal AML/CFT policies, procedures and controls the FIs implement
in relation to the risk assessment, risk classification, and the type and extent of CDD they perform
on NPOs. The policies and procedures that FIs apply should be reasonable and proportionate to
the risks involved, and should be adequately documented, Senior Management approved, and
communicated to the relevant employees of the organisation.

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Hawala / IVTSs

Hawala or informal
value transfer
systems (IVTSs)

Usually no physical
movement of currency
and a lack of formality with
regard to verification and
record-keeping.

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Risks of Hawala / IVTSs

Since Hawala is a remittance system, it can be used at any phase of

the money laundering cycle.
• It can provide an effective means of placement: when the
Hawaladar receives cash, he can deposit the cash in bank
accounts (may approach an exchange house to deposit it in
bank account). He will justify these deposits to bank officials as the
proceeds of legitimate business.
• Hawaladars often operate within or in addition to a legitimate or
front business to provide cover for the activity and commingle the
funds in the business accounts.
• A component of many layering schemes is transferring money
from one account to another, while trying not to leave a paper
trail. A basic hawala transfer leaves little if any paper trail. Hawala
transfers can be layered to make following the money even more
difficult. This can be done by using Hawaladars in several
countries, and by distributing the transfers over time.
• As per Al Ansari Exchange’s risk appetite, Hawala is prohibited.

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Cash Intensive Business

Convenience Stores Retail Stores Restaurants

Wholesale/General Travel agencies Car Dealers

Trading Business

Source: CBUAE/BSD/N/2021/4593

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Vulnerabilities of Cash

Cash Cash holds no

Interchange Transport
Anonymity Acceptability transactions record of its
-ability -ability
are source of
instantaneous owner

Source: CBUAE/BSD/N/2021/4593

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Trade Based
Money
Laundering
(TBML)
Reasons for TBML

01 02 03 04

Cross border Intermingling of Vulnerabilities Long supply

functions the trade sector of the foreign chain
with the finance exchange
sector market

Source:(http://stat.wto.org/StatisticalProgram/WSDBViewData.aspx?Language=E

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Common Typologies of TBML

FATF: Trade-Based
Money Laundering
“Process of disguising the
proceeds of crime and
moving value through the
use of trade transactions
in an attempt to
legitimize their illicit
origins.”

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Common Typologies of TBML

Under-Invoicing Over-Invoicing Multiple-Invoicing Over & Under

Exporting the goods with Exporting the goods Creating more than one Shipment
invoicing lower amount with invoicing higher invoice for the same Displaying over/under
than market standard amount through which consignment exported to shipment exported for
which helps importer to sell importer transfer the justify the reason of receiving unreal credits in
the goods in the market funds to exporter more multiple payments. the account through
and generate the funds. than the correct value. Multiple payments can be trade transactions.
generated from various
financial institutions.

Misleading Description Front & Shell Barter Transactions Funnel Accounts

of Goods Companies Exchanging one Funnel Accounts are
Method of Incorrect Front & Shell companies good for another used in which multiple
description of goods can help the exporter/ good in which no cash deposits/fund
be used to launder the importer to create financial transaction transfers are received
money. E.g. Exporter trade transaction by take place. There are from different business
display expensive goods creating false identity to no money trail locations for trade
in the invoice to receive launder the money. available for such transaction to launder
more than actual funds. transactions. the money.

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Instruments of Trade Finance

Checks on Bills of Exchange

Bills of Exchange
1. Value of Draft, date of payment and payment terms e.g. "at sight",
"30 days after sight", "60 days after Bill of Lading Date".
2. Date Exporter presents documents to the "available with" Bank (not The drawing of a ‘bill of exchange’ (also
normally required).
referred to as a ‘draft’) is commonly
3. Letter of credit reference number assigned by the Issuing Bank (if
required by credit).
used by exporters as a means of
4. Date the letter of credit was issued (not normally found on a draft). obtaining payment from buyers for
5. Name and address of the Issuing Bank (if the drafts are drawn on the goods shipped. Bills of exchange
issuing bank) protects (reduces transactional risk) of
6. Name and address of the bank on which the Drafts are to be drawn. both parties. Documentary credits
7. Signature of an authorised signing officer of the Company and the (discussed later) issued for buyers by
Beneficiary's name as shown on the letter of credit
banks usually require bills of exchange
to be drawn, and frequently bills of
Checks on Commercial Invoice exchange are drawn by the seller in
terms of the commercial contract of
1. Merchandise weight, quantity and price and currency.
sale with the buyer.
2. The name and address of Exporter and the Importer.
Source:
3. The number of copies presented and signed if required.
https://www.fatfgafi.org/media/fatf/documents/repo
4. The trade term listed, e.g. C.I.F., F.O.B etc. rts/Trade_Based_ML_APGReport.pdf
5. Involvement of third party companies (Suppliers, Intermediaries, Freight
forwarders)

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Instruments of Trade Finance

• The quantity of units/weights should match the Commercial Invoice (this may or may not agree based on how the
Checks
weights on the by
are calculated Transport Document
the various parties involved).
(Bill of
• The breakdown ofmerchandise/weight
Lading/Airway Bill) Checks
per carton, package or container on be
should the Packaging
shown if requestedList
in the letter
of credit.

Airway Bill Packaging List

1. Information on the merchandise (usually a • The quantity of units/weights should
general description). match the Commercial Invoice (this
2. The points of loading and discharge may or may not agree based on how
3. The consignee, consigner, notifying party, the weights are calculated by the
freight forwarder, vessel information, various parties involved).
Transshipment information
4. The date of shipment, Date of loading, • The breakdown of merchandise/weight
estimated date of arrival. per carton, package or container
5. Commodity, quantity, value to be verified should be shown if requested in the
against the actual invoice letter of credit.

Source: https://www.fatf gafi.org/media/fatf/documents/reports/Trade_Based_ML_APGReport.pdf

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TBML Checks

Identify who is the

01 ultimate consignee and 03
the location of the
consignee to
understand whether the
Check business activity is
matching with the
Verify
profile of the ultimate
1. Check whether the business activities are consignee and the 1. Verify whether the volume or
matching with the transactions location. frequency of transactions
2. Check whether the business activities of are matching with the
customers and the suppliers of our customer operational activities.
are similar. 2. Verify the value of the goods
3. Check whether there are any involvement of are over or under valued.
third parties or complexity in the trade. 3. Verify the value of the goods
4. Check for any discrepancies in the description 02 are over or under valued.
and the quantity of the products mentioned on
the invoice and the shipping documents.
5. Check whether all the mandatory documents
are submitted by the customers
6. Check the quantity mentioned in the invoice
and the bill of lading is matching
Identify
HR & Administration Department | Learning & Development Page | 52
TBML Red Flags
Differences between the description of the commodity The commodity is trans-shipped through one or more
on the bill of lading document and the invoice jurisdictions for no apparent economic reason

Differences between the description of the goods on the The method of payment appears inconsistent with the
bill of lading (or invoice) & the actual goods shipped risk characteristics of the transactions

Differences between the value of the commodity The transaction involves the receipt of cash (or other
reported on the invoice & the commodity’s fair payments) from third party entities that have no apparent
market value connection with the transaction.

Inconsistency with the scale of the exporter & importer’s The transaction involves the use of repeatedly
regular business activities amended or frequently extended letter of credit

The type of commodity shipped is designated as “high

The transaction involves the use of shell or Front
risk” for money laundering activities
companies.

The type of commodity being shipped appears

inconsistent with the exporter or importer’s regular The commodity shipped to (or from) a jurisdiction
business activities designated as high risk for ML activities

The shipment does not make any economic sense The quantity in the invoice and in the bill of lading is
mismatching

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Case Study

Company X also
Company X Company X filed
fabricated Company X had Company X
located in India falsely declared Company X
purchase invoices received indulged in round
received advance and forged received export Company X
to show local substantial cash tripping by
remittance from documents with payments through transferred large
purchases of deposits in India receiving back as
Company Y the bank to show trade finance amounts of public
diamonds, from the public on export earnings the
located in foreign the overvalued arrangements via deposits to
whereas no the promise of high financial value
jurisdiction for a exports of an open company Y
purchases of returns via a which it had
promise to export diamond without accounting system through Hawala
diamonds had fraudulent Ponzi transferred abroad
consignments of having made any from Company Y.
actually ever taken Scheme as hawala.
diamonds. shipment.
place.

Source: https://www.fatf gafi.org/media/fatf/documents/reports/Trade_Based_ML_APGReport.pdf

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Case Study 1 – Red Flags

Export of goods
without any Advance inward
corresponding remittance
purchase of raw against exports
materials or finished without
goods. justifiable reasons.

Sudden increase Export documents

in volume of which are not duly
exports by a new authenticated by
exporter. export regulating
agency were
accepted by the bank.

Source: https://www.fatf gafi.org/media/fatf/documents/reports/Trade_Based_ML_APGReport.pdf

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Dual-use Goods

Dual-Use Goods list is published by The Executive Committee

for Control and Non-Proliferation (EOCN).

Chemicals
Dual-use Goods includes a wide range Dual-Use
of goods that are designed for Goods
commercial applications, but can have Non-Chemicals
military applications or potentially be
used as precursors or components of
weapons of mass destruction.
Exporting/Importing of Chemicals,
goods and materials which are Dettol
considered to be Dual used goods as a
normal trade, to circumvent targeted Nerve Gas
sanctions and proliferation financing.
Isopropanol

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Examples of Dual-use Goods
Following are the broad categories of Dual Use Goods, published by EOCN.

Nuclear Special Materials and

related equipment
Materials processing Electronics
Materials

Telecommunications
Navigation and
and information Computers Sensors & lasers
avionics
security

Organization for
Aerospace and National Controlled
Marine the prohibition of
propulsion chemicals (OPCW)
Commodities

Note: Refer the website of Executive Committee for Control and Non-Proliferation,
for detail list of Dual Use Goods (www.uaeiec.gov.ae).

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Trade in Dual-use Goods – Case Study 2

After investigation, the

UAE authorities The UAE Prosecution
An informal confirmed, with the
identified that the The shipment The UAE Prosecution
intelligence support of experts, that
The shipment beneficiary of this included four issued an order to
information was the shipment material
contained a chemical shipment is the seize and restrain
received by UAE
component listed as a “Somali Youth is Potassium Nitrate, an containers worth a
authorities about a item listed as an value of AED the shipment in
dual-use item. Movement”, which is
shipment transported explosive precursor 247,000. coordination with
designated in the UAE
as a transit.
Local Terrorist List and according to federal customs and
UNSCR 1267 list. paragraph (28) of relevant port
UNSCR 2498 (2019). authorities

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The Misuse of Legal Entities

Both companies The UAE The FIU, in

The investigation
A local bank have received authorities found
found that the cooperation with
submitted an funds from that both the Central Bank
companies had issued a freezing
STR to the FIU foreign NPOs companies were
transferred a order for accounts
related to from Country Z had the same
total amount of held by the
which affiliates beneficial owner
domestic legal with the Muslim (Fadi Kamar)
AED 51 million to companies in this
persons, NYBI different legal network. As a result
Brotherhood, a and their of the order, 49
Trading and persons within
terrorist group income was not accounts with a
KCL General the UAE using
listed on the UAE consistent with total value of AED
cheques or cash
Trading Local Terrorist their stated
withdrawals.
29 million were
List. business activity. frozen.

Source: CBUAE/BSD/N/2021/5737

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Typologies On Circumventing Targeted Sanctions
Against Terrorism

Trade of
Money Cash Trade in Dual
Communication
Remitters Smuggling Used Goods
Devices

Trade of Oil & Trade of Charcoal The misuse of

Derivates from Somalia legal entities

HR & Administration Department | Learning & Development Page | 60

Notes on Typologies
MONEY REMITTERS: CIRCUMVENTING SANCTIONS THROUGH TRADE:
• Along with the banking sector, the remittance sector has
been exploited to move illicit funds and is also vulnerable • Trade can be very vulnerable to circumvent
to Terrorist Financing. In countries where access to sanctions against terrorism. It is challenging to
banking services is limited, remittance providers may be identify when sanctioned persons are involved in
the primary financial institution through which consumers any part of the value of chain of trade.
can engage in cross-border funds transfer activity. • Trade of communication devises: Importing &
• Remittance providers are especially vulnerable to abuse Exporting of telecommunication devices to
for Terrorist Financing where they are unregulated, not
support terrorist groups through normal trade
subject to appropriate AML/CFT supervision, or where
they operate without a license (thus working without any channels and through the ways of illegal
AML/CFT controls). smuggling across borders.

CASH SMUGGLING:
• Cash continues to be a prevalent aspect of terrorist operations. While funds may be raised in several ways, they are often
converted into cash to be taken to conflict zones. This is assisted by porous national borders, difficulty in detecting cash
smuggling (particularly in the small amounts that are sometimes smuggled for TF purposes), and the existence of informal and
unregulated economies.
• Cash Smuggling: Transport of physical currency across land boarders to support terrorist activities or groups.
• Smuggling of Gold: Transport of Gold Bars/ armaments illegally across land boarders to support or facilitate terrorist activities or
groups .
• Cash Couriers: Concealing the movement of currency from one jurisdiction to another using people, luggage, mail or any other
mode of shipment, without declaration.

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Notes on Typologies

TRADE OF NATURAL RESOURCES:

• The targeted financial sanctions imposed by the United THE MISUSE OF LEGAL ENTITIES:
Nations include the freezing and prohibition to provide
economic resources, including natural resources to terrorists. Legal entities can be misused to
• Trade of oil and derivates: The oil substances such as petrol/ circumvent sanctions by means of the
diesel are being illegally smuggled from sanctioned territories characteristics of the legal type of
(Iran) and are supplied to terrorist groups, through legal entity, for example by using a legal
entities operate in the oil business. entity as a shell company, or complex
• Trade of Charcoal from Somalia: Based on UN resolution no legal structures to obscure the
(2036) in 2012 regarding the band of charcoal from Somalia beneficial owner. Another method is
due to using charcoal for financing Alshabab terrorist group, through the misuse of the economic
FCA, local Customs Departments and the Executive office of activity developed by the legal entity.
Control Importing and Exporting Goods has ban importing Trade and commercial activities are
charcoal from Somalia and monitor the trade and market for among the highly vulnerable activities
diversion of the goods. The following is the investigation for sanctions evasion related to
findings: terrorism.
 Somalin Charcoal has diverted to several country such as
Comoros and Iran
 Counterfeited Certified of Origin
 Counterfeited bill of Lading Financial Action Task Force, October 2015, p. 23

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Typologies Of Financing Proliferation Of Weapons
Of Mass Destruction

Financial Activities of
The Use of Transfer Through
Diplomat & Other Bulk Cash & Gold
Banking Sector Banks
Personnel

Oil Ship to Ship Trading of Nickel Wire &

Trading in Oil
Transfers Carbon Fiber

HR & Administration Department | Learning & Development Page | 63

Notes on Typologies

TRANSFERS THROUGH BANKS: ECONOMIC RESOURCES

One of the common money laundering methods to move money • Bulk cash and gold: Using bulk cash and gold to transfer value
between jurisdictions using wire transfers/ cross border through Cash couriers/ smuggling, by circumventing the
transactions. The complex transactional activities may finally formal financial sector entirely.
reach the high risk destinations identified for proliferation activities • Oil ship-to-ship transfers: Transferring of Oil from ship to ship, to
(DPRK & Iran). transport cash value to sanctioned jurisdictions. It is typically
• Use of cash to circumvent Sanctions: Currency exchange through vessel identity fraud technique to evade sanctions
networks facilitate exchange of foreign currencies (especially and compromising the institutions due diligence measures.
US Dollars) and transfer of high value of bulk cash to • Trading in Oil: Using the shipping companies established in a
sanctioned jurisdictions. jurisdiction with the intention of evading the sanctions against
• Cyber activity targeting financial institutions: There were sanctioned country/ known for proliferation financing. To
evidences that the high risk sanctioned countries, by means of achieve this, the supporting documents for the oil trade
cyberattacks, is stealing funds from financial institutions (eg. created in the name of front companies, and with the forged
Compromised Automated Teller Machine networks) and bill of lading documents to conceal the origin & destination of
cryptocurrency exchanges in different countries, which allows Oil.
the country to evade financial sanctions and generate • Trading of Nickel Wire & Carbon Fiber: Buying/importing
income in ways that are harder to trace and subject to less products such as Nickel Wire, which is used for military
government oversight and regulation. industries and re-exporting to the sanctioned jurisdictions
through normal trade channels. The products then further
According to the UN Panel of Expert, since 2019, there is a used by defense ministry of proliferation sanctioned countries
marked increase in such cyber activities' scope and and/ or by the militant groups involved in terrorist activities.
sophistication. Some estimates placed the amount illegally The Carbon Fiber materials are probably suitable for use in
acquired by the DPRK at as much as $2 billion. ballistic missile components.

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Red Flags Related to Circumventing TFS and
Proliferation Financing

Dealings in sectors
vulnerable for Dealings, directly or
terrorist financing through a customer of Dealings with
and/or proliferation the customer, with dual-used goods
of weapons of mass high-risk countries
destructions for Terrorism Financing

The activity developed

Dealings with or financed does not
relate to the original or Irregularities during
sanctioned goods or
intended purpose of the CDD process
under embargo
the company or entity

HR & Administration Department | Learning & Development Page | 65

Notes on Red Flags

The following are some red flags or situations that could be looked at more closely or monitored to
identify potential sanctions circumventions of the customers, their business, or the transactions.

• Dealings in sectors vulnerable for terrorist financing and/or • Dealings with sanctioned goods or under embargo. For example:
proliferation of weapons of mass destructions, for example:
1. Weapons
1. Financial sector
2. Hawalas or other money transfer services providers 2. Oil or other commodities

3. Oil and gas sector 3. Luxury goods (for DPRK sanctions)

4. Non-profit organizations 4. Dealings with dual-used goods.
5. International trade
5. Dealings with controlled substances.
• Dealings, directly or through a customer of the customer,
• Identifying documents that seemed to be forged or
with high-risk countries for terrorism financing.
counterfeited.
• Dealings, directly or through a customer of the customer,
• Identifying tampered or modified documents with no apparent
with sanctioned countries or territories where sanctioned
explanation, especially those related to international trade.
persons are known to operate.
• Use of intermediaries.
• The use of shell companies through which funds can be
moved locally and internationally by misappropriating the • When the flows of funds exceed those of normal business
commercial sector in the UAE. (revenues or turnover).

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Notes on Red Flags (cont.)

• The activity developed or financed does not relate to the • Carrying out of multiple ATM cash withdrawals in short succession
original or intended purpose of the company or entity. For (potentially below the daily cash reporting threshold) across
example: various locations in territories where sanctioned people have
influence or in the border of sanctioned countries.
1. For companies, they are importing high-end
technology devices, but they are registered as a • Irregularities during the CDD process which could include, but is
company that commercializes nuts and bolts. not limited to:
2. For a non-profit organization, they are exporting 1. Inaccurate information about the source of funds and/or
communication devices, but they are an entity the relationship with the counterparty.
aimed to provide health services.
2. Refusal to honor requests to provide additional KYC
3. Very complex commercial or business deals that documentation or to provide clarity on the final
seem to be aiming to hide the final destiny of the beneficiary of the funds or goods.
transaction or the good.
3. Suspicion of forged identity documents.
• Complex legal entities or arrangements that seem to be
aiming to hide the beneficial owner.

• Virtual Assets / Cryptocurrency: Financial institutions should pay particular attention to the transfer of funds to a virtual assets
exchange’s operational banking account (to fund a virtual asset wallet) followed by the crypto-to-fiat conversion (either more or
less) from the same exchange within a relatively short period of time. As per AAE’s risk appetite, dealing in Virtual Assets /
Cryptocurrency is prohibited..

HR & Administration Department | Learning & Development Page | 67

Trade in Dual-use Goods - Case Study 1

2 UAE entities owned by Naif Al Findings

Jarmouz supported Houthi
Movement in Yemen by trading in
The investigations have identified
dual used goods such as Cash,
a total amount of AED 101,000
chemical materials, electronics,
belonging to the suspect and his
electrical generators, solar panels
companies and were used to
and telecom gadgets that was
support the Houthi Movement in
made through forging bills of lading.
Yemen.
One hundred tons of chemical
A report from the customs
items, among them MDA, were
authorities confirmed that bills of
identified as being shipped and
lading were forged.
valued at AED 220,000.

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Embargo / FATF High Risk

International sanctions and embargoes are

economic and trade sanctions mainly put in
place by FINCEN, OFAC, United Nations, HMT
and European Union against selected
• Iran (Embargo/FATF
countries. The sanctions can be either selective
or comprehensive. High Risk)
• North Korea
We neither process any transactions to the (Embargo/FATF High
below listed countries nor accept transactions, Risk)
from its nationals, routing through US, Europe • Myanmar
and Oceania correspondent banks. (Embargo/FATF High
Risk)
FATF describes “High-risk jurisdiction” as countries with
• Cuba (Embargo)
significant strategic deficiencies in their regimes to counter • Syria (Embargo)
ML, TF and financing of proliferation. Always refer to
http;//www.fatf-gafi.org/countries/#high-risk for latest country
risk.

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High-Risk Jurisdiction & Sanctioned Countries

FATF Grey List Jurisdiction

1. Albania 14.Nigeria
2. Barbados 15.Panama
3. Burkina Faso 16.Philippines
4. Cameroon 17.Senegal
5. Cayman Islands 18.South Sudan
6. Congo 19.South Afirica
7. Croatia 20.Syria
8. Gibraltar 21.Tanzania
9. Haiti 22.Turkey
10.Jamaica 23.Uganda
11.Jordan 24.United Arab Emirates
12.Mali 25.Vietnam
13.Mozambique 26.Yemen

Source: http;//www.fatf-gafi.org/countries/#high-risk

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Targeted Financial Sanctions

The sanctioned (listed) individuals, groups, or entities UN sanctions regimes with TFS
1. Islamic State in Iraq and the Levant (Da'esh), Al-
Qaida, and associated individuals, groups, Somalia
undertakings and entities. Listed by UNSC
Iraq
2. The Taliban, and associated individuals, groups,
undertakings and entities. Democratic Republic of Congo (DRC)
Listed by the Related to the involvement of terrorist
3. Any individual or entity included in the Local
Cabinet of the bombing in Beirut (2005) plus
Terrorist List, according to UNSCR 1373 (2001)
UAE restrictive measures in relation to
UNSCR 1701 (2006) on Lebanon
The proliferation of weapons of mass destruction (WMD): Libya

1. Democratic People's Republic of Korea (DPRK): Central African Republic (CAR)

nuclear-related, other weapons of mass
destruction-related and ballistic missile-related South Sudan
programs. Listed by UNSC
Mali

2. Islamic Republic of Iran: nuclear programs Yemen

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Targeted Financial Sanctions

Definition Two Main Types of Financial Sanctions

• Asset freezing: Freezing is the prohibition to transfer, convert,

• The term “targeted sanctions” dispose, or move any funds or other assets that are owned or
means that such sanctions are controlled by listed individual, groups, or entities. It includes:
imposed against specific • The Freezing of funds and other financial assets and
individuals or groups, or economic resources, and includes preventing their use,
undertakings. alteration, movement, transfer, or access.
• The term targeted “financial • The Freezing of economic resources also includes
preventing their use to obtain funds, goods, or services in
sanctions” includes both asset
any way, including, but not limited to, by selling, hiring, or
freezing and prohibitions to mortgaging them.
prevent funds or other assets • Prohibition to offer funds and services: This means the
from being made available, prohibition to provide funds to, or render financial services or
directly or indirectly, for the other services related to, any listed individual, group, or entity.
benefit of individuals, entities, This includes, for example, the opening of banking subsidiaries
groups, or organization who in the sanctioned jurisdictions, the provision of financial services
are sanctioned. or trading in natural resources (including oil) and providing
internet and/or telecommunications services.

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Targeted Financial Sanctions

Purpose of TFS:

To deny certain individuals, groups, organizations, and entities the means to violate international
peace and security, support terrorism or finance the proliferation of weapons of mass destruction. To
achieve this, it seeks to ensure that no funds, financial assets, or economic resources of any kind are
available to listed actors for so long as they remain subject to the restrictive measures.
• Person (natural and legal) should note that TFS restrictions published by the UN and the Local
• Terrorism List are subject to change. It is the obligation of all individuals and entities to ensure
• relevant controls and procedures are in place to maintain relevant and up-to-date controls in
• order to effectively implement TFS restrictions. The updated Sanctions Lists are published on the
• Executive Office and the UN website

The list of individuals, or entities is subject to change. The most updated information can be found in the following links:
• The UN Security Council has a Consolidated List of all the sanctioned individuals, groups, or entities by the UN Sanctions
Committees (UN List). The link to this list is: https://www.un.org/securitycouncil/content/un-sc-consolidated-list
• Any individual or entity listed by the UAE (Local Terrorist List): The link to the Local Terrorist List: https://www.uaeiec.gov.ae.

Source : https://www.moj.gov.ae/Content/Userfiles/Assets/Documents/e0bd0722.pdf

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Sanction & PEP Screening Procedures

OFAC sanctions
A

Financial sanctions are restrictive B UN sanctions

measures imposed on individuals or
entities in an effort to curtail their
activities and to exert pressure and
influence on them. C OFSI/EU sanctions

These restrictive measures include, but

are not limited to, financial sanctions,
trade sanctions, restrictions, etc. D CBUAE search and freeze notices

E Internal watch list/Interdiction list

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Targeted Sanctions Against Terrorism and
The Proliferation Of Weapons Of Mass Destruction

This term includes providing

food, lodging, training, and
The term terrorist financing
making means available such as
includes the provision of funds to
transportation and
commit terrorist activities and
communication equipment.
the support and maintenance of
Such financing can occur with
the person (terrorist) or the
money or in kind, and funds
terrorist group.
involved can be from legal or
illegal sources.

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ML/FT Risks Associated with Products and Services

Foreign Foreign Exchange (Forex or FX) is the trading of

Exchange one currency for another

Money Money Transfer refers to transferring money to a

Transfers specified account or person
(Inward/Outward)

Prepaid Open loop network branded cards which can be

Cards used at multiple retailers/outlets where customers
(Travel Cards) can load multiple currencies

Special products refers to those value added

Special
services offered by AAE to its customers in
Products many ways
Detailed depreciation is mentioned on next slides

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A) Foreign Exchange

Foreign Exchange (forex or FX) is the trading of one currency for

another. For example, one can swap the U.S. dollar for the euro
or fiat currency and vice versa.
• Currency exchanges specifically are an important link in the
money laundering chain, particularly during the placement
stage. Once the money has been exchanged, it is difficult to
trace its origin. Also, it has been noted that considering that
they are small businesses, currency exchanges can be easily
prone to takeover by criminals and used to launder money.
• Al Ansari Exchange offers services to buy and sell variety of
foreign currencies from/to its customers.
Thus, getting exposed to variety of ML/TF risks associated to
the service.
• FCY Sale - Where Al Ansari Exchange sells foreign
currency to its customers.
• FCY Purchase - Where Al Ansari Exchange purchases
foreign currency from its customers.

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A) Foreign Exchange

Below mentioned are the major ML/TF risks associated with the Foreign Exchange services,
but not limited to:

• Purchase of foreign currency with illegal funds and • Conversion of funds through a number of small cash
thereby to distant themselves from the true transactions - Conversion of large amounts are the most
origin/crime/illegal activity. Once the money has frequently conducted through a number of smaller
transactions. The aim of these transactions is to avoid the
been exchanged, it is difficult to trace its origin requirement to identify the client under the AML/CFT Law and
and difficult to connect it the involved parties this is why they seek to make transactions under the thresholds
since the settlement of crime happened in a for identification and reporting. Such transactions are often
different currency. conducted in more than one branches or institutions. What
often happens is that several individuals are engaged by
• Conversion of large amounts of cash to a different persons who have money of suspicious origin to execute the
currency - There is a possibility that this money transactions for a small fee.
originates from organized crime. More specifically,
• Conversion of funds of foreign currency into fiat currency –
the natural person having on him/her a large The money launderers tends to convert the proceeds of crime
amount of cash generated from crime will not be received in a foreign currency to the fiat currency of a
used for remittances; it is easier to convert the jurisdiction by travelling or not. Even though the owner of the
proceeds from crime to a different currency and funds usually loses a certain amount of funds due to conversion
further proceed with smaller denominations of rates, but this is not important for money launderers as their only
remittances. aim is to conceal the source of funds in any manner possible.

HR & Administration Department | Learning & Development Page | 78

A) Foreign Exchange (cont.)

Below mentioned are the major ML/TF risks associated with the Foreign Exchange services,
but not limited to:

• Conversion of banknotes in denominations • Conversion of marked banknotes - When handling

commonly counterfeited or related to certain foreign banknotes, special attention should be paid to
criminal activities - Certain countries recommend marked banknotes that can indicate a link to
that their financial institutions stop selling EUR 500 individuals involved in money laundering or terrorism
banknotes due to their use by organized crime. financing. These marks may not be visible as they are
This banknote is a favorite one for the criminals as often written in substances that can be seen under
they can launder larger amount through less ultra-violet light only.
transactions. In addition, they are more
• Conversion of damaged banknotes - Account should
convenient for transportation as the denomination
be taken of the type of damage and the way damage
is higher making the transport much easier than if
was made to the converted banknotes as they can
this were done with smaller denomination
originate from criminal activity. It may be that the
banknotes.
banknotes have been damaged deliberately. These
banknotes are exchanged for large fees, which is less
important for the criminals as their only aim is to
conceal their true origin

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B) Money Transfers (Inward/Outward)

Money Transfer refers to transferring money to a specified account or person

from another specified account or person within or between jurisdictions.
Below are the types of Money Transfers:

• Outward remittance: refers to the Outward • Inward Remittance: refers to those transaction
Remittances whereby the customer whereby the customer receives funds through
transfers funds to a different jurisdiction and Al Ansari Exchange from a different
the transaction is routed through a jurisdiction.
correspondent agent/ intermediary agent
 Al Ansari Exchange offers services from
of Al Ansari Exchange.
various countries for receiving funds and
 Al Ansari Exchange offers services to as a result getting exposed to variety of
various countries in various currencies ML/TF risks associated to the product.
for different type of customers and as
a result getting exposed to variety of
ML/TF risks associated to the product.

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B) Money Transfers (Inward/Outward – cont.)

Below are the types of Money Transfers:

• Instant transfers: refers to those remittance services  Al Ansari Exchange offers above services to various
where there is no correspondent / intermediary jurisdictions in various currencies for different type of
agent involved and the services happen instantly customers and as a result getting exposed to variety
without any delay. of ML/TF risks associated to the product. Considering
the nature of instant remittances which is fast and the
• Domestic Transfer - Transfers which are instant
convenience of clearing the money from the financial
and are restricted to domestic jurisdiction and
system with less time, the scope for fraud is also very
can be from Al Ansari Exchange to Al Ansari
crucial. Hence there is a high amount of risk involved.
Exchange only.
Mode of money transfers can be classified into two:
• Cash Express - Cash Express is a payment
platform where Al Ansari Exchange is an • Bank Transfer - Those remittances where the beneficiary
agent and allows customers to remit funds receives fund through bank account in the other
domestically and internationally and is instant. jurisdiction.
• Western Union - Western Union is a payment • Cash Payout - Those remittances where the beneficiary
platform where Al Ansari Exchange is an receives fund through cash payout mode in the other
agent and allows customers to remit funds jurisdiction.
domestically and internationally and is instant.

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C) Prepaid Cards (Travel Cards)
The terms Prepaid Card and Stored Value Card are used interchangeably in the cards industry.
The physical card is either the token to access value recorded remotely and linked to the card, or
the value is stored on and accessible from the physical card’s chip (i.e. stored value cards, also
known as an electronic purse). This means that while all Stored Value Cards are Prepaid Cards,
not all Prepaid Cards are Stored Value Cards.

Al Ansari Exchange’s Travel Cards are basically

open loop network branded card which can be
used at multiple retailers/outlets where customers
can load multiple currencies and can be utilized
for their personal travel and other expenses.

Below mentioned are some of the major uses of the

card, but not limited to:
 Tourism and business travels
 Payment of bills
 Online shopping
 Direct shopping

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C) Prepaid Cards (Travel Cards - cont.)

Below mentioned are the major ML/TF risks associated with the
The assessment of prepaid cards (Travel cards), but not limited to:
potential money
laundering risks of a • Cross-border transport of prepaid cards - One of the
pre-paid card program perceived risk / typology for the abuse of prepaid cards is the
is undertaken by replacement of illicit cross-border movement of cash with the
cross-border transport of prepaid cards.
considering features,
• Cash withdrawal via ATM/Cash redemption of monetary value
including limitations on on card - Cash access from a pre-paid card, such as through
the source and amount withdrawals from automated teller machines (ATM) or other
of funds placed on the access points, will increase the potential that the card will be
cards, how the cards used for money laundering purposes.
are used, and the • Merchants’ points of sale may be used to withdraw cash by
number of cards one overpaying for merchandise and receiving the overpaid
person can own. amount in cash (cash back).

HR & Administration Department | Learning & Development Page | 83

D) Special Products

Special products refers to those value-added services offered by Al

Ansari to its customers in many ways. Out of all special product
services, transaction monitoring is applied on the below mentioned
categories of value-added services.

• Cash Collection - Al Ansari Exchange acts as a cash collector for business partners.
• Air tickets – Customer pays for their booked Air tickets through Al Ansari Exchange.
• Educational fees - Customer pays for school/college fee through Al Ansari Exchange.
• Payment for goods/services - Customer pays for goods purchased / subscription
charges etc through Al Ansari Exchange.
• Insurance Payments - Customer pays for insurance policy/premium through Al Ansari
Exchange.
• Payment of bills – Customer pays their bills through Al Ansari Exchange.
• Credit Card payments – Customer pays their credit card bills through Al Ansari
Exchange.
• Mobile top-up - Customer can top-up local/international mobile numbers through Al
Ansari Exchange, where Al Ansari has ties with such service providers for facilitating
mobile recharges around the world.

HR & Administration Department | Learning & Development Page | 84

D) Special Products (cont.)

Below mentioned are the major ML/TF risks associated with the special
products/services, but not limited to:

• Mobile reloads to high-risk jurisdictions/bordering • Frequent cancellations of air tickets – is another trend
jurisdictions – is one of the method used as ML/TF whereby the customer will book costly air tickets
method, here various individuals will top up mobile pretending he is going to travel and will pay for the
numbers located in other jurisdiction and further ticket with illegitimate funds, later the same tickets will
these toped up mobile users sells this credit to be cancelled, and the airlines company will refund the
locals/tourists to convert these top ups into cash money back to the person through financial system
and further will be used for funding illegal and thereby legalizing the funds.
activities/terrorism etc. Even these mobiles may be
• Abuse of educational institutions – Educational
used by blacklisted guys who are hiding for their
institutions/trusts are involved in ML and the parties
means of communication.
involved in the network will remit funds to the institution
• Overpaying of bills/insurance/goods – is another as fee using fake/marked narrations or references for
trend where the customer will overpay the bills the accountant to identify the illegal funds coming in
using illegitimate funds and will request for a and further the funds will be moved to appropriate
refund from the biller which will be received accounts using the institution name.
through the proper financial channels as a
legitimate fund.

HR & Administration Department | Learning & Development Page | 85

ML/TF Risks

Jurisdictional
Risk

New
Product Risk Technology
Risk

Counterparty
risk

Customer Delivery
Risk Channel Risk

HR & Administration Department | Learning & Development Page | 86

Risk Management - Importance

Risk Management is a systematic approach to setting the best course

of action under uncertainty by identifying, assessing, understanding,
acting on and communicating risk issues. The ultimate goal of risk
management is the preservation of the physical and human assets of
the organization for the successful continuation of its operations.

“The purpose of risk management is to protect

the organization from severe financial disruption
due to accidental losses, and do so at a cost that
is affordable and does not fluctuate significantly
from year to year.”

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Good Risk Management Potential Benefits

Increased focus on the achievement of specific 01

strategies – will highlight areas in which objectives are
unclear or fail to link with the AAE’s corporate strategy

02
Improved awareness and control of risk

Improved compliance with CBAUE requirements and 03

internal policy

Increased assurance that there are 'no surprises' 04

Without risk management, there is a
real possibility that serious financial
and non-financial damages could be
Greater organizational awareness of the benefits of 05
caused to the AAE because avoidable
safe risk-taking
risks were not identified and managed.

HR & Administration Department | Learning & Development Page | 88

Mitigation Measures

Prohibition of certain
businesses/ transactions/
customers

EDD to identify the

UBO and legitimacy
of customer

Stringent onboarding/
review policies and
procedures

Stringent transaction monitoring

and implementation of effective
sanctions screening systems

HR & Administration Department | Learning & Development Page | 89

Compliance Culture

‘Tone at the Top’ & Responsibilities of Senior Management

Implementation of Approval of internal Oversight of the Application of the

governance, control, policies, procedures AML/CFT compliance directives of
and operating systems and controls programme. Competent Authorities.

HR & Administration Department | Learning & Development Page | 90

Notes on Compliance Culture (cont.)

Approval of internal policies, procedures and

Implementation of governance, control,
controls. These include such elements as the FI’s
and operating systems. These include such
overall ML/FT risk appetite as well as the
elements as:
framework of AML/CFT policies, procedures and
1. Appointing a qualified compliance controls related to areas such as:
officer in line with the requirements of
1. Identification, assessment, understanding,
the relevant Supervisory Authority
management and mitigation of ML/FT risks
2. Ensuring a robust and effective
2. Performance, review and updating of CDD
independent audit function is in place
(including EDD and SDD) measures
3. Putting in place and monitoring the
3. Identification and implementation of
implementation of adequate
indictors to identify suspicious transactions
management and information systems,
internal controls, and policies, 4. Record retention and data protection
procedures to mitigate risks.
5. Staff screening, training and development.

HR & Administration Department | Learning & Development Page | 91

Notes on Compliance Culture (cont.)
Oversight of the AML/CFT compliance program: This includes such
elements as:
1. Reviewing and providing comments in relation to the compliance
officer’s semi-annual reports to the relevant Supervisory Authority
2. Approving the establishment and continuance of High Risk Customer
Business Relationships and their associated transactions, including
those with PEPs;
3. Approving the establishment and continuance of Business
Relationships involving high-risk countries
4. Approving the establishment and continuance of relationships with
correspondent institutions
5. Ensuring the adequate application of the appropriate components of
the AML/CFT compliance program to all branches.
Oversight of the AML/CFT compliance program: This includes such
elements as:
1. Applying the directives of regulators and competent supervisory
authorities.

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Three Lines of Defense

1 2 3
Customer (Compliance)
Facing Teams, Regulatory
Internal Audit
Operations Compliance, AML
Team special teams

HR & Administration Department | Learning & Development Page | 93

4 Pillars of AML Compliance

Internal Controls

Risk-Based AML Program

AML Officer

Training

Independent Audit

HR & Administration Department | Learning & Development Page | 94

Notes on 4 Pillars of AML Compliance

Internal Policies, Procedures Designated Compliance Officer and

and Controls Alternate Compliance Officer

• As a financial institution, we have implemented AML • We have an established independent AML function
policies in clear and simple statements that are which is overseen by the Head of Department
uniform across the entire organization, which is (Compliance Officer), assisted by Compliance
approved by board of directors. Our AML policy Manager (Alternate Compliance Officer). Alternate
reflects the roles and responsibilities of relevant Compliance Officer will act as Compliance Officer
stakeholders pertinent to AML compliance function. during the absence of Compliance Officer.
• Our AML/CFT and Sanctions procedures are reviewed • Head of Department has the primary responsibility of
and updated regularly based on the CBUAE managing the AML function and ensuring ongoing
standards, FATF recommendations, Wolfsburg compliance with the AML and CFT regulations.
principles and industry best practices. Procedures • All standards regarding the Compliance Officer is
reflect the work processes and workable practices applicable to the Alternate Compliance officer while
reflecting the respective responsibilities of branch acting as the Compliance Officer.
official, Compliance officials and board of directors. • The role of the compliance officer is not combined
• We have sophisticated compliance tools which are with any other function and reports independently
functioning as intended and within pre-defined and directly to the Board of Directors.
parameters, and includes automated transaction
monitoring system, real time sanctions screening
solution, management reports etc.

HR & Administration Department | Learning & Development Page | 95

Notes on 4 Pillars of AML Compliance

Ongoing Employee Training Program Independent Audit Function to Test

the Effectiveness of the AML Program
• Training on Anti-Money Laundering must be
provided within a month after the employee • Internal Audit Department/External
has joined Al Ansari Exchange L.L.C. The new Auditor will test the activities of the
joiners are not allowed to serve any customer Compliance Regime and perform
independently until they have successfully random checks on key responsibilities.
completed such training. Employees who deal All findings and observation will be
directly with customers, products or services discussed with Head of Compliance
must be trained at least annually at a minimum. and reported to the Board of Directors.
• The training will be provided to: • The Board of Directors/General
 Branch/Operations Staffs Manager is responsible for taking
 Back-office staffs appropriate actions to resolve the
 Compliance Regime recommendations in the internal
 Manager in Charge auditors’ reports in a timely manner
 Functional Heads and for supervision.
 Directors of the Board

HR & Administration Department | Learning & Development Page | 96

Risk-Based Approach

It is the Risk which is assessed through the We use the RBA throughout the
inherent risks linked to nature and type tenure we are associated with
clientele has with us through; The clientele by transaction
customer information, product services,
geographies involved, counterparties and
characteristics and patterns.
the delivery channels they utilize.

HR & Administration Department | Learning & Development Page | 97

Regulatory Responsibilities and Obligation of
Employees

In general, compliance means conforming to a rule,

such as a law, regulation, policy, standards, etc. Federal Law
Regulatory compliance describes the goal that Federal decree-law no. (20) of 2018 on
organizations aspire to achieve in their efforts to ensure
that they are aware of and take steps to comply with
anti-money laundering and
relevant laws, policies, and regulations. combating the financing of terrorism
and financing of illegal organizations.

Executive Regulation
Cabinet decision no. (10) of 2019
Concerning the implementing All FIs’ licensed/registered by CBUAE are
regulation of decree law no. (20) of obliged to comply with the respective AML
2018 on anti- money laundering and law and executive regulation as per the
combating the financing of terrorism notice no: 74/2019 issued by CBUAE.
and illegal organizations.

HR & Administration Department | Learning & Development Page | 98

Responsibilities

Record Keeping Prohibited Actions Data Integrity

Reporting of Potentially Suspicious Know Your

or Unusual Transactions Customer Process

HR & Administration Department | Learning & Development Page | 99

Red Flags

Red flag is an indicator that signals a Unusual Customer

transaction/activity unusual and Behavior
possible suspicion.
• Red Flags are a set of circumstances that
are unusual in nature or vary from normal Trade-Based Money
activity. Laundering Indicators
• A red flag doesn’t flag a customer or an
employee as illegal, but it only means that
such customer/employee requires closer Unusual Customer
scrutiny. Identification/ Verification
• It is a signal that something is out of the Situations and Cash /
ordinary and may need to be investigated Non Cash Transactions
further.
• It does not indicate guilt or innocence but Miscellaneous
merely provided possible signs of warning. Circumstances

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Reporting UPS

Understanding the logic behind identifying UPS

transactions and reporting methodologies

Increasing awareness amongst the staff at the branch

to diligently report UPS transactions

What is UPS?
Monitoring transactions for repeat customers

Ensure case tracking and follow-up till closure for fraud-

related cases filed by the customer

HR & Administration Department | Learning & Development Page | 101

UPS – A Tool to Help
UPS Reporting Process Branch staff are mandated to
report any unusual transaction
Request for KYC & Supporting
Documents for transaction
where the source of money or the
purpose of the money is to
support any criminal or terrorist
activity.
Evaluate the
Not Suspicious Suspicious
transaction
When suspicious, raise STR using
Internal UPS with all details and
Complete the
transaction
Complete the
transaction
copies of all applicable
documents & forward it to the
Compliance and AML Team.
EOP Fill out the UPS
Transaction Form

Red flags are signals of potentially unusual or suspicious

transactions or other activities that should raise the level of
Send it to AML
suspicion and may call for further escalation.
Department Red Flags are signals of potentially
The mere presence of a Red Flag is not necessarily evidence
of money laundering or terrorist financing activity. However,
unusual or suspicious transactions which
it does indicate that further review should be performed
before proceeding to determine if the activity in question EOP
should be escalated and reported.
has a reasonable or legitimate purpose.

HR & Administration Department | Learning & Development Page | 102

UPS Reporting

UPS reporting is completely systemized in AREX and is available for all employees.

Select Input transaction

Select UPS type
transaction type number

Portray reason Scan documents Submit by clicking

of suspicion and IDs “Add to UPS”

On submission, UPS will escalate to Compliance Department for

further investigation and remedial action.

HR & Administration Department | Learning & Development Page | 103

Notes on UPS Reporting

• The employees within the FLOD (branch  Branch / Operations officials may report the
officials, Area managers, business UPS on attempted transaction also, by
executives and back-office operations) selecting attempted transaction from drop
are responsible for disclosing their down option of product / service and
observation regarding the suspicion inputting intended details of transaction /
observed on the customer activities or customer.
behavior or his/her transactions.  Branch should ensure submission of
• The FLOD plays a critical role in the attachment in PDF format in allowed size.
detection & prevention of money  AML Department will coordinate with Branch
laundering and the financing of terrorism through the telephone / e-mail for future
and illegal organizations. For effective correspondence.
control, our core application is equipped  Branch officials are advised to take the
clarification from Compliance Department on
with the internal reporting system for
Internal UPS related issues.
enabling first line of defense for disclosing
 Branch officials are advised to refrain from
their observation regarding the suspicion using and uploading the Internal UPS form for
observed on the customer activities/ reporting unusual / suspicious transactions as
behavior or on his/her transaction(s). the process is completely systemized in AREX.

HR & Administration Department | Learning & Development Page | 104

Suspicious Transactions & Suspicious Activity

Suspicious transaction refers to any transaction

or series of transactions, attempted transaction
or funds, which may indicate/has reasonable
grounds to suspect the involvement of money
laundering/ terrorist financing/ unlawful
activities in whole or in part and regardless of
the amount or the timing - any of the following:
 The proceeds of crime
 Being related to the crimes of money
laundering and related predicate offences,
Suspicious Activity refers to any
the financing of terrorism or illegal
action/behavior/activity of the
organization
 Being intended to be used in an activity customer which may indicate/ has
related to such crimes reasonable grounds to suspect
involvement of unlawful activities. The
The report on suspicious transaction filed with report on suspicious activity filed with
the FIU by AML department is called as the FIU by AML department is called as
Suspicious Transaction Report (STR). Suspicious Activity Report (SAR).

HR & Administration Department | Learning & Development Page | 105

Third Party – Individual Transaction
A transaction is considered as a third-party transaction, if conducted by a ‘representative’ on
behalf of another individual customer who is the “beneficial owner of funds.

Transaction conducted by an Individual (Representative) on Behalf of another Individual

(Beneficial owner):

Letter of authority must

contain type of
Representative must Where there is no POA, The beneficial owner The signature of
transactions (whether
produce a duly the beneficial owner of of funds must visit the beneficial owner of
FCY or money transfer),
executed Power of funds must issue a branch to sign such funds in the letter of
identification details of
Attorney (POA) from letter authorizing the letter of authority, the authority must be
both the parties,
the beneficial owner of representative to carry validity of which shall verified against that in
relationship, purpose
funds to carry out such out transactions on not exceed two years Emirates ID or in
and beneficiary details
transactions. his/her behalf. from the date of issue. Passport.
& destination (in case of
money transfer).

Both ID copies must be

The branch officials
Branch officials must use the Membership of beneficial The representative and retained from original
must create the
owner and should select the particular representative beneficial owner of identification document and
membership in respect
name from “Representative” option of “Transfer for / fund must both be such copies must be certified
of authorized
by” field, while conducting the transaction. resident in the UAE. as “Original sighted and
representative(s).
verified

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Third Party – Individual Transaction

Transaction Conducted by an Individual (Representative) on Behalf of another

Individual (Beneficial owner, who are Domestic Helper, Maid, Cook, Servant etc.):

The beneficial owner of

Representative must Letter of authority must
funds (Domestic Helper, The total value of
produce a letter signed contain type of
Maid, Cook, Servant etc.) transactions (whether FCY
by the beneficial owner transactions (whether FCY
must visit the branch to or money transfers
of the funds authorizing or money transfer),
sign such letter of outward) shall not exceed
the representative to identification details of
authority, the validity of AED 24,000 during 365
carry out such both the parties and
which shall not exceed days from the date of first
transactions. beneficiary details (in
two years from the date transaction
case of money transfer).
of issue.

Branch officials must use

the Membership of
representative and should Both ID copies must be
The branch officials must
select the particular retained from original The representative and
create the membership
beneficial owner name identification document the beneficial owner of
for beneficial owner of
from “beneficial owner” and such copies must be funds must both be
funds (Domestic Helper,
option of “Transfer for / certified as “original resident in the UAE
Maid, Cook, Servant etc.)
by” field, while sighted and verified”.
conducting the
transaction.

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Third Party – Corporate Transactions
It is a type of transaction, i.e. legal entity in the UAE (i.e. the remitter) which remits on behalf of
another entity outside/inside the UAE (i.e. beneficial owner of funds) who imports goods or pays
for services. Al Ansari Exchange accepts such transactions subject to the following conditions:

a) AAE must undertake EDD on remitter and beneficial owner of funds.

b) There must be at least one share holder or partner common to both entities.
c) In case, there is no common shareholder/partner, then there must be a legally valid
agreement between both the parties, authorizing the remitter to carry out such transaction.
d) Agreement between both the parties must be appropriately attested by relevant authorities
in the respective foreign country and in the UAE (not applicable to third party inside UAE).
However, AAE may collect the notarized documents instead of these documents being
attested by the relevant authorities in the respective foreign country and in the UAE.
e) The name of the beneficial owner of the funds and its Owner/Partners/Shareholders must be
recorded in the system in addition to the required information of the remitter. Names of all
parties involved in the transaction such as names of the remitter, beneficial owner of funds,
Owner/Partners/Shareholders of both entities, authorized person who carries out the
transaction (i.e. the representative) and beneficiary will undergo sanction/PEP screening.
f) AAE establishes the commercial/economic reasons for each remittance transaction.

HR & Administration Department | Learning & Development Page | 108

Third Party – Corporate Transactions (cont.)

a) Invoice or supporting document should address to both parties “Bill to” remitter & “Ship to”
beneficial owner of funds.
b) Recommend to settle such transactions through bank, either by cheque or via bank transfer,
instead of accepting cash.
c) AAE collects original Bill of Lading/Airway Bill, certificate of origin and custom clearance
document whenever it is issued. AAE shall provide a grace period of 21 calendar days (after
conducting remittance transaction) to customer in order to produce the Bill of
Lading/Airway Bill in cases of advance payments for the trade transactions.
d) Obtain the internal invoice issued by our customer or purchase order issued by the beneficial
owner of funds for confirming the deal.
e) Obtain the supporting documents to substantiate that our customer received the
consignment amount from third party through banking sectors (Banks, Exchange houses
etc.).
f) AAE tracks the movement of vessel via an appropriate vessel tracking system
g) The system has the capability to support monitoring of such transactions and generates
necessary exception reports and alerts.
h) The authorized person who carries out the transaction (i.e. the representative) on behalf of
the legal entity in the UAE must be a resident in the UAE

HR & Administration Department | Learning & Development Page | 109

Customer Identification (CID) Process

Foreign Currency Exchange CID Process

(Purchase & Sale) Record the following information

Customer’s full legal name

If transaction value is between
AED 3500 and AED 34,999.75.
Residential status

Mobile number

Nationality
If transaction value is less than
AED 3,500, but multiple transactions Date of birth
aggregate volume, are equivalent
to or greater than AED 3500 within a Country of birth
period of 7 calendar days.
ID type and ID number

HR & Administration Department | Learning & Development Page | 110

Customer Due Diligence (CDD) Process - Individual

Foreign Currency Exchange (Purchase & Sale) CDD PROCESS

If transaction value is between AED 35,000, but less than
Create / use the membership for
AED 54,999.75. conducting the transaction

If transactions value of multiple transactions aggregate

volume, are between AED 35,000 to AED 54,999.75,
within 90 calendar days
Accurate information on the “source of
funds” and “purpose of transaction” must be
collected and recorded for each transaction
Remittances – Inbound/Outbound
Transaction value between AED 1 and AED 54,999.75

Note: The Individual customer profile / membership must be reviewed

and updated either annually or upon the expiry of the ID whichever The receipt must be signed by the customer
comes first. During the review, the branch officials must conduct the and must be retained in the records along
due diligence on the customer KYC profile and update all the with all KYC / CDD supporting documents
KYC/CDD/EDD information.

HR & Administration Department | Learning & Development Page | 111

Notes on CDD Process - Individual

Important KYC points

1. Seaman’s Pass/ID can be accepted in order to complete

the KYC Process for the following transactions.
 Foreign currency exchange transactions of aggregate
value up to AED 34,999.75 per week and
 Money transfer transactions of aggregate value up to
AED 27,000 per week
2. Always request the customer, for establishing the
relationship with intended beneficiary and obtain / record
the relationship along with accurate purpose in detail, while
conducting the transaction
3. Ensure to select the appropriate profession from drop down
option of membership during create / renewal / review, on
customer disclosure / authentication of documents.
4. Obtain and record / select the correct profession for
non-residents / visitors, after confirmation.
5. Obtain and record expected annual activity (count /
amount) in the membership after confirming with the
customer.

HR & Administration Department | Learning & Development Page | 112

Enhanced Due Diligence (EDD) Process - Individual

Foreign Currency Exchange Remittances –

(Purchase & Sale) Inbound / Outbound

If transaction value is equal to or If transaction value is equal to or

greater than AED. 55,000/- greater than AED. 55,000/-

If transaction value of multiple If transaction value of multiple

transactions aggregate volume, transactions aggregate volume,
are equivalent to or greater than are equivalent to or greater than
AED 55,000, within a period of 90 AED 55,000, within a period of 45
calendar days calendar days

HR & Administration Department | Learning & Development Page | 113

Enhanced Due Diligence (EDD) Process - Individual

Under EDD process, branch officials must comply to the following requirements by sighting
the original ID and obtaining the relevant information and documents from customer;

Create / use the membership for conducting the transaction

Obtain information on the “source of funds” and “purpose of transaction”

Documentary evidences on source of funds must be collected and retained

in case the customer pays cash.

Information on the purpose of the transaction must be collected and recorded

The receipt must be signed by the customer and must be retained in the records
along with all KYC / EDD supporting documents

Individual to Corporate transactions should be supported with POT – appropriate invoices

If transaction received by individual on behalf of the corporate – Collect the trade documents
e.g. Trade license & business docs. Create Corporate Membership

HR & Administration Department | Learning & Development Page | 114

EDD for Legal Persons – Legal Arrangements

Corporate booklet (including KYC Questionnaire) of the Collect copies of valid permissions/licenses of the legal
Licensed Person must be completed and signed by the legal person or legal arrangement from competent authorities to
person or legal arrangement carry out the business

Ownership structure of the legal person or legal

arrangement must be collected including the purpose Original IDs of BOs must be verified
and nature of the intended business relationship

Record the legal person or legal arrangement’s legal

Collect the list of authorized signatories and verify
form and collect a copy of the legal person or legal
their original IDs and retain the copies
arrangement’s proof of existence

Collect copies of the powers that regulate and bind the

Letter of Authorization
legal person or legal arrangement

Verify names of relevant persons holding senior management Collect the list of authorized signatories and verify their
positions in the legal person or legal arrangement; original IDs and retain the copies

HR & Administration Department | Learning & Development Page | 115

KYC Corporate

Enhanced Due
Diligence (EDD)
• Corporate Customers
• Legal Arrangements
• Waqf

HR & Administration Department | Learning & Development Page | 116

Examples and Description of SOF / POT - Individual

Type of source of Funds Source of Funds Documents Purpose Documents

Salary
Collect any of the following documents for
substantiating the source of funds: a) Purchase of personal
Bank Loan
consignment: Invoice / sales
a)Bank withdrawal slip Contract including bill of lading /
Savings airway bill etc.
b)Bank Statement describing withdrawal amount.
c) ATM Withdrawal slip with Bank statement or b) Property Purchase: Property
End of Service Benefit document proving account ownership. Documents, Passport copy of
d)Cash cheque copy with encashment proof seller, Attorney agreement etc.
Sale proceed of Property e) Cheque copy / Bank transfer letter, if settlement c) Education fees: Enrollment proof /
through bank account Student ID etc.
Rental Proceeds d) Rental Payment: Lease / Tenancy
agreement etc.
Note: e) Hotel Booking: Booking /
1. If payment is by cash without providing the documents highlighted under (a) to (d) above, then Admission receipts, List of
branch official should obtain the additional documentary evidences for substantiating the source of passengers etc.
funds. such as: f) Mortgage: Mortgage / Pledge
• For Sale proceed of Property, obtain sale deed / agreement, Passport / credentials of buyer agreement etc.
including SOF documents from the buyer of the property & additional documents if any g) Any other documentary
• For Salary, obtain Pay slips or Salary Statement with proof of payment evidences, which suffices and
• For end of service benefit, EOS computation letter from company with proof of payment – authenticate the intended
For rental proceeds, Title deed and Tenancy contract. purpose
2. In case there is any doubt or suspicion about the information provided, additional documentary
evidences on the SOF should be requested.

HR & Administration Department | Learning & Development Page | 117

Examples and Description of SOF / POT - Corporate

Source of Funds Documents Purpose Documents Notes

Cheque copy • Bill of lading / airway bill and custom

Bank Transfer Advise clearance should be available in respect of
Withdrawal slip all consignment, wherever full payment is
Bank statement reflecting a) Invoice/sales contract settled to the suppliers or as per terms /
withdrawal amount b) Bill of lading/airway bill condition embossed on invoice.
document
Cash voucher with Sales receipts / c) Certificate of Origin • In the absence of BL / CC for intended
report d) Custom Clearance beneficiary, branch officials should obtain
Representation letter with Sale e) Packing list - on bill of lading/airway bill and custom
receipts / report availability clearance issued from other vendors, in
Cash Voucher with Monthly / f) House bill of lading – case of requirements / suspicion.
Periodical VAT Return If consignment is not
ready for dispatch • Must collect the original Bill of
Any other documentary Lading/Airway Bill for post transaction
evidences, which suffices the SOF verification in a timely fashion after it is
authentication issued.

HR & Administration Department | Learning & Development Page | 118

SOF / POT Document Control

System will insist obtaining evidence of SOF System will not allow the approver for On approval of
for all => AED 55k CE- Send TXNs, Outward approving the TXN, unless approver (BM / SOF / POT
remittances during the evaluation period set ABM or authorized officials) open, read, verify, documents,
as per the customer profile and consisting review, confirm and mark the check box for system will print
total amount in respect of multiple below authenticating the uploaded SOF / POT doc the TXN receipt
threshold TXNs file. and TXN will
execute.

On uploading of SOF/Purpose doc, TXN will

System will consider and calculate all
reflect under approver queue, for initiating
remittance TXN (GFT, DT, WU and CE) for
appropriate action (approve or reject) after
mandating source of docs for multiple TXNs On rejection,
verification of SOF/Purpose doc
no receipt, TXN
cancelled

FLA should upload the relevant docs from

confirmation page. System equipped with the
System will mandatorily insist the branch
new screen “SOF/POT Document Upload” for
officials to collect and upload the Purpose
uploading the SOF/POT docs under the main
docs for all corp TXN
menu ‘TXNs’, if FLA failed to upload the
documents from confirmation page

HR & Administration Department | Learning & Development Page | 119

Due Diligence Measures

Due Diligence Measures applied Due Diligence

Transactional Due by Compliance & AML Department Applied on Third
Diligence (Individual) (Corporate Transaction) Party Transaction

Transactional Due Due Diligence Measures

Diligence (Corporate) (Onboarding) applied on
Business Partner
HR & Administration Department | Learning & Development Page | 120
Due Diligence Measures - cont.

Source of Funds Documents (Example)

A) Transactional Due Diligence
(Individual) • If the source is from salary, kindly obtain three
consecutive pay slips or three months’
statement of salary account.
• Source of funds for FCY and Remittance • If the source is from bank loan, kindly obtain
transaction, if amount exceeds AED loan documents.
55,000, in one off or aggregate • If the source is from savings, kindly obtain latest
transactions (Aggregation period: three months’ bank statement.
• If the source is from end of service, kindly obtain
FCY: 90days, Remittance: 45 days). end of service letter, latest three months bank
• Source of funds for special products, if statement and additional documents
amount exceeds AED 55,000, in one off requested.
or aggregate transactions. • If the source is from sale proceeds, kindly obtain
property documents, title deeds, sale
• Purpose of remittance, in line with UAE agreement, and source of fund documents
standards for the Regulations and from the buyer of the property and additional
correspondent bank compliance documents requested.
requirements. • Refer to relevant internal circulars for complete
details.

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Due Diligence Measures - cont.

B) Transactional Due Source of Funds Documents (Example)

Diligence (Corporate)
• Cheque copy or withdrawal slip
• Source of funds all • Bank statement
transaction from AED 1. • Sales receipts
• Documents • Cash voucher receipts
substantiating the
purpose of transactions - Documents substantiate purpose of the transaction
irrespective of the value (Example)
of transaction.
• Invoice/sales contract
• Packing list
• Bill of lading/airway bill document
• Certificate of Origin
• Customs Clearance

Refer to relevant internal circulars for complete details.

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Due Diligence Measures - cont.

No established ‘Private Office of

Transactions on Behalf of Sheikh
Sheikh’, but existing individual Notes
Office/Royal Family/Ruling Family
member of Al Ansari Exchange.

• Transaction conducted on behalf of • Specific authorization letter from

Ruling and Royal Family Sheikh/Royal Family Member/Ruling
Members/Sheikh Office must be Family Member for subsequent
• Branch official must add the name
treated as corporate transaction transactions are required and such
of the representative subject to the
and corporate membership must be authorization letter must contain
following conditions:
created under the name of beneficiary details, amount details,
• Obtain original letter of authority from
respective ‘Private office of Sheikh’. and purpose of transaction and
Sheikh/Royal Family Member/Ruling
Branch official must add the name destination of funds accordingly.
Family Member.
of the authorized representative • Sheikh/Royal Family Member/Ruling
• ID copy of the Sheikh/Royal Family
under respective membership to Family Member must visit the branch
Member/Ruling Family Member.
initiate transaction. to create membership with Al Ansari
• Copy of Passport with visa page or
• In case of no established ‘Private Exchange (in case of no
Internal ID of the authorized
Office of Sheikh’, the following membership).
representative.
process must be followed at a • Sheikh/Royal Family Member/Ruling
minimum to consider such transaction Family Member must visit the branch
(see next). for the renewal of ID scenarios.

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Customs Declaration Form (CDF)

Regulation on the Declaration of

Currencies, Bearer Negotiable
Instruments, and Precious Metals and
Stones in Possession of Travelers Entering
or Leaving the UAE (issued in the Official
Gazette No 703 dated 31/05/2021).

These Regulation set requirements for

individuals entering or departing the UAE
carrying currencies, precious metals or
stones, or bearer negotiable instruments
with a value above AED 60,000. Such
persons must declare these goods by
completing the Customs Declaration
Form (CDF).

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Customs Declaration Form (CDF) – cont.
Full amount utilization

Confirm from customer that, if the source of funds is originated from outside / inside UAE

If the origination or proceeds of SOF from outside the country, request for the CDF Form

Branch officials must collect and retain the original CDF, if the customer exchanges the full amount of
currencies, or if customer exchange the equivalent value of funds obtained from sale of precious metals or
stones brought into the country, or of settlement amount of bearer negotiable instruments

Partial amount utilization

Actual amount of currency exchanged, or of funds related to the proceeds of sale of precious metals or
stones brought into the country, or of bearer negotiable instruments must be endorsed on the original CDF

The signature of the employee who conducted the transaction should be embossed on CDF and
endorsed with the official stamp of the company.

The original CDF can be returned to the customer, but its copy after endorsement must be
retained with the transaction receipt and other documents.

Note: CDF is the revised version / form of DRIC – Declaration regarding Importation of Cash, issued through UAE custom authority.

HR & Administration Department | Learning & Development Page | 125

Customs Declaration Form (CDF) – cont.

The amount of any partial exchange is endorsed on a CDF:

Note: The CDF form
Branch official must exchange only the balance of the amount of collected from a customer
currencies or proceeds of sale of precious metals or stones brought into the must not be treated as
country, or of bearer negotiable instruments
evidence for the source of
funds. Appropriate due
The original CDF can be returned to the customer, if partial amount is diligence procedures must
exhausted from balance amount. (Copy of the CDF after endorsement be conducted and
must be retained with the transaction receipt and other documents)
supporting documents as
evidence for the source of
Branch officials must collect and retain the original CDF, if the customer funds or purpose of
exchanges the full amount of balance currencies, or proceeds of sale of
precious metals or stones brought into the country, or of bearer negotiable transaction must be
instruments endorsed on a CDF collected whenever and
wherever CDFs are
This is required to ensure that the total amount of currency exchanged by obtained for conducting
the customer using the same CDF does not exceed the total value stated in
the CDF
transactions.

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Process Chain Transaction Monitoring

1) KYC 2) Risk Based Approach

Customer Due Diligence Threshold & Parameter
Customer Risk Profiling Setting
Typology Assessment
Testing & Analysis

TM
4) Action
CHAIN
STR Filing 3) Implementation
FIU Feedback
Post-transaction Checks
Remedial Measures
Alerts Handling
System Enhancements
Documentation

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Record Retention Policy

Branch Level Retention of Documents Period:

Cabinet decision Value of Transaction Time Period

10/2019 article 24 states Big/Large Amount 18 months
that necessary records
Small Amount 6 months
of the customers/clients
need to be maintained
for a period of 5 years. NOTE: Daily filing should be strictly imposed
It facilitates easy as a branch practice to minimize
operational risks and avoid further
verification of consequences of non-compliance.
information, if required
by the authorities. CONFIDENTIALITY: Customer Due Diligence records,
transactions, history etc. should not be disclosed or shared
with any unauthorized third party.

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Tipping Off

Tipping off means (whether knowingly or

accidentally) letting someone know that
their transactional activity has been
reported or is deemed suspicious to the
AML Team. The likely result is that the person
suspected will hide or destroy evidence, or
disappear themselves. This disclosure may
be intentional or unintentional in nature.

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Tipping Off – cont.

• Tipping off means when a person makes a disclosure to a third

party (customer or any other person) which is likely to prejudice
any investigation which either is or might be conducted. Financial
Institutions, their managers, officials or staff, shall not disclose,
directly or indirectly, to the Customer or any other person(s) that
they have reported, or are intending to report a Suspicious
Transaction, nor shall they disclose the information or data
contained therein, or that an investigation is being conducted in
that regard.

• Tipping off is prohibited and is a punishable criminal offence.

We must not inform customers or any persons or third parties,
either directly or indirectly, that their transactions are subject to
monitoring, are under investigation or have been reported to the
FIU as suspicious transactions. Any person violating this prohibition
is liable to a penalty of no less than AED100,000 and no more
than AED500,000 and imprisonment for a term of not less than six
months.

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Disciplinary Procedures

As an employee of Al Ansari
Exchange, we are obliged to Common
adhere the rules and regulations Misconduct

embedded within the daily

operational procedure and keep
yourself informed and abreast of
your duties and responsibilities.

Organization expects all the

employees to perform their duties
and daily processes in a quality
manner so that we can Impact of Disciplinary
Levels of Disciplinary
collectively mitigate risks Action Action to Employee
Career
associated to any operational
procedure.

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Criminal Offences and Penalties –
UAE Federal AML/CFT Framework - cont.

Legal Entity
Individual
AML Law:
• Federal Decree-law
No. (20) of 2018
• Federal Law No. 7
Failure to report a of 2014 (CTC Law) Failing to disclose
suspicious • The Counter-Terrorism or falsely making
Law (Federal Law No. 7
activity/STR/UPS of 2014 (CTC Law) a report

Tipping off Breaching regulatory

requirements offence

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Criminal Offences and Penalties –
UAE Federal AML/CFT Framework - cont.

Federal Decree-law Article (14)

No. (20) of 2018
• 1- The Supervisory authority shall impose the
ON ANTI-MONEY following administrative penalties on the financial
LAUNDERING AND institutions, designated nonfinancial businesses and
COMBATING THE professions and non-profit organisations in case
FINANCING OF they violate the present Decree-Law and its
TERRORISM AND Implementing Regulation:
• 2- Administrative penalties of no less than AED
FINANCING OF 50,000 (fifty thousand dirham) and no more than
ILLEGAL AED 5,000,000 (five million dirham) for each
ORGANISATIONS violation.

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Criminal Offences and Penalties –
UAE Federal AML/CFT Framework - cont.

Article (22)

• Any person who commits or attempts to commit any of the acts set forth in Clause (1) of Article 2 of this
Decree-Law shall be sentenced to imprisonment for a period not exceeding ten years and to a fine of no
less than (100,000) AED one hundred thousand and not exceeding (5,000,000) AED five Million or either one
of these two penalties.
• A temporary imprisonment and a fine of no less than AED 300,000 (three hundred thousand dirham) and
no more than AED 10,000,000 (ten million dirham) shall be applied if the perpetrator of a money laundering
crime commits any of the following acts:
• If he abuses his influence or the power granted to him by his profession or professional activities.
• If the crime is committed through a non-profit organisation.
• If the crime is committed through an organized crime group.
• In case of Recidivism
• An attempt to commit a money laundering offense shall be punishable by the full penalty prescribed for it
• A life imprisonment sanction or temporary imprisonment of no less than (10) ten years and penalty of no
less than AED 300,000 (three hundred thousand dirham) and no more than AED 10,000,000 (ten million
dirham) is applied to anyone who uses Proceeds for terrorist financing.
• A temporary imprisonment sanction and a penalty of no less than AED 300,000 (three hundred thousand
dirham) shall be applicable to anyone who uses the Proceeds in financing illegal organizations.

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Criminal Offences and Penalties –
UAE Federal AML/CFT Framework - cont.
Article (2)
The provisions of the present Law shall apply to the offences set forth thereon and to
Federal Law No. (7) of the felonies and misdemeanors set forth in any other law should they be committed
2014 for a terrorist purpose.

Life imprisonment shall be Article (3)

imposed on whoever uses The provisions of the present Law shall apply to whoever commits, outside the State,
or threatens of the use of any of the terrorist offences in the following cases:
violence to urge the head a) Commission of the offence against the State or any of its citizens,
employees, interests, public properties or public facilities abroad including
of state, his deputy or any embassies, consulates, missions or offices affiliated thereto.
of the members of the b) Commission of the offence with the purpose of exert pressure on the State or
Federal Supreme Council, urge it to perform a certain act or abstain therefrom.
their heir apparent or c) Commission of the offence in a means of transport that is registered in the
State or that bears its flag.
deputies to perform or d) Commission of certain preparatory actions for an offence within the
abstain from performing an territories of the State.
act that falls within their
The provisions of the present Law shall apply to every foreigner present within the
legal competence. State’s territories after having committed, against another state abroad, any of the
offences set forth therein and mentioned in any of the effective international treaties
to which the State is a member, in case such foreigner is not extradited.

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Criminal Offences and Penalties –
UAE Federal AML/CFT Framework - cont.

Under UAE Federal a) Article 28 states that anyone who forms, establishes, organizes, manages, or
leads a terrorist organization or promotes its activities shall be punished by
Law No. (7) of 2014 imprisonment and a fine not less than AED 2 million and not exceeding
on Combating AED 7 million.
b) Article 29 states that anyone who participates in a terrorist organization,
Terrorism Offenses, supports it financially or through any means, provides information or resources
to aid its activities, or promotes its ideologies shall be punished by
fines are imposed for imprisonment and a fine not less than AED 500,000 and not exceeding
various offenses AED 2 million.
c) Article 32 states that anyone who provides financial support, whether directly
related to terrorism. or indirectly, to a terrorist organization or its members shall be punished by
Here are some imprisonment and a fine not less than AED 500,000 and not exceeding
AED 1 million.
provisions regarding d) Article 41 states that anyone who possesses, manufactures, acquires, or
transports explosives, firearms, ammunition, or any other materials intended
fines under this law: for terrorist activities shall be punished by imprisonment and a fine not less
than AED 100,000 and not exceeding AED 500,000.
Reference:
e) Article 42 states that anyone who distributes, broadcasts, or publishes
https://www.centralbank.ae/media/05mli3jt/federal- information, news, or propaganda related to terrorism or terrorist acts shall be
decree-law-no-20-of-2018.pdf
https://www.ilo.org/dyn/natlex/docs/ELECTRONIC/9865 punished by imprisonment and a fine not less than AED 50,000 and not
8/117474/F399649256/LNME-FED-LAW-7-2014.pdf
https://www.uaeiec.gov.ae/en-us/laws-regulations-
exceeding AED 1 million.
listing/federal-decree-no-26-of-2021

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Prudential Reporting and Submission to
Central Bank of UAE (CBUAE)

This is a vital part of our regulatory compliance

obligations, which must be fulfilled with utmost
prudence on a priority basis. The reports
referred to hereunder provide critical
information to Banking Supervision
Department and Financial Intelligence Unit
(FIU) at the CBUAE for further investigation on
a wider scale at their end.

Failure to report is subject to undesirable

penalties and depending on the seriousness
of our negligence in this respect; the failure
may also cause irreparable damage to our
business, integrity, and reputation ultimately
affecting entire organization.

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Non-Compliance Charges
No. Description of the Non-Compliant Item Non-Compliance Charge
1 Failure to carry out KYC processes (i.e. CID, CDD, EDD & Ongoing CDD). AED 150,000 to AED 250,000
2 Failure to prohibit relationships with Shell Banks and Shell Companies. AED 250,000
Failure to obtain the Letter of No Objection from the Central Bank prior to
3 opening current accounts (i.e. Nostro/Remittance relationships) with banks and AED 150,000
other financial institutions outside the UAE.
4 Failure to appoint a Compliance Officer. AED 250,000
Failure to carry out a ‘fit and proper test’ on the Compliance Officer or any
5 AED 50,000
other employee who are relevant to AML/CFT compliance function.
6 Failure to carry out an independent audit on AML/CFT Compliance function. AED 50,000
Failure to develop and implement appropriate AML/CFT internal control systems
7 AED 200,000
(Policies, Procedures, Systems and other Controls).
8 Failure to provide initial AML/CFT training to employees. AED 100,000
9 Failure to comply with the record retention requirements. AED 250,000
Failure to provide periodical/ongoing training to the Compliance Officer and
10 AED 50,000
other relevant employees for Continuous Professional Development.
Failure to introduce PEP screening systems in accordance with AML Standards
11 AED 50,000
and executive regulations
Any amount between AED 50,000 to AED
Failure to comply with any requirements of the AML/CFT Regulations and its 500,000 depending on the severity of the
12
Addendum including any amendments thereto, not listed above. breach and at the discretion of the
Central Bank.

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Contact Details – CO & ACO

Particulars Compliance Officer (CO) Alternate Compliance Officer (ACO)

Name Sanjay Singh Shihabudheen Kareem

Designation HOD – Compliance & AML Sr. Manager – Compliance & AML

Telephone 04 377 2773 04 377 2872

Email sanjay.singh@alansari.ae shihabudheen.kareem@alansari.ae

Branch Support Number: 04 501 05999

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Roles of the CO and ACO

We have an established independent

AML function which is overseen by the
HOD (CO), assisted by Compliance
Manager (ACO).
• ACO will act as CO during the
absence of CO.

HOD has the primary responsibility of

managing the AML function and
ensuring ongoing compliance with the
AML and CFT regulations.

HR & Administration Department | Learning & Development Page | 140

Roles of the CO and ACO – cont.
All standards regarding the Compliance Officer is applicable to the Alternate Compliance officer
while acting as the Compliance Officer. The role of the compliance officer is not combined with
any other function and reports independently and directly to the Board of Directors.

Head of the Department (CBUAE Approved Compliance Officer)

Mandatory Reporting to: Board of Directors

• Purpose: To play a leadership role in the overall AML/CFT & Sanctions compliance function.
• Develop and implement AML Policies and Procedures in accordance with the local Laws and Regulations
reflecting Financial Action Task Force (FATF) recommendations.
• Develop and deliver effective training courses to staff.
• Identify, review and eliminate compliance procedural risks while keeping the company executives abreast of
such situations.
• Review and assess customer business relationship and the associated risks, advises the executives of such risks.
• Oversee the Compliance Function to ensure overall effectiveness.
• Ensure mandated responsibilities are performed by Compliance Regime as expected.
• Ensure effective monitoring process and transaction surveillance system is in place and the Compliance Officer
performs his responsibilities as mandated.
• Review and revise Internal Policies and Procedures in line with any subsequent or future amendments or new
compliance regulations. Ensure appropriate training is provided as appropriate.
• Ensure day-to-day compliance of the business against internal AML/CFT policies and procedures.

HR & Administration Department | Learning & Development Page | 141

Roles of the CO and ACO – cont.
All standards regarding the Compliance Officer is applicable to the Alternate Compliance officer
while acting as the Compliance Officer. The role of the compliance officer is not combined with
any other function and reports independently and directly to the Board of Directors.

Head of the Department (CBUAE Approved Compliance Officer)

Mandatory Reporting to: Board of Directors

• Act as the key contact point regarding all AML/CFT related matters/queries from the Central Bank and any
other competent authorities.
• Receive STR alerts from employees and analyze them to take appropriate decisions to report all suspicious cases
to the FIU.
• On-going monitoring of transactions to identify high-risk, unusual and suspicious customers/transactions.
• Submit STR reports to the FIU in a timely manner.
• Provide compliance reports to the board of directors on all AML/CFT issues, on quarterly basis at a minimum.
• Arrange to retain all necessary supporting documents for transactions, KYC, monitoring, STR and AML training
materials for the minimum period as per record retention policy.
• Conduct regular GAP analysis between our existing AML/CFT procedures and current laws, regulations, Notices
and the standards of the UAE in order to determine the extent our level of compliance and propose actions
required to address GAPS.
• Prepare Bi-Annual Compliance Reports.

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Reference to Industry Guide

Central Bank of
https://www.centralbank.ae
the UAE
Egmont Group https://egmontgroup.org
FATF http://www.fatf-gafi.org
MENAFATF http://www.menafatf.org/
https://www.wolfsberg-
Wolfsberg Group
principles.com/
IMOLIN https://www.imolin.org/

HR & Administration Department | Learning & Development Page | 143

Q & A Session

HR & Administration Department | Learning & Development Page | 144

 Together we fight
against Money
Laundering and
Terrorism

HR & Administration Department | Learning & Development Page | 145