UAE’s exchange houses discuss anti-money laundering issues

FERG central bank panel
Panellists from the inspection department of the UAE Central Bank at FERG conference. - Supplied photo

Abdul Basit

Exchange companies and tax auditors on March 31 discussed ways to improve compliance in the wake of a federal decree comes into effect with more strict regulations and fines of up to Dh5 million. The UAE’s exchange houses handle more than Dh164 billion remittances.

The federal decree on anti-money laundering and countering the financing of terrorism came into effect on November 30, 2018, introducing more stringent penalties for violations including a warning, administrative fines between Dh50,000 and Dh5 million, a ban for a period of time, restrictions on management executives and license cancellation.

Osama Al Rahma

Appreciating these guidelines, the UAE’s Foreign Exchange and Remittance Group (FERG) Vice Chairman and Chief Executive Officer of Al Fardan Exchange Osama Al Rahma said that these standards had been established to upgrade the whole industry level in the way the exchange houses conduct business.

FERG on Sunday held the third edition of its annual Anti-money laundering (AML) & Operations Heads conference in Dubai. Attended by over 170 representatives from 65 exchange houses, the conference highlighted pressing issues related to AML, risks, measures, and solutions associated with the effective operations of foreign exchange and remittance service providers in the UAE. During the conference, representatives shared critical insights on the current state of compliance in exchange houses and discussed areas of improvement.

The participation of the Central Bank of the UAE was one of the key highlights of the event. While representatives from the Financial Intelligence Unit of the Central Bank held a special workshop on the use of UNODC’s goAML application, representatives from the institution’s Inspection Department organised an awareness session for FERG representatives on the latest regulatory updates and their implications.

In his opening keynote, Osama Al Rahma, Vice Chairman of FERG, highlighted the significance of these annual meetings, emphasising their ability to help bridge the gaps between the regulators and the industry. He said, “The UAE is benchmarking itself against global standards, and we must raise our standards accordingly. Getting a deep understanding of the Central Bank’s regulations is only the first step; we need to create a culture of communication across departments in different exchange houses. We need to establish committees and meet regularly for updates and ensure that the same level of understanding exists across functions. Ensuring this alignment will help businesses in our industry to mitigate the risk of becoming non-compliant and labelled as ‘high-risk’, which, as we all know, can paralyse any company.”

Following his keynote, a panel of senior consultants from KPMG, PWC and AJMS shared findings from audits that they conducted on exchange houses in the UAE. While they all agreed that the state of compliance is at standard, they also acknowledged certain common areas of improvement such as IT systems, training, and resource allocations. The consultants suggested that the role of the Compliance Officer must evolve and go beyond the policing duties traditionally allocated. They must become consultants to the business and contribute by designing policies and ensuring that operations staff are adequately trained. There was also a call for exchange houses to recognise their audit function as a revenue driver that protects the business.

The consultants’ panel was followed by a detailed workshop by the Financial Intelligence Unit of the Central Bank of the UAE on the use of goAML, an application developed by the UNODC as a strategic response to financial crimes. UNODC’s goAML platform helps enhance the capacity of businesses to detect crime and meet international standards on anti-money laundering and terrorist financing.

The workshop was followed by a panel discussion on corporate governance and operational challenges. The panellists stressed the importance of maintaining a risk-based approach and called for the adoption of independent directors to provide unbiased guidance and maintain best practices. The final panel included representatives from the Central Bank of the UAE who provided an update on the regulations and called for the inclusion of more Emiratis in the industry.

Commenting on the event, Osama Al Rahma concluded, “At FERG, it is our responsibility to facilitate such knowledge sharing sessions between industry leaders and stakeholders to ensure the effective adoption of best practices within the sector. By adopting the latest technology and aligning the industry with emerging regulations, we aim to create a safer, more secure and progressive remittance and foreign exchange landscape in the country. Threats and risks are rapidly evolving, and it is only through a culture of continuous learning and collaboration that we can stay ahead in this ever-changing world of finance.” –