On 28 December 2023, the UAE Securities & Commodities Authority (SCA) issued an amendment to the SCA’s Booklet of the Rules of Financial Activities and the Status Rectification Mechanisms (the SCA Rulebook).
The amendment came into effect from the date of publication in the Official Gazette (the Amendment), which was on 15 January 2024 and introduces an additional fifth section to the SCA Rulebook (Title 5).
In the pre-Amendment era, the primary sources on anti-money laundering and on combating the financing of terrorism or unlawful organisations for SCA regulated entities were governed by the following (in addition to other pieces of legislation, circulars and decisions):
- Federal Decree-Law No. (20) of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Financing of Illegal Organisations; and
- Cabinet Decision No. (10) of 2019 Concerning the Implementing Regulation of Decree Law No. (20) of 2018 On Anti-Money Laundering and Combating the Financing of Terrorism and Illegal Organisations.
Over the years, there has been constant expectation in the market for the SCA to issue more specific regulations around anti-money laundering measures and preventing the financing of terrorism and financing of unlawful organisations which is tailored to align with the activities regulated by the SCA similar to approaches taken by securities regulators in other developed jurisdictions.
Title 5 does just that; titled "Controls for Combatting Money Laundering Crimes, Terrorism Financing and Financing of Unlawful Organisations", the new provisions under the additional fifth section are principally focused on anti-money laundering measures and preventing the financing of terrorism and financing of unlawful organisations.
A brief summary of the direct impacts expected from the Amendment are set out below:
- The Amendment applies to entities that are or would be subject to the SCA regulatory supervision, as well as all SCA-licensed entities. Such entities must ensure compliance with the Amendment, so may need to review and/or amend their internal procedures, policies and measures relating to anti-money laundering; and
- To the extent that any entity has an ongoing licencing application with the SCA and their internal policies and procedures require changes to ensure compliance with the Amendment, following their review of the same, the SCA will inform the entities of any required amendments.
The enhanced anti-money laundering requirements is a positive step towards reaffirming the UAE's commitment in tackling money laundering and terrorist financing in an effective manner in line with the Financial Action Task Force's international standards and requirements.
As a firm well-versed with the UAE market and regulatory framework, our experts are well placed to guide businesses on the implications of these changes or any other wider legal and practical issues and navigating through these. Please get in touch with our International Banking & Finance team for further information.
