UAE’s Central Bank Introduces New Anti-Money Laundering Guidance for Crypto Businesses – Here’s the Latest

The UAE’s Central Bank just introduced new anti-money laundering (AML) and counter-terrorism financing guidelines for crypto businesses and financial institutions handling digital assets, according to an announcement on Wednesday.

The new guidance applies to all licensed financial institutions (LFIs), which include banks, exchange houses, finance companies, payment service providers, brokers and insurance companies.

According to the UAE Central Bank’s statement, the new guidance will help these firms understand risks of dealing with digital assets, and will help them follow AML and combat the financing of terrorism (CFT) rules.

Specifically, the new guidance “outlines the customer due diligence and enhanced due diligence for LFIs towards potential virtual asset service providers (VASP) customers and counterparties, with the aim of de-risking, supporting them with training programs, a governance system and record-keeping mechanisms”.

The new rules, which come into effect at the start of July, contribute to strengthening the supervisory and regulatory frameworks of the Central Bank to combat money laundering and the financing of terrorism”, UAE Central Bank Governor Khaled Balama.

UAE Making Efforts to Become Global Crypto Hub

New guidelines regarding the handling of digital assets for LFIs comes as the UAE makes efforts to position itself as a global hub for the crypto industry.

The UAE introduced a regulatory framework for digital assets back in January and the country is known for working cooperatively with digital assets businesses.

As a result, a wave of major crypto firms are expanding/moving operations to the UAE.

These include Coinbase, who are reportedly considering the UAE as an international hub for their business, and Gemini, who are in the process of securing a license.

Meanwhile, the UAE Central Bank recently announced that it has strengthened ties with the central bank of Hong Kong, the Hong Kong Monetary Authority (HKMA), in order to focus on crypto regulation.

But setting up shop in the UAE isn’t without its risks.

Back in March 2022, the Financial Action Task Force (FATF), an international anti-money laundering and anti-terrorism financing group, placed the UAE on its “grey” list, meaning the jurisdiction was subject to increased monitoring.

The UAE Central Bank said its new guidance for LFIs dealing with digital assets takes FATF standards into account.