Regulatory Compliance and Reporting
14 Apr 2022
14 Apr 2022
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Regardless of sector or scale, all companies must obey the laws and regulations of the country’s operations. Regulatory compliance and reporting have to do with a set of guidelines that an organization must follow in accordance with the law. This is considered one of a compliance officer's most critical responsibilities–including reports on corporate compliance.
The compliance report documents show a company's adherence to specific business regulations. In addition, some government sectors and agencies in the UAE inspect and ensure that a company's enforcement is in accordance with its corporate goals, risk management plans, and the country's laws and regulations.
The regulatory compliance and reporting in the UAE ensure that all companies uphold all the country's laws and regulations - no one is excluded.
The Economic Substance Regulations are enacted in accordance with the global norm established by the Organization for Economic Cooperation and Development ("OECD") Forum on Harmful Tax Practices, which allows companies engaging in geographically mobile business activities to have significant operations in a jurisdiction.
According to the Economic Substance Regulations, ESR notifications must be submitted within six months of the Licensee's financial year-end.
Within twelve months of the end of the financial year, all ESR Reports must be submitted.
The guidelines for Country-by-Country Reporting (CbCR) are based on the Organization for Economic Cooperation and Development's (OECD) CbCR guidance. It is intended for UAE-based companies that are part of multinational groups that are tax residents in different jurisdictions and have combined sales of at least 3,150,000,000 UAE Dirhams in the previous financial year.
The CbC report should be sent within 12 months of the end of the MNE Group's reporting year.
The Ultimate Beneficial Owner's (UBO) goals include keeping the UAE's economic status in line with international standards. Its purpose is to create an effective regulatory structure and procedure for beneficial owner data and regulate minimum obligations in the disclosure of Beneficial Owners, Shareholders, Partners, and Nominee Board Members.
The UAE's Ministry of Economy (MoE) has launched an awareness and monitoring campaign to enable registered Designated Non-Financial Business and Professions (DNFBPs) to register with the Financial Intelligent Unit (goAML) system. Similarly, it encourages targeted organizations to write in the Committee on Goods Subject to Import and Export Control (Automatic Reporting System for Sanctions Lists) system and to take steps in accordance with both the provisions of Federal Law No. 20 of 2018 on the fight against money laundering crimes and the financing of terrorism and criminal organizations, as well as relevant laws and decisions.
The grace period for organizations to enforce these measures has been extended until March 31, 2021. Non-compliance with the above conditions would result in the suspension of your business license, as directed by the Ministry of Economy.
What are the most challenging regulatory compliance and reporting components in the UAE?
In the United Arab Emirates, determining whether or not a company complies with the country's laws and regulations is extremely difficult. As a result, there have been occasions when management assumed that the organization had already adhered to a specific rule, only to find out later that they had incurred a penalty or punishment.
Every day, new laws and regulations are enacted that organizations in the UAE must obey. As a result, organizations must dedicate a considerable amount of time and resources to keeping their bodies up to date, through at least a training, on the current laws and regulations in the UAE, which tend to be updated regularly.
Any company that does not comply with UAE laws and regulations risks losing its name and credibility. That is certainly not something any business owner wants to happen.
Annexed Table to the Cabinet Decision No. (16) of 2021 Regarding the Unified List of the Violations and Administrative Fines for the Said Violations of Measures to Combat Money Laundering and Terrorism Financing that are Subject to the Supervision of the Ministry of Justice and the Ministry of Economy
|Applicable Article in the Implementing Regulation
|Administrative Fine (AED)
|Article (4) Clause 1
|Failure to undertake the actions and procedures necessary to identify the risks associated with the crime in the violator’s field of work
|Failure to identify and assess the risks that may arise in the violator’s field of work when developing the services that the violator offers or when conducting new professional practices through its facility.
|Article (4) Clause 2
|Failure to undertake the actions and procedures necessary to mitigate the risks identified based on the results of the National Risk Assessment or the Selfassessment process given the nature and scale of the violator’s business.
|Failure to implement internal policies, procedures and controls within the facility aimed at combating crime or preventing involvement in suspicious business relationships.
|Article (4) Clause 2/B + Article (22) Clause 1
|Failure to take the necessary enhanced due diligence measures to manage high risks.
|Article (4) Clause 3
|Failure to take the necessary simplified due diligence measures to manage low risks.
|Failure to undertake the necessary customer due diligence measures before establishing the business relationship or resuming a business relationship or performing a transaction under the customer’s name or in his/her favor.
|Article (8) Clause 3
|Failure to undertake the necessary measures to understand the purpose of the business relationship and its nature, or the failure to acquire any information pertaining to this purpose when needed
|Article (8) Clause 4
|Failure to undertake the necessary measures to understand the nature of the customer’s business, the ownership structure of his/her business, and the extent to which the customer has control over that business.
|Article (8) Clause 1 and 2
|Failure to verify the identity of the customer and the real beneficiary or their representative using documents or data collected from reliable and independent sources before or while establishing a business relationship or opening an account or prior to performing a transaction for a customer with whom no business relationship has been established.
|Failure to undertake the due diligence measures pertaining to the ongoing supervision of customers while conducting the business relationship.
|Failure to notify the Financial Intelligence Unit of the suspicious transaction report when the customer due diligence measures were not taken before establishing or continuing a business relationship with the customer or performing a transaction for the customer or under his/her name
|Article (17) Clause 1/A
|Delay in notifying the Financial Intelligence Unit of the suspicious transaction report in case there is suspicion or if there are reasonable grounds to suspect that the business relationship with the customer is in whole or in part linked to the crime, or that the customer’s funds that are subject to the business relationship are in fact proceeds of a crime or were used in committing a crime.
|Article (17) Clause 1/A
|Failure to provide the Financial Intelligence Unit with the additional information it requires regarding the matter reported in the suspicious transaction report.
|Article (14) Clause 1
|Dealing with shell banks in any way
|Article (14) Clause 2
|Opening or maintaining bank accounts using pseudonyms, fictitious names or numbered accounts without the account holder’s name.
|Failure to conduct due diligence measures on politically exposed persons before establishing or continuing a business relationship with such customers.
|Article (18) Clause 1
|Disclosing, directly or indirectly, to the customer or any other person(s) that they have reported or are intending to report a suspicious transaction
|Failure to appoint a compliance officer
|Failure to implement the measures prescribed by the National Committee for Combating Money Laundering and the Financing of Terrorism and Illegal Organizations with respect to customers from high-risk countries
|Article (24) Clause 1
|Failure to create records for keeping track of financial transactions with customers
|Article (24) Clause 3
|Failure to create records that keep track of financial transactions with the customers in an organized manner, which prevents data analysis and tracking of financial transactions.
|Article (24) Clause 2
|Failure to keep records and documents related to the financial transactions for a period of five years from the date of concluding the transaction or terminating the business relationship with the customer, or from the date of completion of the inspection of the customer’s facilities.
|Article (24) Clause 4
|Failure to make all the information pertaining to the customer due diligence, ongoing supervision, and the results of their analysis, records, files, documents, correspondence and forms available to the competent authorities upon request.
|Article (21) Clause 4
|Failure to provide training for the facility’s employees on combating money laundering and the financing of terrorism.
|Failure to take the necessary measures regarding customers included in the international or domestic sanctions lists before establishing or continuing a business relationship with those customers.
With AMCA, we'll make it easy for you and your business to comply with the UAE's laws and regulations. Our experts are well-trained and specialized in delivering regulatory advice and assistance. In addition, our experts are experienced in advising and assisting with regulatory relations, meeting regulatory requirements and expectations, and obtaining regulatory approval for your company.