Dubai, UAE — The Central Bank of the UAE (CBUAE) Wednesday issued guidelines on the risks related to, and combating the use of, virtual assets (VA), such as cryptocurrencies and exchange tokens, and Virtual Asset Service Providers (VASPs) in money laundering and financing of terrorism.
The guideline elaborates on various channels of mechanisms of interaction between VASPs and Licensed Financial Institutions (LFIs), including banks, finance companies, exchange houses, payment service providers, registered hawala providers and insurance companies, agents and brokers.
It will assist LFIs’ understanding of risks and effective implementation of their statutory anti-money laundering and combatting the financing of terrorism (AML/CFT) obligations and takes Financial Action Task Force (FATF) standards into account. The guideline comes into effect within one month, the bank said in a statement.
The guidance discusses the risks of dealing with VAs and VASPs and sets out clear descriptions of VAs, VASPs and VASP business models. It outlines the customer due diligence (CDD) and enhanced due diligence (EDD) for LFIs towards potential VASP customers and counterparties, to de-risk and support them with training programs, a governance system and record-keeping mechanisms.
Khaled Mohamed Balama, Governor of the CBUAE, said, “The new guidance related to the virtual assets sector contributes to strengthening the supervisory and regulatory frameworks of the Central Bank to combat money laundering and the financing of terrorism. We are constantly working to enhance efforts and strengthen the awareness of licensed financial institutions to prevent all kinds of financial crime activities and reduce potential risks to protect the financial and monetary system and maintain its soundness and stability, in line with the Financial Action Task Force standards.”