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January 05, 2019
The Government of the United Arab Emirates issued the Federal Decree No. 20 of 2018 On Combating Money Laundering Crimes, the Financing of Terrorism and the Financing of Unlawful Organisations on 23 September 2018. The new law provides for several measures to combat money laundering such as including a broad definition of the offence of money laundering, establishment of a Financial Information Unit to investigate suspicious activities, and strict penalties for the commission of the offence of money laundering, amongst others.
The Money Laundering Law requires that financial institutions, businesses and professionals continuously assess, document and update the assessment based on the various risk factors and identify the risk and assess them.
Four Key Points on the New Anti-Money Laundering Law
1. The Money Laundering Law was issued in the UAE on 23 September 2018 to combat money laundering crimes, and related financial crimes. It abrogated Federal Law No. 4 of 2002 on the criminalisation of money laundering and combatting of the financing of terrorism.
2. Under Article 2 of the Money Laundering Law, a perpetrator of a money laundering offence is a person who is aware that the funds (including all kinds of assets such as currencies, crypto, shares, cheques, etc.) have been derived from a felony or a misdemeanour and: (a) transfers or moves the proceeds, or disposes of the funds/proceeds intending to conceal or disguise their source; (b) conceals or disguises the true nature, source or location of the proceeds including the manner of disposal; (c) acquires, possesses or uses the proceeds on receiving them; or (d) assists the person who committed the felony/misdemeanour to escape punishment.
3. The Money Laundering Law considers money laundering as an independent crime and even if the criminal has been punished for the main crime, he could still face a separate sentence for committing the crime of money laundering. The law indicates that the court which investigates the money laundering case does not have to wait or depend on a judgment of the main crime to convict the criminal.
4. The law considers that the companies could be criminally liable if the crime was committed under the name of the company. However while the company would be considered liable, the individual who committed the crime also bears personal responsibility for such a crime.
Five-Key-Point-Learning on the Criminal Investigations and Seizure under the New Anti-Money Laundering Law
1. Article 5 of the Money Laundering Law provides the governor of the Central Bank with the right to freeze the suspicious funds deposited in a financial institution for a period of 7 days, and it gives the Prosecution and Criminal Court the right (without informing the owner) to allocate, follow, evaluate and seize or freeze any amounts of money if such amounts were sourced or linked to any crime.
2. The law empowers the Criminal Court and Prosecution to impose a travel ban on the owner until the criminal investigation or trial is completed. They are also authorized to issue the decision to restrict the money owner from processing any transaction, which could lead to hiding or breaching the seizing order (as far as that does not affect others, acting in good faith).
3. Any grievance against the freezing or seizure will have to be filed before the competent court. If the such grievance has been dismissed, the accused will have the right to raise a new grievance after 3 months from the initial dismissal, unless there is a serious reason to raise the grievance before the expiry of such 3 months.
4. The court has the right to nominate a person to manage the funds, proceeds and other instrumentalities that have been seized, frozen or confiscated, permitting such a person to sell or dispose of it, even before the judgment was issued if needed.
5. To investigate money laundering crimes, the law empowers the Prosecution to check the accounts, records, auditing reports and documents in possession of others, and have access to communication, email correspondence or computers to trace the money and monitor the accounts.
International Cooperation Under the New Anti-Money Laundering Law
As per article 18 of the Money Laundering Law, the UAE local judicial authority shall, upon request of a judicial authority of another country bound by an enforceable agreement with the UAE, cooperate with other judicial authorities and provide evidence on investigation and trial processes connected to a crime, which has happened in other countries.
Such authority has also the power in deciding:
a) to seize or freeze the assets or proceeds used in the crime;
b) to provide all the auditing reports kept in the UAE financial institutions;
c) to inspect the concerned individuals and buildings, to hear witnesses and to collect evidence; and
d) to deliver and extradite individuals and things used in the crime.
The above could be even done in the absence of the treaty but based on the principles of mutual assistance existing between the countries. The law orders that every request for international cooperation, which is relevant to money laundering, will be given priority and all precautionary measures should be taken to keep the confidentiality of the matter.
The law empowers the local authorities in their sole discretion to recognize any foreign court order issued in a country, which has a treaty with the UAE if such court order relates to the confiscation of funds, proceeds, or assets linked with money laundering, terrorist financing or financing of illegal organisations.
What is The Expected Punishment For Money Laundering in Felony And Misdemeanour Crimes Under The UAE Laws?
As the types of crimes may vary from one to another and the information, resources, and assistance of the defendants may be additive in crime detection, the punishments for such crimes and their consequences depend on the circumstances.
According to Article 22 of the Money Laundering Law, any person who commits money laundering in the UAE will be punished with imprisonment for at least 1 year and up to 10 years. The perpetrator could also be punished with fines which could range between AED 100,000 to AED 5 million or either fine or imprisonment. The punishments are harsher if the money laundering crime is committed by the perpetrator who has abused his influence or power vested in him by virtue of his profession, committed through a non-profit organization or an organized criminal group or if he is a repeat offender. In these cases, the punishments include temporary imprisonment and fines of AED 300,000 and AED 10 million.
The breach of the Anti Money Laundering law shall lead to mandatory deportation upon serving the sentence, in case the criminal was an expat. Article 29 of the Money Laundering stipulates that deportation shall be ordered for money laundering or other felony crimes. If the law was breached in misdemeanour crimes, deportation will be subject to the court’s discretionary power.