The UAE Central Bank has issued new anti-money laundering and counter-terrorism financing guidance covering the dealings with virtual assets, including cryptocurrencies and non-fungible tokens (NFTs).
UAE’s New Virtual Assets Guidance
The new guideline, which will come into effect within a month, will be applicable to all licensed financial institutions, including banks, finance companies, exchange houses, payment service providers, registered hawala providers, insurance companies, agents, and brokers.
The guidance discusses the risks while dealing with virtual assets and virtual asset service providers and signifies the effective implementation of legal obligations for licensed financial firms. In addition, they provide clear definitions of virtual assets, virtual asset service providers, and their business models.
Furthermore, the guideline outlines due diligence procedures the financial institutions need to follow when dealing with the customers of virtual asset service providers. On top of that, they highlighted proper channels and mechanisms through which financial institutions should interact with virtual asset service providers.
“The new guidance related to the virtual assets sector contribute to strengthening the supervisory and regulatory frameworks of the Central Bank to combat money laundering and the financing of terrorism,” said Khaled Mohamed Balama, the Governor of the UAE Central Bank.
Progressive Rules around Virtual Assets
The UAE is one of the progressive nations regulating the digital asset industry. Dubai, one of the seven emirates, even formed a dedicated regulator overseeing the virtual asset industry. Last month, Abu Dhabi-based federal agency, the Securities and Commodities Authority, started accepting license applications for cryptocurrency services.
Moreover, the Central Bank pointed out that the new guidance considered Financial Action Task Force (FATF) standards. Last year in March, the FATF added the UAE to its ‘grey’ list, basically increasing monitoring of the jurisdiction. At the time, the UAE said it would work with the FATF to address the concerns.
“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,” the Governor added.
This article was written by Arnab Shome at www.financemagnates.com.