UAE to implement tougher anti-money laundering laws and jail terms for reporting failures

The United Arab Emirates is proposing amendments to its anti-money laundering legislation that, if approved, may be one of the most stringent anywhere. That’ s because it will allow the incarceration of officers for failures to report transactions suspected of involving money laundering or terrorist financing without a due diligence defence. Canadian anti-money laundering laws, for example, also permit the incarceration of employees and directors and officers for similar reporting failures for a term of up to 5 years, however, a due diligence defence is available for officers and directors and with respect to employees, a defence of upstream reporting is available. The UAE is proposing a strict liability regime which will obviously increase the legal risk of correspondent and other banking relationships in the UAE for US, EU, Canadian and other banks and funds.

The proposed amendments will also expand the law to make it an offence to fail to report if a person has controlled substances in the UAE (such as drugs and alcohol) or to fail to complete currency importations, exportations and holdings in amounts to be prescribed.

The UAE is one of the few jurisdictions in the world where crimes against the environment, or a violation of environmental laws, is a predicate offence to money laundering. The same is true for damage to public property and violations of international treaties.

One of the more innovative approaches taken in the UAE was the formation in 2002 of a national anti-money laundering committee which advises the government in respect of policy and legal issues comprised of several federal ministers in charge of customs, taxation, finance, trade, justice and the Central Bank. This committee was responsible for directing these proposed legislative amendments currently under consideration.