UNITED ARAB EMIRATES Law and Practice Contributed by: Arnold Krutilins and Gabrielle Margerison (nee Lowe), White & Case LLP
2.13 Conjunction of Unregulated and Regulated Products and Services While it will depend on the nature of the business activities contemplated, it is generally expected that corporate entities maintain a degree of separation between regulated and unregulated business activi - ties to ensure that they can ring-fence those which are regulated and have higher supervision requirements from those which are not. For instance, in the ADGM it is prohibited to combine financial and non-financial services on the licence of a single entity. 2.14 Impact of AML and Sanctions Rules AML/CTF is regulated in the UAE by: • Federal Decree-Law No 20/2018 (as amended); • Cabinet Decision No 10/2019 (as amended); • Cabinet Decision No 58/2020; and • Federal Law No 7/2014, collectively, the “UAE’s AML/CTF Laws”. Financial institutions and VASPs fall within the scope of the UAE’s AML/CTF Laws. As such, where fintechs fall within the scope of the definition of a financial insti - tution or VASP, they will also fall within the scope of the UAE’s AML/CTF Laws. Fintechs regulated by the CMA are required to ensure compliance with the standards and obligations set out in the UAE’s AML/CTF Laws. This is confirmed, for instance, by SCA Decision No 13/RM/2021 (the “CMA Rulebook”), which requires licensed bodies to meet the requirements of the “Law of Anti-Money Laundering and Combating the Financing of Terrorism and Illicit Organisations and its Implementing Regula - tions”. The CMA has also issued a number of circulars and notices governing various aspects of AML/CTF compliance, including the freezing and unfreezing of accounts and the implementation of targeted financial sanctions. This is in addition to any standards issued by the CBUAE in respect of this FATF guidance. Fur - thermore, both the VA Decision and the DVAL are explicit in requiring VASPs licensed thereunder to comply with the obligations of the UAE’s AML/CTF Laws.
Under Article 71 (1) of the DIFC Regulatory Law 2004, regulated FSPs are required to comply with the UAE’s AML/CTF Laws. The Anti-Money Laundering, Coun - ter-Terrorist Financing and Sanctions Module of the DFSA Rulebook also applies to regulated FSPs in respect of their activities carried on, in, or from the DIFC. Similarly, the UAE’s AML/CTF laws also apply to regu - lated FSPs in the ADGM. In addition, the ADGM’s Anti- Money Laundering and Sanctions Rules and Guid - ance Module to the FSRA Rulebook sets out further requirements for regulated FSPs to ensure compliance with the provisions of the UAE’s AML/CTF Laws. This includes implementing appropriate AML/CTF policies and procedures, establishing detection and reporting mechanisms for suspicious customers and transac - tions, and maintaining appropriate records of these transactions. 2.15 Financial Action Task Force (FATF) Standards The AML and sanctions rules in the UAE generally follow the standards imposed by the FATF. Since its removal from the FATF grey list in 2024, the UAE has continued to evidence its dedication to accelerating its AML reform agenda by making various amend - ments to its AML laws in August 2024, launching a new national strategy for AML/CTF and proliferation financing developed using the World Bank Group’s methodology and by continuing to take enforcement action in cases of non-compliance with AML rules and regulation. 2.16 Reverse Solicitation In “onshore UAE”, the CMA Rulebook contains a reverse solicitation exemption (from the requirement to obtain a promotion licence from the CMA) where, on its own initiative, an investor inside “onshore UAE” enquires with an entity outside “onshore UAE” about the offer or purchase of a specific foreign security, without a promotion by the foreign issuer or their pro - moters or distributors and provided that documentary evidence exists demonstrating this. Unlike the position in “onshore UAE”, in the DIFC and the ADGM, no codified reverse solicitation exemptions exist with respect to offering regulated products and
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