The Central Bank of the United Arab of Emirates (CBUAE) has issued a detailed circular (i.e. circular no. 24/2000, as amended) on AML* (Anti Money Laundering) that is required to be complied with by all banks. An AML law was also passed in the UAE in 2002 titled Federal Law no. (4) 2002 – Criminalization of Money Laundering. This law entitles the regulator to enforce heavy penalties on financial institutions for being used as an enabler of money laundering. In addition to these laws, CBUAE issued circular no. 3809/2009 on Politically Exposed Persons. The regulations/circulars of the CBUAE are reflected in NBF’s AML, Compliance and Sanctions Policies respectively.
The Compliance team consists of AML/CTF*(Counter Terrorism Financing) and sanctions specialists that constantly monitor NBF’s clients’ behavior. Automated transaction monitoring and payment screening filters enable the teams to better assess the compliance risks related to any type of client engagement or transaction.
The Compliance team meets the highest standards to protect NBF from client engagements or transactions with sanctioned individuals and entities. Its Sanctions Policy clearly prohibits the bank to knowingly deal -directly or indirectly- with designated individuals or entities. In addition, in accordance with the Sanctions Policy, the bank has expressed it has zero tolerance with regard to a number of countries in accordance with international laws and the prevailing sanctions. NBF’s Compliance Programme includes:
- Risk assessment procedures to identify customer risk based on AML/CTF risk factors.
- NBF uses a risk-based approach to AML/CTF. In cases where the AML/CTF risk is deemed higher, more control measures are required so that NBF can satisfy itself that the risks are adequately mitigated.
- A Compliance and an AML/CTF Policy and Standard Operating Procedures which define the (AML/CTF) compliance framework.
- Ongoing due diligence measures. These are performed with the assistance of an automated AML monitoring and an automated payment screening system. Both trigger alerts if the defined parameters are met. A dedicated team of AML/CTF analysts investigate the AML alerts for any potential suspicious or sanctions activity, as the case may be. In relation to investigation of payment screening alerts, a dedicated team in Central Operations investigates the alert in first instance. Potential true hits are escalated to Compliance;
- The Money Laundering Reporting Officer is responsible for reporting suspicious cases to the Anti-Money Laundering Suspicious Cases Unit at Central Bank of UAE.
- Compliance ensures through its training sessions and adequate communication (lectures, seminars, e-learning sessions, newsletters, etc.) that identified NBF staff –whether internal or external- is knowledgeable enough to protect the bank from money laundering, financing of terrorism or prohibited transactions with sanctioned countries.
- Strong focus on performing enhanced due diligence on those areas of the bank that constitute a higher money laundering, terrorist financing and economic sanctions risk due to a (combination of) perceived higher geography, industry or product risk in regard to the client or his business. Dedicated compliance staff is assigned to perform additional controls on clients, based on thorough scrutiny of client’s due diligence profile, including his counter parties, volumes, mode and channels of payment. Both open source material and premium service providers are used to obtain the information required.
- Scenarios where NBF identifies exceptionally high levels of risk. In such cases more due diligence measures are typically warranted to mitigate the compliance risk.
- An independent internal audit function which periodically evaluates the effectiveness of NBF’s AML Compliance Programme.
*AML (Anti Money Laundering) – a set of procedures, regulations and controls designed to stop the practice of money laundering. The aim of money laundering is to create the appearance that large amounts of money obtained from criminal activity originates from a legitimate source.
*CTF (Counter Terrorism Financing) – activities aimed at providing controls within the bank with a view to prevent that individual terrorists or terrorist groups are financed or given financial support.
NBF has implemented a strict KYC* (Know Your Customer) programme to ensure that all kinds of (prospective) customers (natural persons or legal entities) are subject to adequate identification and verification, risk rating and monitoring measures. The programme has been implemented throughout all business divisions. The KYC programme aims to obtain an understanding of the clients and entities with which the bank deals (either in a single transaction or ongoing relationship), or to which the bank renders any service, as well as the ultimate beneficial owners of the legal entities, legal representatives and authorised signatories as appropriate.
The programme includes strict identification requirements, name screening procedures, the requirement to periodically monitor client behaviour and to re-assess transaction behaviour of existing clients against the known client profile. Extra controls are implemented for business relationships with politically exposed persons (PEPs), clients from countries or industries deemed high risk, and clients that are predominantly availing banking services that are subject to high money laundering and sanctions risk (e.g. trade finance).
* KYC (Know Your Customer) – the bank’s process of identifying and verifying the identity of its clients.
Correspondent Banking Relationships and FATCA
Key regulations that impact NBF’s correspondent banking business are the Financial Action Task Force (FATF) and the US Patriot Act. While NBF is regulated by local regulations first and foremost, it is increasingly subject to relevant foreign regulations mostly due to the fact that NBF deals with foreign counterparties or currencies which triggers foreign regulations to apply.
NBF maintains important and longstanding corresponding banking relationships with a number of financial institutions. NBF may either act in capacity of respondent bank to its international counterparts or as a correspondent bank for some of its foreign counterparts. Typically NBF would perform an enhanced due diligence on the correspondent bank at the time of entering into a relationship – whether through the exchange of RMA only or where concrete transactions are expected to occur on the account. Periodic risk assessments must take place on the existing banking relationship from an AML/CTF/sanctions risk perspective. In addition, ongoing due diligence on a transaction-basis is performed in regard to correspondent banks. Among other things, our AML/CTF Policy prohibits dealings with any financial institution that is a shell bank, sanctions designated, entities that are domiciled in a sanctioned country, located in or majority held by a sanctioned entity, or which offers Payable Through Accounts (PTAs), or anonymous/nested/numbered accounts.
NBF is compliant with FATCA regulations. It is furthermore committed to comply with the Common Reporting Standards, pursuant to the OECD guidelines. NBF has registered with the Internal Revenue Service (IRS) in accordance with the In-principle agreement between UAE & US Governments.
Legal Name:National Bank of Fujairah PJSC
IGA Status: In principle agreement for Model 1 IGA