Commentary on Risks associated with Money Laundering Based on Dubai Financial Services Authority Regulation

Introduction

This article covers the latest Anti-Money Laundering regulatory requirements issued by Dubai Financial Services Authority Regulation and how RiskNucleus Anti-Money Laundering solution caters to such policies in order to help financial services providers achieve their objectives to comply with such regulatory requirements. The categories covered are:

1. Business Risk Assessment
2. Customer Risk Assessment
3. Customer Due Diligence
4. Correspondent banking, electronic fund transfers and audit
5. Sanctions and other International obligations

Business Risk Assessment

As per the policies, business risk assessment must comply by taking appropriate steps to identify and assess money laundering risks to which its business is exposed, taking into consideration the nature, size and complexity of its activities. E-KYC/Risk Assessment module of RiskNucleus Anti-Money Laundering solution allows the financial institutions to record customer information and their attributes as mentioned in the regulation and allows them to generate risk scores and ratings.

The regulations emphasize on establishing and maintaining effective policies, procedures, systems and controls to prevent opportunities for money laundering in relation to the relevant person and its activities. Watchlist Screening module of the system allows financial institutions to screen their customers against blacklists and internally maintained Politically Exposed Persons (PEPs) list to identify customers and their beneficial owners as mentioned in the regulation.

Customer Risk Assessment

The regulation focuses on a risk-based assessment of every customer and assigning the customer a risk rating proportionate to the customer’s money laundering risks. Risk assessment of a customer must be completed prior to undertaking Customer’s Due Diligence.

RiskNucleus E-KYC/Risk Assessment module allows financial institutions to record customer information and their attributes as mentioned in the regulation and allows them to generate risk scores and rating accordingly, while Watchlist screening module assists in identification of shell banks, etc.

Customer Due Diligence

RiskNucleus Anti-Money Laundering solution allows financial institutions to conduct due diligence of customers before and after establishing relationships through its automated Screening, Risk Assessment and Transaction Monitoring Modules.

The Customer due diligence regulation highlights the identification and verification of customer and beneficial owners and understand nature of customer’s business, structure and ownership, beneficiary and beneficial owners of life insurance policy. RiskNucleus Watchlist Screening module and Transaction Monitoring module allow the identification of such beneficial owners and PEPs; while monitoring such transactions.

RiskNucleus Anti-Money Laundering solution serves to monitor suspicious transactions being conducted by an institution’s customers. It also screens customers against sanctions listed by UNSC such as OFAC, EU, UN and HMT.

Correspondent banking, electronic fund transfers and audit

RiskNucleus Risk Assessment module assists in assigning a risk rating for the correspondent banks while the Watchlist Screening module screens the bank and its management.

Transaction Monitoring module of the system helps in identifying certain transactions through its fully configurable scenarios. Once such transactions are identified, Watchlist Screening module can be used to identify the involved and related parties as per the regulations.

Sanctions and other International Obligations

For sanctions and other international obligations, the policy states that a relevant person must establish and maintain effective systems and controls to ensure that on an ongoing basis, it is properly informed and takes reasonable measures to comply with relevant resolutions or sanctions issued by the United Nations Security Council. RiskNucleus AML solution screens blacklisted people against our fully automated Watchlist Screening module. The module provides global sanctions such as OFAC, EU, UN and UK and also allows institutions to upload internal lists provided by DFSA and UAE enforcement agencies.