Methodology To Effectively Implement Sanctions Compliance Program | AML UAE

Hello, Financial Crimefighters!

Targeted financial sanctions is an integral part of the AML function, bringing completeness to the efforts for combating various financial crimes.

In this context, the UAE’s Cabinet Decision No. 74 of 2020 mandates the regulated entities – DNFBPs, Financial Institutions and VASPs – to develop and implement adequate measures to comply with the Targeted Financial Sanctions (TFS) regime and protect the business against the inadvertent exploitation by the sanctioned or designated persons.

This video will discuss a step-wise approach to developing an effective and robust TFS or Sanctions Compliance program.

Only when the entities have documented policies and procedures the implementation of controls can be streamlined.

The regulated entities must develop a Sanctions Compliance Policy. This policy must be developed considering the following:

Provision of the Cabinet Decision No. 74
EOCN’s guidance on Targeted Financial Sanctions issued for DNFBPs, VASPs and Financial Institutions
The entity’s assessed exposure to TFS and proliferation financing risks

Further, as the first stage of the Sanctions Compliance Program, the regulated entities must subscribe to the EOCN’s Notification system to receive email alerts regarding any changes, additions or delisting made to the UAE Local Terrorist List or the UNSC Consolidated List.

The Sanctions Compliance Policy must be backed by adequate technology and tools which can handle the screening of large databases, generate intelligent alerts for actionable and reporting requirements, etc.

The regulated entities must invest in the right solution or software. The entities must evaluate the alternatives available in the market and identify the right fit that aligns with its Sanctions Compliance Policy.

Further, for real-time screening and to ensure seamless data integration between the legacy system and the TFS solution, the entities must consider integrating these two.

Before finalizing the solution, adequate testing must be carried out to identify and fix gaps before the solution is made live for actual use.

Compliance Officers may not individually design and effectively implement the sanctions program across the organization. For combining the TFS compliance activities with routine business operations, the contribution from the employees, specifically the ones associated with clients and managing business relationships, is required.

Sanctions Training is essential to effectively identify and manage the TFS risk and avoid huge penalties associated with sanctions non-compliance.

The Compliance Officer must ensure that the concerned staff in the organization is well trained around the entity’s Sanctions Compliance Program. The relevant personnel must understand the sanctions compliance system and tool deployed by the entity and how to use it. The awareness of individual roles and responsibilities towards Sanctions compliance is a must.

The regulated entities must screen all the customers, beneficial owners, suppliers, employees, etc., against the sanctions lists.

For the UAE-based entities, screening the UAE Local Terrorist List and the UNSC Consolidated List is mandatory. However, screening the relevant sanctions lists is also required for entities engaging with international customers or foreign jurisdictions.

The screening must be conducted before establishing a business relationship and also on an ongoing basis to detect the change in the person’s designation status.

Additionally, basis the outcome of the screening outcome, the regulated entities are required to apply necessary TFS measures and report the identified matches with the Executive Office for Control and Non-Proliferation.

For any confirmed matches identified with UAE Local Terrorist or UNSC Consolidated List, the regulated entities must:
1. freeze the designated person’s funds, available if any,
2. refrain from onboarding the customer or terminate the business relationship if existing
3. file the Fund Freeze Report (FFR) on the goAML Portal.

For any partial name matches, which the regulated entities can neither conclude as a confirmed match nor a false match, the entity must:

1. suspend the business relationship till receipt of any instructions from EOCN
2. submit a Partial Name Match Report (PNMR) on the goAML Portal.

Timestamps:
0:00 Introduction on Methodology To Effectively Implement Sanctions Compliance Program
0:42 Development of Sanctions Compliance Policy
1:37 What is Sanctions Screening Solution Identification?
2:24 What is Sanctions Training?
3:14 What is Sanctions Screening and how it works?
4:44 Sanctions Compliance Program
5:32 Conclusion and Regards

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