Search for:

Greater scrutiny into financial crimes

The newly enacted Federal Law No. 20 of 2018 on Anti-Money Laundering Law (AML Law) contains important improvements over the prior legal framework to combat financial crimes. For the first time, digital currencies are brought within the ambit of the law, targeting online money laundering using cryptocurrencies. The law also introduces the concept of “controlled delivery” (a form of “sting operation”) where the authorities would allow a suspected money laundering activity to proceed in order to assist in investigating and apprehending persons suspected of carrying on illicit activities.

In 2018, the UAE Criminal Penal Code was amended, among other things, to broaden the scope of the anti-bribery and anti-corruption provisions by including bribery committed by foreign public officials, and for the first time the law expressly provides for extra-territorial reach, when the criminal act has an effect in the UAE or if the acts involve UAE persons or residents. These changes bring the UAE’s ant-bribery and anti-corruption regime closer in line with international best practice.

The re-imposition of US sanctions against Iran after its withdrawal from the Iran nuclear deal has increased scrutiny into Iran-related transactions and has had a marked impact on companies doing business with Iran and the use of the UAE banking system to facilitate that business. Although the UAE does not have a standalone comprehensive sanctions regime targeting Iran or a blanket prohibition on doing business with Iran the flow of funds between Iran and the UAE has been disrupted to a significant degree,.

Enhanced cooperation with foreign law enforcement authorities

The UAE authorities are also cooperating with the US Treasury Department, notably through its partnership within the Terrorist Financing Targeting Center. This has led to the imposition of specific sanctions across the Gulf Cooperation Council countries, targeting networks of money traders and exchange houses. There have been several highly visible joint enforcement actions between the US and UAE authorities to shut down currency trading operations that had links to Iran.

Heightened accountability and enforcement authority

Major appointments have been made at senior levels at the financial regulators in the UAE financial free zones, the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM) over the past year. Appointments at the enforcement divisions of both the Dubai Financial Services Authority (DFSA) in the DIFC and the Financial Services Regulatory Authority (FSRA) in the ADGM signals that these bodies are likely to take a more active approach to enforcement and a renewed commitment to the financial safety and soundness of these financial hubs, particularly in advance of the evaluation of the soundness of the UAE’s financial system and in particular its ability to detect and counter financial crimes that will be undertaken by the Financial Action Task Force (FATF) in Q2 of 2019.

The DFSA also introduced amendments to its cornerstone regulatory legislation to enhance its anti-money laundering regime, further supporting the UAE’s alignment with the FATF Recommendations. The changes mainly address the registration of Designated Non-Financial Professions and Businesses (including law firms, real estate brokerages and accounting firms) and require the confirmation of their beneficial ownership, information on their senior management teams and details of their Money Laundering Reporting Officer.

What does the new development mean for companies?

Over time, collectively, these changes will have a profound impact on the compliance environment in the UAE, particularly as it relates to financial crimes, and companies can no longer approach compliance issues casually. Compliance now needs to be on the agenda of boards and management teams, and strategic business decisions – whether they relate to the launch of new products or services, acquisitions and other opportunities to expand into new markets, or the selection of key business partners – will need to be undertaken only after a thorough compliance risk assessment. The best companies will reassess their compliance policies and risk exposure in light of these new developments. All companies would be well advised to make appropriate adjustments and take corrective actions now to ensure they can continue to operate successfully in the new compliance-focused regulatory environment. The UAE authorities have sent a clear signal that they are serious about protecting the UAE financial system from the risks of money laundering, terrorist-linked financing and other financial crimes. Companies that ignore this shift will do so at their peril.

These developments assure that businesses will be facing greater regulatory scrutiny and operating in a more compliance-focused environment than ever before. We expect the UAE to share investigation intelligence information more transparently going forward, and work on actively implementing joint enforcement actions with foreign law enforcement agencies, pursuant to the new enabling provisions of the AML Law. We also anticipate that the UAE will adopt a more liberal approach to extradition requests and we expect to see greater transparency in cases involving bribery. For example, the Anti-Corruption Department within the UAE’s State Audit Institution, the independent authority tasked with investigating financial irregularities involving federal bodies and government-owned companies, recently disclosed financial irregularities in public procurement contracts.

Now more than ever, companies will need to focus on putting in place robust compliance systems and controls to detect possible financial crimes. These systems should include carrying out regular due diligence exercises to determine a company’s risk of exposure to internal and external financial crime.

But having compliance systems and controls in place alone is not sufficient. It will be crucial to train employees to ensure that these systems and controls are understood and properly and effectively implemented, allowing them to withstand regulatory scrutiny.


Borys Dackiw has been a partner of Baker McKenzie since 1995. In 2008 Mr. Dackiw was appointed managing partner of the Gulf offices (including Abu Dhabi, Doha, Riyadh and Bahrain), coordinating the opening of the Abu Dhabi and Doha offices and the merger in the UAE with Habib Al Mulla in July 2013. Mr. Dackiw is head of the Compliance practice in the Gulf and also advises on mergers & acquisitions (including privatizations), private equity and general corporate and commercial law. Borys regularly advises clients across various industries on their compliance and anti-bribery policies and programs and has participated in whistleblower interviews relating to allegations of bribery and other bribery-related investigations. He also works with in house legal teams of multi-national clients to deliver tailored trainings on anti-corruption issues, including legal developments and enforcement trends in the UAE. Prior to this appointment Borys, held the position of managing partner in the Prague (Czech Republic) and Kyiv (Ukraine) offices of Baker McKenzie.


Matthew Shanahan is a partner in the Dubai office of Baker McKenzie Habib Al Mulla and a member of the Firm's Banking & Finance Practice Group. Having worked for three years at the UK Financial Services Authority and seven years in the legal division of the Dubai Financial Services Authority (DFSA), he has extensive experience of financial services regulators, and financial services regulatory regimes.


Mazen has over 22 years’ experience in banking and finance law in the Middle East and has practiced in the UAE for more than nine years. He is a certified Professional Director from the Mudara-Institute of Directors and is a member of the UK Securities Industry Management Association (SIMA). He has also been awarded the CISI Level 3 Certificate in Derivatives, Securities and Financial Regulations, and Financial Regulations, and the Islamic Finance Qualifications (IFQ) and is a certified Basel III professional (2011) and DIAC qualified arbitrator as well as a registered practitioner before the DIFC courts. In 2012, Mazen was appointed by the International Finance Corporation (IFC) as a short term consultant to advise on UAE legislative matters in relation to security laws.


Andre Abou Aad is a partner in Baker McKenzie's UAE office.


Laya Aoun-Hani is a Counsel and senior member of the EMEA Baker McKenzie International Commercial & Trade Practice Group. With over 17 years of experience in the Middle East, Laya regularly advises multinational clients from different industries on commercial transactions, multijurisdictional distribution and agency arrangements and restructurings, commercial disputes settlements, competition law, trade compliance, export controls, trade sanctions and customs matters. She is the Middle East lead for the Baker McKenzie Consumer Goods and Retail Industry Group and has also extensive experience in the Healthcare sector.
Laya trained at one of the largest law firms in Lebanon and one of the largest international law firms in London before she joined Baker McKenzie in Dubai in 2013. She was a lecturer and coordinator of a Business Law course for five years at the Faculty of Business at Antonine University in Lebanon and she currently delivers training courses to lawyers in the private practice at the Dubai Legal Affairs Department.