Anti-Money Laundering (AML)

Money laundering

Over the past several decades, money laundering has become an increasingly prevalent issue. Both financial institutions and governments are constantly looking for new ways to fight money laundering, and several anti-money laundering policies have been put in place to help this effort to the maximum. 

Anti-money laundering laws entered the global arena soon after the Financial Action Task Force was created. The FATF was responsible for the creation of most anti-money laundering standards, and it made a framework for countries to follow. After putting this framework into effect, the FATF then began to systematically identify countries that did not have proper legislation regarding money laundering. This tactic helped motivate countries to alter their legislation and start properly enforcing the policies that were in already place.

Anti-money laundering (AML) refers to all policies and pieces of legislation that force financial institutions to monitor their clients to prevent money laundering. AML laws require that financial institutions report any financial crime they detect to relevant regulators.

The objective of anti-money laundering (AML) is to deter criminals from feeding their illicit funds into the financial system. Criminals use money laundering to hide the true source of their money that has been derived from crimes.


United Arab Emirates Issues New AML Law in the Context of FATF Evaluation

In the context of this year’s mutual evaluation, the UAE has undertaken a number of proactive initiatives to ensure best-practice anti-money laundering and counter-terrorist financing measures, including enacting an important new law and seeking to combat financial crime in cooperation with international partners.

The AML Law introduced several concepts recommended by FATF designed to enhance the UAE’s effectiveness in identifying and preventing attempts at money laundering and terror financing.

Anti-Money Laundering (AML) is a set of policies, procedures, and technologies that prevents money laundering. There are three major steps in money laundering (placement, layering, and integration), and various controls are put in place to monitor suspicious activity that could be involved in money laundering.

The UAE’s efforts to ensure its financial sector strongly complies with international best practices on financial crime prevention are not limited to the new AML law.

Federal Decree No. 20 of 2018 on Anti-Money Laundering and Countering the Financing of Terrorism was issued to develop the legislative and legal structure of the nation to ensure compliance with international standards on anti-money laundering and countering the financing of terrorism. The law aims to:

  • Combat money-laundering practices
  • Establish a legal framework that supports the authorities concerned with anti-money laundering and crimes related to money-laundering
  • Counter the financing of terrorist operations and suspicious organizations.

Ultimately, avenues for international cooperation that involve advancing combative tools, raising awareness of the risks, and improving legislative defenses should be a priority for all players in the global system that are tasked with defending the integrity of the international market.

Cumulatively, these legislative advancements can assist in providing greater protection for the UAE’s market, as well as offering assurance to international investors that their financial interests are safe within the UAE jurisdiction.


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