5.1 AML framework & risk-based approach
▼UAE AML / CFT framework syllabus 5.1
Primary law: Federal Law No. 20 of 2018 on AML/CFT and the financing of illegal organisations. SCA implementation: Decision No. 10/Chairman of 2019. UAE is a FATF member and follows the 40 Recommendations + 9 Special Recommendations.
Risk-based approach — calibrated intensity syllabus 5.2
RBA means resources and CDD intensity are calibrated to the assessed risk of each customer, product, jurisdiction:
- Low risk: simplified CDD
- Standard risk: full CDD
- High risk: enhanced DD (EDD)
Skipping CDD entirely for low-risk customers is NOT "risk-based" — it's non-compliance.
5.2 Customer Due Diligence
▼CDD triggers — the AED 55k / 3.5k pair syllabus 5.3
AML record retention — 5 years from END syllabus 5.3
CDD documentation, transaction records, and correspondence must be kept for ≥ 5 years from completion of the transaction OR end of the business relationship, whichever is later.
The "whichever is later" anchor ensures the clock starts only after engagement closes — important for long relationships.
Third-party CDD reliance syllabus 5.3
Reliance permitted ONLY when:
- Third party is a regulated FI subject to equivalent AML standards, AND
- Licensed body remains ultimately responsible for CDD adequacy
Indemnities do NOT transfer regulatory responsibility — they shift contractual loss only.
Wire transfer — minimum originator info syllabus 5.3
Above the CDD threshold, the minimum information that must accompany the transfer:
- Originator name
- Account number (or unique transaction reference)
Calibrated to FATF Recommendation 16. Cross-border / higher-risk cases require fuller personal data.
5.3 Beneficial ownership & PEPs
▼Beneficial owner — 25% threshold syllabus 5.4
A natural person is a "beneficial owner" of a legal-person customer if they hold (directly or indirectly) ≥ 25% ownership OR controlling interest. Where no natural person meets 25%, the senior managing official is treated as the BO.
PEPs — enhanced due diligence syllabus 5.4
Where the customer or BO is a Politically Exposed Person:
- Senior management approval at relationship establishment / continuation
- Reasonable source-of-wealth / source-of-funds investigation
- Ongoing enhanced monitoring
Automatic decline is NOT required. Simplified DD is forbidden.
5.4 Suspicious Transaction Reports
▼STR — to whom & when syllabus 5.5
Tipping off is a crime syllabus 5.5
Tipping off (informing the customer or third party that an STR has been filed or investigation underway) is criminal: imprisonment ≥ 6 months + fine AED 100k–500k.
Failure to report — also criminal syllabus 5.5
Failure to file an STR (where duty arose) is criminal: imprisonment + fine AED 100k–1m. Not just administrative — reflects how essential the STR pipeline is.
Compliance officer reporting cadence syllabus 5.5
The AML compliance officer must report to senior management / Board at least semi-annually. Monthly noise / annual sparseness / STR-triggered only are all wrong.
5.5 Sanctions & monitoring
▼Sanctions screening — onboarding + ongoing syllabus 5.6
Screening against UN / UAE lists at onboarding AND on an ongoing basis, including re-screening when lists update. Onboarding-only creates a stale snapshot.
Ongoing monitoring — periodic + event-driven syllabus 5.6
Customer risk profile reviewed periodically PLUS at material changes (transaction pattern shift, jurisdiction change, PEP status change). Either alone misses something.
Group-wide policies — highest common denominator syllabus 5.6
Group AML policies apply group-wide, including foreign subsidiaries and branches. Host-country rules take precedence where stricter. UAE rules cannot be diluted overseas.
5.6 Market abuse & Chinese walls
▼Chinese walls — purpose & application syllabus 5.7
Information barriers between parts of the firm (e.g. corporate finance vs research vs trading) to prevent inside information flowing improperly. Required where the firm has activities that could create conflicts.
Market abuse — Articles 16 & 37 syllabus 5.7
Investment research — pre-publication rules syllabus 5.7
Draft research containing a recommendation or target price may generally NOT be reviewed by:
- The issuer (even to correct factual errors)
- Other relevant persons inside the firm (besides analysts)
- Prospective major clients
EXCEPT solely to verify compliance with the firm's legal obligations. Inducements from interested parties must be refused.
5.7 Penalties — criminal & admin
▼Penalty matrix syllabus 5.8
| Offence | Imprisonment | Fine |
|---|---|---|
| Standard ML (natural) | ≤ 10 years | AED 100k–5m |
| Aggravated ML | Temporary imprisonment | AED 300k–10m |
| Terrorism financing | Life or ≥ 10 years | AED 300k–10m |
| ML — legal person | — | AED 500k–50m |
| Failure to report STR | Imprisonment | AED 100k–1m |
| Tipping off | ≥ 6 months | AED 100k–500k |
| Market abuse (Art. 37) | 3 mo – 3 yr | AED 100k–1m |
| SCA admin trading ban (max) | — | 1 year ban |
| Admin penalty (per violation) | — | AED 50k–5m |
5.8 Cheat sheet — all the numbers
▼Every Ch 5 threshold in one place exam day
| Topic | Threshold |
|---|---|
| CDD — occasional transaction | ≥ AED 55,000 |
| CDD — wire transfer | ≥ AED 3,500 |
| Beneficial owner | ≥ 25% ownership / control |
| Record retention | ≥ 5 yrs from completion / relationship end |
| STR destination | FIU |
| STR timing | Immediately / without delay |
| Compliance officer reports | Semi-annually |
| SCA admin trading ban max | 1 year |
| ML — natural person fine | AED 100k–5m |
| Aggravated ML fine | AED 300k–10m |
| Terrorism financing fine | AED 300k–10m |
| Legal-person ML fine | AED 500k–50m |
| Failure to report STR | Imprisonment + AED 100k–1m |
| Tipping off | ≥ 6 mo + AED 100k–500k |
| Market abuse (Art. 37) | 3 mo – 3 yr + AED 100k–1m |
| Admin penalty range | AED 50k–5m |
The penalty pairs reward repetition
- 🎯 95 calibrated Ch 5 questions in the bank.
- 🔄 Penalty pairs (natural vs legal, ML vs terrorism vs market abuse) — drill them until reflex.