Compliance Rules and Guidance

As a committed member, the United Arab Emirates contributes to global anti money laundering (AML) efforts and combating financing of terrorism (CFT), and strives to fully implement the standards set by the International Financial Action Task Force (FATF).

Therefore, Federal Decree-Law No. (20) of 2018 on Money Laundering and Combating the Financing of Terrorism and Financing of Illegal Organizations, and subsequent laws and regulations have been issued. The law requires all establishments, regulated by licensing authorities all over the UAE to meet the AML regulations requirments including those Licensed by the non-financial free zones such as Creative City. 

goAML UBO Creative City

AML Compliance

In line with the UAE’s interest in and commitment to enforcing AML/CFT legislation. Creative City have implemented new procedures and tools to help investors meet the requirements in timely manner through supporting several initiatives and basic operational action plans emanating from the National Strategy on Anti-Money Laundering and Countering the Financing of Terrorism (2020-2023) and the National Action Plan.

Creative City strives to continuously improve the effective implementation of an overall government system that aims to mitigate the risks of money laundering, terrorist financing and financing of illegal organizations.

For more details on the organizational structure of the UAE’s money laundering framework. Please visit the UAE’s Ministry of Economy at:

https://www.economy.gov.ae/english/AML/Pages/default.aspx

 

Business License benefits

Designated Non-Financial Businesses and Professions

As part of the UAE government’s efforts to prevent money-laundering, a series of guidelines for designated non-financial businesses and professions (“DNFBPs”) have been recently issued.

Such DNFBPs provide coverage amidst various high-risk industries, including:

  • Real Estate – Transactions involving the sale, purchase, leasing (or financing) of real estate have posed a great risk towards money laundering practices and, subsequently, facilitating further criminal operations.
  • Precious Metals and Stones – Cabinet Decision No. (10) of 2019 identified this category when dealers engaged in carrying out monetary transactions. Therefore, subjecting them to specific anti-money laundering and counter terrorism financing obligations under UAE legislation.
  • Accounting and Auditing Services – the UAE government, through its legislative framework, has implemented regulations on commercial companies and financial institutions to regulate the auditing profession. Specific obligations have been imposed on auditors with regard to the direct nature and content of their duties.
  • Company Service Providers – parties engaged as services providers should determine the appropriate policies, procedures and controls related to the adequate retention, organization and maintenance of records.
  • Legal consultancies – legal consultancy firms (except lawyers and Notary Publics)

In light of the above, alongside supplemental guidance, the Ministry of Economy has issued circulars providing in-depth details of anti-money laundering practices in connection with the DNFBPs.

For more details about the circulars, please refer to the below links.

    goAML

    Steps on how to file suspicious transaction reports through goAML

    FAQs

    Templates

    For more details please visit the Ministry of Economy website.

     

     

    Ultimate Beneficial Owner (UBO) Declaration

    All Creative City’s registered establishments must submit the registers of UBO’s and Partners / Shareholder and Nominee Directors no later than 30 June 2021 by filling the following UBO Declaration form for existing investors and at the time of License Registration for new applications. 

    Failure to submit details of the Ultimate Beneficial Owner (UBO) will result in fines and penalties imposed by the Ministry of Economy.

    The UBO Law applies to all establishments licensed and registered in the UAE, except for those that are wholly owned by a local or federal government body or listed in the stock market. The UAE Cabinet Decision No. 53/2021 establishes penalties to be imposed in the event of failure to submit the Ultimate Beneficial Owner (UBO) as follow: 

    (Download Cabinet Decision in English) – (Download Cabinet Decision in Arabic)

    To submit UBO Declaration please click on the button below:

    Creative City UBO

    Who is the ultimate beneficial owner?

    An ultimate beneficial owner is the natural person who:

    directly or indirectly owns or controls an establishment.

    Owns more than 25% of the establishment’s equity,

    Holds more than 25% of the establishment’s voting powers.

    Has the authority to appoint or dismiss any of its board of directors.

    If the above-mentioned conditions cannot be met, the senior management officer of the establishment will be considered as the ultimate beneficial owner.

    Is there any entities which are exempted from UBO resolution?

    They are as follows: (a) the companies in financial free zones like Abu Dhabi Gold Markets and Dubai International Financial Centre, and (b) the companies which are directly or indirectly owned or affiliated by the Federal or Emirate Government.

    Entities will need to assess who constitutes a UBO and consider whether anyone is a nominee Director / Manager. The Register of Shareholders / Partners is not a new concept as this is a requirement outlined in the UAE Commercial Companies Law, as well as in respective Free Zone Companies Regulations. Although the Resolution requires additional information to be detailed (for example, voting rights).

    What is an DNFBP and how to determine if you likely to be a DNFBP?

    Designated Non-Financial Businesses and Professions (“DNFBP’s) must register on a “goAML portal”.  The goAML portal is a integrated platform used to file Suspicious Transaction Reports (STRs) and/or Suspicious Activity Reports (SAR).

    It is your obligatory duty under the Federal Decree Law 20 of 2018 and Article 20(2) of Cabinet Decision No. (10) of 2019, to have procedures in place to report Suspicious Transactions to manage anti-money laundering (“AML) and counter terrorist financing (“CFT”). This system will allow you to help authorities identify criminal and suspicious activity.

    Click here to Determine if you likely to be a DNFBP.

    Who must adopt ultimate beneficial owner procedures?

    All establishments registered and licensed in the UAE, including commercial free zones.

    What are the risks and Vulnerabilities of nominee shareholders and director?

    A nominee shareholder is the registered owner of shares held for the benefit of another person. A nominee director is a director appointed to the board of a company to represent the interests of his/her appointer on that board. In some cases, a nominee may hold the position of director or shareholder in name only on behalf of someone else.

    These arrangements may be controlled by a trust arrangement or civil contract between the nominee and actual director or shareholder. The use of nominee shareholders and directors is a common phenomenon that occurs in most countries. In some countries there is also formal recognition in law of certain scenarios in which nominee arrangements are permitted. Nominees are utilised in a number of legitimate scenarios, including to shield the nominator from public disclosure requirements or to meet legal requirements of a country in which the company is incorporated (such as requirements for companies to have a director residing domestically).

    A range of service providers are known to offer formal nominee services, including legal and accounting professionals, Trusts and Corporate Services Providers, and professional nominees (people who rent their identification information to companies for nominee purposes only, but provide no additional services to the company).

    The main use of a nominee arrangement is that the beneficial owner can keep their identity confidential and the information will not be disclosed as part of public registers. This can give a measure of privacy and confidentiality and protect one’s identity. There are other methods such as setting up intermediary companies though these methods might cost more to implement than a nominee shareholder arrangement.

    In some countries, members of the public can do searches of public registers for companies to identify their directors and shareholders. In the UAE, the National Economic Register currently contains basic company information including the name of a company’s manager. The Beneficial Ownership and Shareholding register is currently not available to the public
    but is shared with the Ministry of Economy by all company registries. In this context, the use of nominees reduces the usefulness of shareholder registers filed publicly for the purpose of identifying beneficial owners and controlling persons. Likewise, the availability of corporate directors makes it more difficult for authorities to obtain information on the control of a corporate vehicle.

    Notwithstanding the legitimate purposes, nominee directors and shareholders, particularly informal nominees, are a key vulnerability. While the use of nominees is lawful (or at least not explicitly unlawful) in most jurisdictions, the role of the nominee, in many cases, is to protect or conceal the identity of the beneficial owner and controller of a company or asset.
    A nominee can help overcome controls on company ownership, disguise ownership and control, circumvent directorship bans imposed by courts and to evade laws designed to manage foreign business ownership and trade. These problems are greatly exacerbated when different aspects of a corporate vehicle implicate numerous countries. Criminals often create, administer, control, own, and financially operate companies in different countries, thereby preventing authorities in any one jurisdiction from obtaining all relevant information about a corporate entity.

    As a result, the availability and use of formal nominee services are vulnerable to exploitation for the purposes of disguising beneficial ownership. The presence of nominee directors and shareholders in company records can also affect law enforcement investigations by delaying the identification of the beneficial owner, or by creating false links between companies that share nominees. Therefore, the ongoing merits of this practice are questionable in the context of the significant money laundering and terrorist financing vulnerabilities associated with their use.

    What is the mandatory self-identification to disclose the presence of nominee shareholders and director?

    Given the vulnerabilities associated with the use of nominees, Registrars shall consider enhancing controls to regulate nominee arrangements with a view to promote transparency of beneficial ownership with the ultimate aim to fight corruption and money laundering activities which have been known to mask themselves behind nominees, in the UAE and
    elsewhere.

    UAE enacted laws that require nominees to expressly identify themselves, to the entity itself and to their regulatory authority. This mandatory self-identification is meant to make the search for beneficial owners more transparent, as well as to impose penalties against nominees who fail to appropriately disclose their status.

    UAE legislation empowers registrars to require a natural or legal person holding shares to disclose whether or not the person holds shares as trustee or nominee for or on behalf of another person and, if so, to disclose the name of the person and any instructions in relation to the transaction.

    How to be in compliance with UBO procedures?

    Entities must perform the following:

    1. Maintain in their headquarters each the following registers:
      • Partners/Shareholders (state the information about the ownership interests and voting rights held by each individual);
      • Real Beneficiaries (provide the reason behind being Real Beneficiaries and the date they termed as one.
      • Directors and Nominee Directors.
      • And other important documents and UBO forms submitted to authorities.
    2. Submitting undertaking to create the registry and ensure accuracy of data (which gives establishments with complex structures to start the procedures for determining their Ultimate Beneficial owner and keep their data in registers and also submit to their relevant Regulatory Authority.
    3. Notify the relevant licensing authority of any amendment regarding the initial information given, provided within fifteen (15) days of such change or amendment.
    4. Submitting the Ultimate Beneficial Owner declaration form in the systems of licensing authorities to avoid penalties

    If entities failed to comply with the UBO Resolution, the UAE Ministry of Economy has announced major penalties for non-compliance to be imposed.

    However, it has been assured by the ministry that, any data submitted will be kept with utmost confidentiality with no access to anyone for any purposes including the employees of the entity itself, except in case of an investigation and the required disclosure to specific official entities, according to strict internal policies and Regulations.

    To submit your declaration please visit:

    UBO

    What are the requirement of goAML registration?

    Before registering for the two stages, you must prepare the following:

    • Authorization letter from the institution you represent (download the form).
    • A copy of the passport, resident VISA, Emirates ID.
    • A copy of the commercial trade license (for companies).
    • Download the “Google Authenticator” application on the phone. (This application contains the password for the SACM protection system, which is a password that changes every minute)

    What are the objectives of the Anti-Money Laundering legislation?

    • Combating money laundering practices and crimes
    • Strengthening the efforts made by the concerned authorities to combat money laundering
    • Combating terrorism financing and financing of suspicious organizations
    • Avoid violating the law and register your establishment in the approved systems to combat money laundering.

    Prevent money laundering risks and help combat financing of terrorism & illegal organizations

    • Protect your investments and register your establishment in anti-money laundering systems to avoid penalties and fines.
    • For more information, please visit the Ministry of Economy website.

    www.economy.gov.ae

    What are the objectives of the Anti-Money Laundering legislation?

    • Combating money laundering practices and crimes
    • Strengthening the efforts made by the concerned authorities to combat money laundering
    • Combating terrorism financing and financing of suspicious organizations
    • Avoid violating the law and register your establishment in the approved systems to combat money laundering.

    Prevent money laundering risks and help combat financing of terrorism & illegal organizations

    • Protect your investments and register your establishment in anti-money laundering systems to avoid penalties and fines.
    • For more information, please visit the Ministry of Economy website.

    www.economy.gov.ae

    What is the Informal Nominee Shareholders and Directors relation to the ultimate beneficial owner?

    Criminals often use informal nominee arrangements through which friends, family members or associates allege to be the beneficial owners of corporate entities. This can be particularly challenging given the informal and private nature of such arrangements. Discovering informal ties between the real beneficial owner and the nominee where there is no formal
    document, nor other proof that joins them together would require investigative practices that are beyond the reach of most company registries. This issue can be at least partially addressed by placing obligations on the nominees to disclose to the company registry the identity of the person on whose behalf they are acting and enforcing sanctions for false declarations as provided by the UAE law governing beneficial ownership.

    Obscuring the relationship between the beneficial owner and an asset differs from the establishment of complex ownership and control structures in that, rather than aiming to create distance via legal complexity, it attempts to create a false or misleading picture of the true ownership and control structure. Techniques most often used to achieve this include the use of formal and informal nominees.

    Informal nominee shareholders and directors perform the same function as formal nominee service providers, however their connection with the true director, shareholder, or beneficial owner is often of a personal, rather than of a professional, nature. Informal nominees commonly include spouses, children, extended family, business associates (who are being controlled by the actual owner or controller of the company), and other personal associates otherwise unrelated to the beneficial owner’s business interests. The reliance on familial nominees may stem from the ease with which the true beneficial owner can control and manage their activities.

    Indeed, the relationship between an informal nominee and the actual owner or controller of a company or shares can vary significantly. Law enforcement agencies and FIUs have reported instances where foreign students and tourists have been convinced or coerced into establishing companies on behalf of third parties, sometimes in exchange for nominal
    payments or other personal benefits. These individuals are recorded as directors or controlling shareholders of these companies, however they are rarely involved in the operation of the company post-formation.

    Unlike formal nominee arrangements, informal nominee arrangements will rarely be governed by a contractual agreement. Furthermore, while formal nominees will always seek to insulate themselves from the activities of the legal person or arrangement, informal nominees are more likely to declare to be the beneficial owner of the legal person or arrangement in an effort to maintain the fiction created by the true beneficial owner.

    General Policies

    Given below are various policy and regulation documents highlighting terms and conditions under which Creative City operates. Please note that the information provided in the documents below are subject to change without prior notice.

      Licensing Rules and Regulations                                           

                       

    Our Location

    Creative Tower, Office 1901
    P.O. Box 4422 Fujairah, UAE
    Working Hours: 09:00AM - 04:00PM  Sunday to Thursday.

    (+971) 9 207 7666
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    sales@ccfz.ae
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    customercare@ccfz.ae

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