CBUAE Classification: Restricted

UAE RISK ASSESSMENT

OUTREACH PROGRAM

2021
CBUAE Classification: Restricted

Table of Contents

Introduction ................................................................................................................................................. 2
Goals and Objectives .................................................................................................................................. 3
Competent Authorities: .............................................................................................................................. 4
Audience ...................................................................................................................................................... 5
Risk Assessment: National (NRA) ............................................................................................................. 6
Risk Assessment: Terrorist Financing (TF) ........................................................................................... 11
Risk Assessment: Targeted Financial Sanction (TFS) ........................................................................... 12
Risk Assessment: Legal Entities .............................................................................................................. 15
Risk Assessment: Gold and Precious Metals Sector .............................................................................. 17
Risk Assessment: Real Estate .................................................................................................................. 22

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UAE Risk Assessment Outreach

Program
Introduction
As a committed member, the United Arab Emirates (UAE) contributes to global anti
money laundering efforts and combating financing of terrorism (AML/CFT), and
strives to implement fully the standards set by the International Financial Action
Task Force (FATF). In 2018, the UAE, with the extensive participation of all
concerned authorities, conducted its first national risk assessment on money
laundering (ML) and terrorist financing (TF). The assessment identified a number
of areas in which the risks of money laundering and terrorist financing are high. In
2019, FATF also evaluated the UAE in accordance with international requirements
and found a number of areas that will benefit from a national framework for
combating ML and TF to develop further.
Federal Decree-Law No. (20) Of 2018 on Money Laundering and Combating the
Financing of Terrorism and Financing of Illegal Organizations, and its
Implementation Regulation was issued on September 23rd, 2018. The basic
legislative framework criminalizes ML and TF operations, and capitalizes on the
effectiveness of the legal and institutional framework to implement procedures and
measures that contribute to AML and CTF efforts.
ML is defined as “any financial or banking transaction aimed at concealing or
changing the identity of illegally-obtained funds by passing them through the
financial and banking system in order to make them appear as originating from
legitimate sources, and then investing them in a legal manner contrary to their real
nature”.
Private sector and Financial Institutions (FI) are considered key partners in
delivering the UAE’s AML/CFT program. The UAE designed an outreach program
to provide the private sector and FI with an understanding of its National Risk
Assessment (NRA) and the most vulnerable sectors thus identified.

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Goals and Objectives

The outreach program goals are:

1. Public and Private Sectors Partnership (PPP) (including FI) in AML/CFT.
2. Growing private sector and FI awareness of ML/FT risks.
3. Increase the number of private sector and FI Suspicious Transaction Reports
(STR) based on risk assessment.
4. Increase private sector and FI compliance in ML/FT.

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Competent Authorities:

• The Higher Committee for Anti-Money Laundering and Competing Terrorist

Financing
• The National Committee of Anti-Money Laundering and Competing Terrorist
Financing (Committee and Executive Office)
• The National Risk Assessment Sub-Committee
• The Money Laundering Investigation Sub-Committee
• The Terrorist Financing Sub-Committee
• The Supervisor Sub-Committee
• The Registrar Sub-Committee
• International Co-operation Sub-Committee

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Audience

The Outreach Program is designed for General, and Designated Non-Financial

Business and Professions (DNFBP) in the private sector, and specifically for FI.
FATF defines DNFBP as:
• Real estate agents;
• Dealers in precious metals;
• Dealers in precious stones;
• Lawyers, notaries, other independent legal professionals and accountants.
This refers to sole practitioners, partners or employed professionals within
professional firms. It is not meant to refer to internal professionals that are
employees of other types of businesses, nor to professionals working for
government agencies, who may already be subject to AML/CFT measures;
• Trust and Company Service Providers. This refers to all persons or businesses
that are not covered elsewhere under these recommendations, and which as a
business, provide any of the following services to third parties:
o acting as a formation agent of legal persons;
o acting as (or arranging for another person to act as) a director or
secretary of a company, a partner of a partnership, or a similar position
in relation to other legal persons;
o providing a registered office, business address or accommodation,
correspondence or administrative address for a company, a partnership
or any other legal person or arrangement;
o acting as (or arranging for another person to act as) a trustee of an
express trust or performing the equivalent function for another form of
legal arrangement; or
o acting as (or arranging for another person to act as) a nominee
shareholder for another person.

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Risk Assessment: National (NRA)

A decision taken by the UAE National Committee for Anti-Money Laundering and
Combating the Financing of Terrorism No. (214) of 2017 issued on 29/05/2017
(update to Resolution No. 149 of 2016 issued on 12/06/2016) regarding the
formation of the Sub-Committee for the National Risk Assessment for Money
Laundering and Financing of Terrorism Risks in the United Arab Emirates
(hereinafter referred to as the NRA Sub-committee) started the process of
developing the NRA for ML and TF risks in the UAE, which had not been conducted
previously.
This initial NRA assessment is a FATF requirement, and a first step in the Mutual
Evaluation process to implement FATF and MENAFATF 1 recommendations after
their assessment of the UAE in 2019-2020.
The NRA has helped the UAE and its public and private sector partners to have a
more comprehensive and shared understanding of the inherent ML/TF risks facing
the nation as a whole (i.e., risks prior to the application of numerous mitigations and
controls). The NRA also provides a basis on which to formulate appropriate policies
and activities to mitigate the impact of the inherent risks identified. The FATF
assessment of effectiveness of the UAE’s AML/CFT efforts will always refer back
to the threats, vulnerabilities and risks identified in the NRA.
The first task before the NRA Sub-committee was to raise awareness amongst
stakeholders on the need to conduct a NRA, and to get them involved in the AML-
CFT control regime.
The NRA Sub-committee organized multiple workshops involving international
experts on regulating the financial and DNFBP sectors and law enforcement. It held
focused meetings for each sector, with the experts conducting interactive sessions
with the regulators and licensing and supervisory authorities. The NRA Sub-
committee also obtained stakeholder feedback on their processes, to assess how they

1
MENAFATF: Meddle East and North Africa Financial Action Task Force

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could be exploited for ML/TF purposes potentially, thus revealing underlying risk
factors.
The UAE authorities assessed the ML threats for 21 predicate crimes specified by
the FATF, and for the crime of Professional Third-Party ML, including:
• participation in an organized criminal group and racketeering;
• terrorism, including terrorist financing;
• trafficking in human beings and migrant smuggling;
• sexual exploitation, including sexual exploitation of children;
• illicit trafficking in narcotic drugs and psychotropic substances;
• illicit arms trafficking;
• illicit trafficking in stolen and other goods;
• corruption and bribery;
• fraud;
• counterfeiting currency;
• counterfeiting and piracy of products;
• environmental crime;
• murder, grievous bodily injury;
• kidnapping, illegal restraint and hostage-taking;
• robbery or theft;
• smuggling; (including in relation to customs and excise duties and taxes);
• tax crimes (related to direct taxes and indirect taxes);
• extortion;
• forgery;
• piracy; and
• insider trading and market manipulation.
The consensual assessment with relevant competent authorities was based on
comprehensive qualitative and quantitative information, using the following pre-
defined rating criteria:

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1) Actor Capacity: the extent to which threat actors have the resources and
network to launder criminal proceeds (e.g., access to facilitators, links to
organized crime).
2) Scope of ML activity: the extent to which threat actors are using financial
institutions, DNFBPs and other sectors to launder criminal proceeds.
3) Proceeds of Crime: the magnitude of the estimated Dirham value of the
proceeds of crime being generated annually from the profit-oriented crime.
The UAE authorities identified the most likely ML crimes and threats in the UAE to
be:
• fraud;
• counterfeiting and piracy of products;
• illicit trafficking in narcotics, and
• professional third-party ML.
They also assessed insider trading and market manipulation, robbery and theft, illicit
arms, forgery, smuggling and tax crimes as ML threats.
The NRA review of TF in the UAE, considering the available and classified
information and discussions with the concerned authorities, identified eight terrorist
groups as posing a threat to the UAE’s internal and external security, law and order.
The UAE authorities also identified inherent ML/TF sectorial vulnerabilities based
on five pre-defined rating criteria:
1) Inherent Characteristics: the extent of the sector’s economic significance,
complexity of operating structure, integration with other sectors and scope
and accessibility of operations.
2) Nature of Products and Services: the nature and extent of the vulnerable
products and services and the volume, velocity and frequency of client
transactions associated with these products and services.
3) Nature of clientele: the inherent vulnerabilities associated with the sector’s
clientele profile; nature of business relationship (with clients); customer
status; client’s occupation/businesses; facility to identify the beneficial owner

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for most of the customers (i.e. complex business structure vs. individual
business activity).
4) Geographic Reach: the exposure to high-risk jurisdictions and locations of
concern.
5) Nature of the Delivery Channels: the extent to which the delivery of
products and services can be conducted with anonymity (face-to-face, non-
face-to-face, use of third parties) and complexity (e.g., multiple intermediaries
with few immediate controls or no accountability in identifying the originator
of the transaction)
Notably, the profiling of ML/TF inherent risks was conducted separately for the
UAE’s jurisdictions on-shore and off-shore (the Financial Free Zones - FFZ), due
to the different nature of ML/TF risks in the latter. FFZ often have a different
legislative and regulatory framework for the application of commercial and civil
laws, and different services and products to their on-shore counterparts.

UAE on-shore sectoral vulnerabilities: overall risk

Highest Medium-high Medium

Banking Lawyers and notaries Auditors,
Money service providers Real estate agents Custodians
Exchange houses Company service Life Insurance and
providers Investment
Precious metal dealers Financial advisers and Property and Casualty
consultants (General Insurance)
Investment funds and
Asset managers
Financial brokers and
agents
Credit providers (finance
companies)

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CBUAE Classification: Restricted

For FFZ ML vulnerabilities, the highest risk sector was exchange houses, with the
following sectors assessed as medium-high risk:
• banking;
• brokers and agents;
• wealth management;
• custodians;
• investment fund management;
• financial advisors;
• some DNFBP sectors, including:
o company service providers;
o dealers in precious metals and stones;
o real estate agents; and
o lawyers, notary and other independent legal businesses.

The NRA identified registered auditors, accountants, and insolvency firms and life
insurance as being at medium inherent risk, while general insurance represented a
low risk.
The NRA process included an overview of the UAE’s financial governance structure
and the economic environment. It concluded that the large size and openness of the
UAE’s financial sector, its geography, the large proportion of foreign residents, the
use of cash in transactions, and the highly-active trade in gold and precious metals
and stones, were also inherently open to ML/TF abuse by criminals. The NRA
process also identified the national, political, social and economic ML/TF
consequences in the UAE.
Overall, the NRA provides a sound basis on which the UAE authorities and the
private sector can implement effective measures, commensurate with the identified
risks that they face.

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Risk Assessment: Terrorist Financing (TF)

The 2020 TF Risk Assessment is based on the analysis of a much wider set of data
and information sources, compared to the previous version. The assessment scope is
not limited to any given number of terrorist organizations; it focuses on TF risks in
general, and considers the specific factors that characterize TF threats and
vulnerabilities in the UAE context through different risk scenarios.
The TF assessment looked at the UAE’s domestic risks and its status as an
international financial center (IFC), and identified the following risk scenarios:
• Fundraising through social media;
• Collecting Funds through crowdfunding 2 Techniques;
• Fundraising through Virtual Currencies;
• Donations/Non-Profit Organization (NPOs);
• Trade activities in the UAE - terrorists or terrorist networks:
o selling or purchasing goods;
o using UAE legal entities;
• Fund transfers to/from high – risk jurisdictions;
• Ownership or control over UAE FIs or money or value transfer service
(MVTS)
• Smuggling or transportation of cash, including through Foreign TF;
• Investment, or financial management, of terrorism-related funds in the UAE.

2
Crowdfunding is the practice of funding a project or venture by raising small amounts of money from a large
number of people, typically via the Internet. Crowdfunding is a form of crowdsourcing and alternative finance

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CBUAE Classification: Restricted

Risk Assessment: Targeted Financial Sanction (TFS)

The United Nations Security Council (UNSC) can act to maintain or restore
international peace and security under Chapter VII of the United Nations (UN)
Charter by imposing sanctions measures under Article 41, encompassing a broad
range of enforcement options that do not involve the use of armed force.
UNSC sanction regimes focus mainly on supporting the settlement of political
conflicts, nuclear non-proliferation, and counter-terrorism. These regimes include
measures ranging from comprehensive economic and trade sanctions to more
targeted measures, such as arms embargoes, travel bans, and restrictions on dealing
with certain financial or commodity transactions.
The UAE, as a UN member (and a UNSC member in 2022-23), is mandated to
implement UNSCRs, including those related to UN sanctions regimes.
Consequently, through the Cabinet Resolution No. 74 of 2020, the UAE implements
UNSCRs on the suppression and CTF, and countering the financing of proliferation
of weapons of mass destruction (CFP), including targeted financial sanctions (TFS).
The term ‘targeted sanctions’ means that such sanctions are against certain
individuals, entities, groups, or undertakings.
The term ‘TFS’ includes both asset-freezing and prohibitions to prevent funds or
other assets from being made available, directly or indirectly, for the benefit of
sanctioned individuals, entities, groups, or organizations.
The list of UN sanction regime measures include freezing of funds and prohibition
of fund and service provision, in accordance with UNSC resolutions. The sanctioned
(listed) individuals, groups, or entities include:
1. Islamic State in Iraq and the Levant (Da'esh),
Al-Qaida, and associated individuals, groups, Listed by the UNSC.
undertakings and entities.

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2. The Taliban, and associated individuals,

groups, undertakings and entities.
3. Any individual or entity included in the Local
Listed by the Cabinet
Terrorist List, according to UNSCR 1373
of the UAE.
(2001)

The proliferation of weapons of mass destruction (WMD):

1. Democratic People's Republic of Korea
(DPRK): nuclear-related, other weapons of
mass destruction-related and ballistic
Listed by the UNSC.
missile-related programs.
2. Islamic Republic of Iran: nuclear
programs.

Other UN sanctions regimes with TFS

1. Somalia
2. Iraq
3. Democratic Republic of Congo (DRC)
4. Related to the involvement of terrorist bombing in
Beirut (2005) plus restrictive measures in relation to
Listed by
UNSCR 1701 (2006) on Lebanon
the UNSC.
5. Libya
6. Central African Republic (CAR)
7. South Sudan
8. Mali
9. Yemen

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The following are relevant Laws/Executive Regulations, Resolutions, Guidelines

and Notices issued to implement UNSC targeted financial sanctions in the UAE:
Title Articles/Text Issued Type
Decree Federal Law No. 20 of 2018 on 16.1, 28 2018 Federal
Anti-Money Laundering and Combating Law
the Financing of Terrorism and Illegal
Organizations
Cabinet Decision No. 10 of 2019 11, 12, 44.7, 2019 Executive
Concerning the Implementing Regulation 60 Regulation
of Decree Federal Law No. 20 of 2018 on
Anti-Money Laundering and Combating
the Financing of Terrorism and Illegal
Organizations
Cabinet Resolution No. 74 of 2020 The whole 2020 Executive
concerning the Local Terrorist List of text Resolution
terrorists and implementation of UN
Security Council decisions relating to
preventing and countering financing
terrorism and leveraging non-proliferation
of weapons of mass destruction, and the
relevant resolutions.
Guidelines on Anti-Money Laundering and 10. 23- Guidelines
Combating the Financing of Terrorism and International Jun-19
Illegal Organizations for Financial Financial
Institutions Sanctions,
pages 88-96

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Risk Assessment: Legal Entities

Legal persons and entities are an important part of every economy and a mechanism
to develop business. However, they can be misused to manage, produce or transfer
the products of crime, or act as an instrument for it.
Anonymity enables many illegal activities to be hidden from law enforcement
authorities, such as tax evasion, corruption, money laundering, and financing of
terrorism. Money laundering can involve complex operations and transactions to
make money from illicit sources (such as drug trafficking or tax evasion) appear
legal. A criminal could set up a nightclub with apparently legal sources of income
from the sale of tickets and alcohol, whilst in reality, they are earning money from
the sale of drugs. In a business setting, it is important therefore to know the beneficial
owner of legal entities, and arrangements to prevent its misuse. Determining whether
countries know the true beneficial owners of legal entities and business
arrangements is important in combating tax evasion, corruption, ML and FT. 3
From the ML/TF perspective, legal persons and arrangements are most vulnerable
when their characteristics or structure create obstacles to identify the beneficial
owner. As identified by the World Bank in its report on the misuse of legal persons
in corruption cases, entitled “the Puppet Masters”, corporate vehicles - including
companies, trusts, foundations, and fictitious entities - are misused to conceal the
identities of corrupt people4. This is also true for other ML/TF crimes.
The beneficial owner is the person(s) who ultimately owns or controls a customer
and/or the natural person on whose behalf a transaction is being conducted. It also
includes persons who exercise ultimate effective control over a legal person or
arrangement 5.

3 OECD – IDB. A beneficial Ownership Implementation Toolkit. 2019. Pg. 4

4 StAR Initiative of the World Bank and the UNODC, 2011. The Puppet Masters – How the Corrupt Use Legal Structures to hide
Stolen Assets and What to Do About it. Pg. 33
5 FATF. International Standards on Combating Money Laundering and Terrorism Financing & Proliferation. 2012-2020. Pg.

175

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Important studies by the FATF and the World Bank and United Nations Office of
Drugs and Crime’s (UNODC) Stolen Asset Recovery Initiative (StAR) have
explored the misuse of corporate vehicles for illicit purposes, including ML/TF. In
general, the lack of adequate, accurate and timely transparency of the beneficial
ownership information facilitates (ML/TF) by disguising:
• the identity of known or suspected criminals,
• the true purpose of an account or property held by a corporate vehicle, and/or
• the source or use of funds or property associated with a corporate vehicle6.
Consequently, a legal person or entity can have a higher risk of misuse when it is
more challenging for authorities (including law enforcement and investigative
agencies) to access information about the beneficial owner. These vulnerabilities
can be identified in the structure of the legal person or entity that promotes
opaqueness, or in the contextual framework where the legal entity is registered.

6
FATF. Guidance on Transparency and Beneficial Ownership. 2014. Pg.6

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Risk Assessment: Gold and Precious Metals Sector

Gold has been used since antiquity as a medium for exchange or payment in various
cultures. Historically, governments minted coins from a physical commodity, such
as gold, or would print paper money that could be redeemed for a set amount of
physical commodity (‘the Gold standard’). Most modern paper currencies are
referred to as ‘fiat currencies’. They have no intrinsic value, and are used solely as
a means of payment. Even with the modern use of fiat money, precious metals
remain an alternative means of payment, due to their high intrinsic value and ease of
exchangeability internationally.
Recent shifts in the global economy have resulted in an increased demand for stable-
value investments and commodities. Gold is a universally-accepted currency that
has remained stable, in spite of fluctuations in global financial markets.
Internationally-enforced AML measures are influencing a shift in criminal behavior
towards methodologies with lower law enforcement visibility, which makes gold
very attractive. Gold is also an integral part of the cultural heritage of many
countries, such as China and India, where it features heavily in religious and social
exchanges.
The UAE’s NRA identified the gold and precious metals sectors as high-risk. The
private sector and FI have to maintain a robust, internal, risk-based approach for all
transactions.
ML/TF: Red Flags 7
• Customer Behavior:
o Established customer (including bullion dealers) dramatically
increasing their purchase of gold bullion for no apparent reason.
o Foreign nationals purchasing gold bullion through multiple transactions
over a short time period.

7
https://www.fatf-gafi.org/media/fatf/documents/reports/ML-TF-risks-vulnerabilities-associated-with-gold.pdf

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CBUAE Classification: Restricted

Bullion transferred among associates using bullion accounts (including

o
family members) for no apparent commercial purpose.
o Occupation inconsistent with customer’s financial profile. For
example, the customer may list their occupation as ‘student’ or ‘truck
driver’ yet transfer large values of funds to bullion accounts.
o Customer buying gold bullion and using a General Post Office or
private service mailbox as their address, without listing a corresponding
box number.
o Unusual pattern and nature of bullion transactions inconsistent with the
customer profile.
o A previously unknown customer requesting a refiner to turn gold into
bullion.
• Company Behavior:
o Gold industry organizations not reporting suspicious transactions to the
UAE Financial Intelligence Unit (FIU), where there is an obligation to
report.
o Changes to the business name of entities registered to deal in gold.
o Trading company registration in a tax haven, even though its business
relates to another jurisdiction.
o Movement of abnormally large sums of money in individuals’ and
companies’ accounts, unrelated to the nature of their business.
o Unusual deposits, i.e. use of cash or negotiable instruments (such as
traveler’s cheques, cashier’s cheques and money orders) in round
denominations (to keep below reporting threshold limit) to fund bank
accounts and to pay for gold. The negotiable instruments may be
sequentially numbered or purchased at multiple locations, and may
frequently lack payee information.
o Numerous sole proprietorship businesses/private limited companies set
up by seemingly unrelated people (proxies), but controlled by the same
group of people. False addresses are used to register such businesses.
o Use of a corporate structure of shell companies located across different
jurisdictions.

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oSignificant number of companies registered to one natural person.

o Commercial activities are not easy to track, as the companies are
registered elsewhere.
o No clarity on how the company transports its merchandise.
• Trade-Based behavior (also related to Trade-Based ML):
o Cash payments for high-value orders are an indication of trade-based
ML (TBML) activity.
o Misclassification of gold purity, weight, origin and value on customs
declaration forms.
o Gold is shipped to or from a jurisdiction designated as ‘high risk’ for
money laundering activities or sensitive/non co-operative jurisdictions.
o Gold is transshipped through one or more such high-risk/sensitive
jurisdictions for no apparent economic reason.
o Consignment size or type of commodity being shipped appears
inconsistent with the exporter or importer’s scale or capacity in their
regular business activities, or the shipment does not make economic
sense, i.e. there is no reasonable explanation for the client’s financial
investment in the shipment.
o The transaction involves the use of front or shell companies. Both shell
and front companies can be used to facilitate TBML, but in different
ways. A shell company has no real operating activity, and is used to
hide ML activity and the identities of individuals involved, to obscure
the money trail. If activity is traced to the company, it is literally an
empty shell.
• Product Differentiation:
o The bullion has physical characteristics that are inconsistent with
industry standards.
o Gold prices are higher than those of the local gold market.
• Payment Behavior:
o A number of affiliated entities in the payments chain.
o Transit movement of funds and changes in purposes of payments.
o Payments to shell companies with further withdrawals.

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CBUAE Classification: Restricted

oGranting of loans (with zero interest rates) to foreign companies or

persons.
o Natural person or business sells gold saying that it comes from a place
with no extraction license or from places with no gold mines.
o Large amount of funds transferred internationally, then withdrawn
quickly.
o International transfers to countries where the company is not registered.
o Significant cash withdrawals from bank accounts by participants within
the gold trading industry.
o Division of funds in cheques and smaller cash transactions to pay for
merchandise.
o Purchase of gold bullion with bank cheques may be an attempt to
conceal the source of the funds and underlying ownership.
o The use of cash to purchase bullion, especially when there are multiple
purchases in a short timeframe, or when large amounts are purchased
at once, or when there are structured cash deposits into an account to
finance a single gold bullion purchase.
o Original source of funds to buy gold bullion cannot be established. The
transaction involves the receipt of cash (or by other payment methods,
including cheques or credit cards) from third party entities that have no
apparent connection with the transaction or front or shell companies or
wire instructions / payment from parties which were not identified in
the original letter of credit or other documentation. Transactions that
involve payments for goods through cheques, bank drafts, or money
orders not drawn on the account of the entity that purchased the items
also need further verification.
o Transactions between domestic buyers and sellers with sales proceeds
sent to unknown third parties overseas.
• Predicated Crime Activity - Gold Mining Behavior:
o Gold production and commercialization by a person or business
without a license.

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CBUAE Classification: Restricted

o An ethnic community hiring a third party for the entire operation of a

mine.
o Licensed mines, where the production has decreased with no apparent
explanation.
o The development of mining activities using machinery and equipment
that is not in accordance with the characteristics of the licensed small
or artisanal mining.
o The development of mining activities without compliance with the
administrative, technical, social and environmental regulation.
o The development of mining activities in prohibited areas.

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Risk Assessment: Real Estate

The UAE’s real estate sector is considered one of the biggest in the Middle East.
Dubai’s real estate market continues to achieve record numbers and value of real
estate sales transactions, enhancing the emirate's global position as the preferred,
most attractive and flexible real estate investment destination.
To implement a reasonable risk-based approach, real estate agents should identify
criteria to assess potential ML/TF risks – customers, or categories of customers, and
transactions – to allow real estate agents to determine and implement proportionate
measures and controls to mitigate those risks.
• Country/geographic risk:
o Location of property(s) in relation to the buyer. Different countries pose
different levels and types of risks for cross-border, non face-to-face
transactions, e.g. different countries have different levels of criminality
and/or regulation.
o Buyer and seller location.
o Countries subject to sanctions, embargoes or similar measures issued
by, for example, the UN. In addition, in some circumstances, countries
subject to similar sanctions or measures to the UN, but which may not
be universally recognized, may be given credence by a real estate agent
because of the issuer’s standing and the nature of the measures.
o Countries identified by credible sources as:
• lacking appropriate AML/CFT laws, regulations and other
measures;
• providing funding or support for terrorist activities that have
designated terrorist organizations operating within them;
• having significant levels of corruption, or other criminal activity.
o Countries where there is no mandatory registration of real property.
• Customer Risk:

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CBUAE Classification: Restricted

oSignificant and unexplained geographic distance between the agent and

customer location.
o Customers where the structure or nature of the entity or relationship
makes it difficult to identify the true owner or controlling interest.
o Cash-intensive businesses.
o Charities and other non-profit organizations that are not subject to
monitoring or supervision.
o The use of intermediaries who are not subject to adequate AML/CFT
laws and measures, and who are not adequately supervised.
o Politically-exposed persons (PEPs).
• Transaction risk
o Transaction speed (transactions that are unduly expedited without a
reasonable explanation may be higher risk).
o Type of properties (residential or commercial, vacant land, investment,
high-turnover properties, multi-unit properties for lettings/leases).
o Successive transactions, especially of same property in a short period
with unexplained changes in value.
o Conversion of properties into smaller units.
o Introduction of unknown parties at a late stage of transactions, e.g.
arrangements made between purchasers.
o Third-party vehicles (i.e. trusts) used to obscure a buyer’s true
ownership.
o Under- or over-valued transactions.
o Sale of properties immediately before restraint or insolvency.
o Property value not in the customer’s profile.
o Location of client’s and/or customer’s source of funds.
o Unusual sources, e.g. funds obtained from unknown individuals or
unusual organizations.
o Purchase with large amounts of cash.
o Cash deposits or money orders from unusual sources or countries
identified under country/geographic risks.

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CBUAE Classification: Restricted

oUse of complex loans, or other obscure means of finance, versus loans

from regulated financial institutions.
o Unexplained changes in financing arrangements.
• Variables that impact upon risk:
o Involvement of other parties, e.g. financial institutions, lawyers or
notaries, and whether they are subject to AML/CFT requirements.
o How the client was introduced to the agent.
o Method of communication between client and agent, e.g. e-mail or
personal contact.
o Whether the client is a PEP.
o Whether there is a beneficial owner different from the direct customer.
o The products/services used by the client or the purchaser.
o The person with whom the real estate agent has the relationship. For
example, legal entities or arrangements with no clear structure might
pose a higher risk than a natural person.
• Controls for higher-risk situations:
o Increased awareness by the real estate agent of higher risk customers
and transactions within business lines across the institution.
o Increased levels of know your customer (KYC) or enhanced due
diligence.
o Escalation of establishment approval for an account or relationship.
o Increased transaction monitoring .
o Increased levels of ongoing controls and frequency of reviews of
relationships.
o The same measures and controls may often address more than one of
the risk criteria identified. It is not necessarily expected that real estate
agents establish specific controls targeting each and every risk criterion.

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