Ultimate Beneficial Owner  – Assessment & Compliance

The UAE government in the last few years has taken few effective measures against money laundering activities and to bring transparency in the country’s economy. One of the decisions made was the Cabinet Decision No. 58 of 2020 on the Regulation of the Procedures of the Real Beneficiary, which required the companies registered in the free zones and the mainland to keep a register of the Ultimate Beneficial Owner (UBO) and submit the same information to the relevant authorities.

We, at Asad Abbas Chartered Accountants & Co. ensure that our clients meticulously study their ownership structure to avoid any kind of non-compliance with anti-money laundering and combating the financing of terrorism laws. Henceforth, we have here laid out the what, why and how of these UBO Regulations. According to the Federal Cabinet, the “UBO Regulations” in 2020, applies to:

• Mainland (of onshore) Companies
• Non-Financial Free Zone Companies operating in non-financial free zones, such as DMCC, JAFZA, and DAFZA

UBO Regulations require the Mainland Companies and Non-Financial Free Zone Companies to submit their ultimate beneficial owner (UBO) data to their respective corporate regulators. A UBO is an individual who ultimately holds/ owns/ controls a Mainland Company or Non-Financial Free Zone Company. The UBO Regulations also set out a criterion to determine a UBO. According to Article 17 of UBO Regulations, Mainland Companies/ Non-Financial Free Zone Companies in breach of the UBO Regulations and those that do not submit their UBO data to corporate regulations are subject to administrative penalties.

The Consequences of Violating Anti-Money Laundering Procedures

According to the Ministry of Economy (MoE), the violators of anti-money laundering or ultimate beneficial owner procedures may have to pay administrative fines ranging from Dhs 50,000 to Dhs 1,000,000.

Approach and action against Money Laundering

The United Arab Emirates is a leader in the development of an integrated system to combat money laundering and terrorism financing. Apart from strict rules and regulations, the country has a number of online systems as well as institutional and administrative procedures in place to ensure that the country’s systems are in line with the worldwide guidelines. The Ministry has formed a national team with its partners to raise awareness regarding the issue. Private sector establishments must submit ultimate beneficial owner data to the licensing authorities as a mandatory legal requirement to avoid penalties and fines.

Penalties and Fines

All establishments must submit ultimate beneficial owner data. Companies should register in the system and submit reports of suspicious transactions and activities to avoid license suspension, fines of up to Dhs 5 million, or the closure of the establishment itself. Administrative penalties will include written warnings imposing up to Dhs 100,000 in fines in the event of recurrence and continued non-compliance, license suspension for one year, and restrictions on board of directors’ authority.

How to Submit Ultimate Beneficial Owner Data

Private sector companies can follow the steps below to submit ultimate beneficial owner data.

Step 1: Companies must create and maintain a register of their ultimate beneficial owner data. This register shall be exhibited to concerned entities and individuals. Forms stating the information to be listed in the register are available on the concerned authorities’ official websites.

Step 2: Submit an undertaking to create the registry and ensure data accuracy online through the official websites of the respective licensing authority.

Step 3: Enter the ultimate beneficial owner data in the licensing authorities’ systems through dedicated web pages on their official websites.

Data Confidentiality

Government entities will maintain the highest levels of confidentiality when dealing with the ultimate beneficial owner database of the establishments. Even their employees will not have free access to this information except when required for investigation or disclosure to specific official entities. The data will also not be used for any commercial purposes.

The establishments must notify the relevant licensing authorities about any changes in the ultimate beneficial owner information within 15 days. They should also appoint a resident as a point of contact with the licensing authority.

The assessment includes:

• Providing support and guidance to enterprises in the Designated Non-Financial Businesses and Professions (DNFBP) sector to reduce the risks they face.
• Examining the company’s systems, policies, and procedures for Anti-Money Laundering and assessing their implementation quality and suitability.
• Assessing other risks after setting Anti-Money Laundering regulations, policies, and procedures.

Targeted establishments must apply a set of basic requirements, including:

• Registration in the Anti-Money Laundering and Combating the Financing of Terrorism systems: The Financial Information Unit system and the automated reporting system for sanctions lists. Reporting suspicious transactions or activities using the go AML platform is also necessary.
• Appointing a qualified and appropriate compliance officer.
• Conducting an internal study of money laundering risks with the following aspects in mind:

1. The business
2. Type of clients
3. Locations the establishment deals with
4. The company’s financial and operational volume
5. Channels for providing a service or product
6. Following appropriate measures against clients by gathering complete KYC information and identifying risk ratings.
7. Providing training for the concerned employees in meeting the general requirements of Anti-Money Laundering procedures, depending on the nature of the business.

If you have any further questions pertaining to UBO in UAE or the procedures are still ambiguous, feel free to contact our professionals at Asad Abbas Chartered Accountants & Co.

We have in-depth knowledge on the UBO registration in UAE, UBO deadlines, maintaining UBO Register, and complying with all the requirements of regulations as to Ultimate Beneficial Owner in UAE.  Our highly skilled experts will ensure that your company is fully compliant with government regulations.