Key Points

  • The United Arab Emirates announced a plan to penalize unlicensed Virtual Asset Service Providers (VASPs).
  • The country’s lawyer, Irina Heaver, explained that the new plan is part of UAE’s efforts to move out of the Financial Action Task Force’s “Grey List.”

The United Arab Emirates has announced new guidance to penalize unlicensed VASPs as part of a plan to have more transparent financial activities in the country.

UAE continues to spearhead crypto regulation in the world

Financial Regulators, alongside the Central Bank of the United Arab Emirates (CBUAE), have published a new joint guidance for digital assets services providers operating within the country aiming to streamline the financial sector by enhancing transparency.

tweet from the CBUAE read:

“The National Anti-Money Laundering and Combating Financing of Terrorism and Financing of Illegal Organisations Committee (NAMLCFTC), in collaboration with UAE supervisors, has issued guidance on combating the use of unlicensed virtual asset service providers, which is prepared by the supervisory subcommittee.”

The National Anti Money Laundering and Combating Financing of Terrorism and Financing of Illegal Organisations Committee (NAMLCFTC) and the CBUAE published a joint list of “Red Flags” for Vasps. The guidance list included unrealistic marketing promises, Operations without a regulatory license, poor communication, and poor or lack of regulatory disclosures, among other indicators of suspicious operations.

In a press release, the governor of the CBUAE and the chairman of the NAMLCFTC, his excellency Khaled Mohamed Balama, said that the new guidance plan comes when the country is working to make virtual assets more accessible. He explained that the digital economy needs to mature and thus will have to get good backing from the government, including “combating all kinds of financial crimes intensifies” to ensure the integrity of the financial system in the country.

It’s not the first time that the UAE has made bold steps to streamline its financial system as it marches towards more transparency and sitting on better books in the world. In March 2022, the UAE was placed on FATF’s Grey list and subjected to increased monitoring due to deficiencies in its Anti-money laundering and CTF regulations. The country vowed to increase its efforts and commitment to work alongside the global watchdog to strengthen its financial monitoring deficiencies.

According to its Lawyer, Irina Heaver, the UAE has enacted significant reforms since 2022, with the current VASP monitoring guidance being one of them. Heaver says they expect to exit the grey list as soon as in the next 2024 FATF review.

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