Under the new rules of the Central Bank of the United Arab Emirates (CBUAE), licensed financial institutions (LFIs) will be required to verify the identity of all their customers.
The CBUAE published guidance on virtual assets and risks associated with virtual asset service providers on May 31. This 44-page document sets out new rules on Anti-Money Laundering and Combating the Financing of Terrorism for banking institutions dealing with crypto in the UAE. According to the central bank’s definition, LFIs include all institutions that engage with virtual asset providers, including banks, financial companies, exchange offices, payment service providers, registered remittance providers, and insurance companies.
CBUAE and Hong Kong Authorities Meet
According to the document, LFIs are required to submit a case-by-case request to the central bank to avoid objections to opening accounts for each VASP, and not to cooperate in any way with VASPs without a national license.
Besides the general verification process for customers, LFIs will need to understand the nature of the customer’s business. This step proposes to create a profile of the client, including the types and volumes of transactions he is expected to take. LFIs will also have an obligation to monitor the volumes of crypto transactions made by non-institutional retail clients with VASPs from high-risk jurisdictions. In these cases, customers will only be able to transfer their virtual assets to their own accounts outside of the UAE licensed VASP ecosystem.
In addition, CBUAE representatives met with their counterparts from the Hong Kong Monetary Authority to discuss cooperation on digital asset regulations. The two central banks pledged to facilitate discussions with each region’s own innovation centers on joint fintech development initiatives and knowledge-sharing efforts.
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