CISI UAE FRR Financial Crime & AML/CFT UAE 2 — Questions and Answers
Question 1: A Politically Exposed Person (PEP) in UAE AML regulation refers to:
- An individual entrusted with prominent public functions, domestically or internationally (Correct answer)
- Any person with a net worth over AED 1 million
- A foreign national holding a UAE resident visa
- A listed company director
Correct answer: An individual entrusted with prominent public functions, domestically or internationally
PEPs are individuals entrusted with prominent public functions (heads of state, ministers, senior officials, judges, military officers) who pose higher ML/TF risks due to their potential for corruption.
Question 2: Under UAE AML regulations, what is the threshold for mandatory cash transaction reporting?
- AED 40,000 or equivalent (Correct answer)
- AED 100,000 or equivalent
- AED 10,000 or equivalent
- AED 500,000 or equivalent
Correct answer: AED 40,000 or equivalent
Financial institutions and designated non-financial businesses must report cash transactions of AED 40,000 or more (or equivalent in other currencies) to the relevant authorities.
Question 3: The UAE's targeted financial sanctions regime requires financial institutions to:
- Screen customers against UAEFIU and UN sanctions lists and freeze matching assets immediately (Correct answer)
- Report sanctions matches within 30 days
- Notify the customer they have been sanctioned
- Apply enhanced due diligence only without freezing
Correct answer: Screen customers against UAEFIU and UN sanctions lists and freeze matching assets immediately
Financial institutions must screen against sanctions lists (including UN, OFAC, EU, and UAE lists), and upon a match must immediately freeze assets and report to the UAEFIU without tipping off the subject.
Question 4: What is 'trade-based money laundering' (TBML)?
- Using international trade transactions to disguise and transfer illicit funds (Correct answer)
- Laundering money through licensed securities trading
- Using trade finance to fund terrorism
- Manipulating commodity prices on exchanges
Correct answer: Using international trade transactions to disguise and transfer illicit funds
TBML exploits import/export transactions — through over/under-invoicing, multiple invoicing, or falsely describing goods — to move and launder value across borders using the legitimate trade system.
Question 5: Under UAE AML law, a financial institution that fails to file an STR when required faces:
- Administrative fines and potential criminal liability for officers (Correct answer)
- Only a written warning for a first offence
- Automatic licence revocation
- A mandatory public announcement of the breach
Correct answer: Administrative fines and potential criminal liability for officers
Failure to file a required STR can result in substantial administrative fines imposed by the regulator and potential criminal liability for responsible officers, reflecting the seriousness of the obligation.
Question 6: What is the purpose of the UAE's 'Virtual Assets Regulatory Authority' (VARA)?
- To regulate virtual asset service providers and crypto exchanges in Dubai (Correct answer)
- To oversee all UAE fintech companies
- To manage the UAE Central Bank's digital currency
- To license blockchain developers only
Correct answer: To regulate virtual asset service providers and crypto exchanges in Dubai
VARA, established in Dubai, regulates virtual asset service providers (VASPs) including crypto exchanges, custody services, and NFT marketplaces, applying AML/CFT and consumer protection requirements.
CISI UAE FRR Financial Crime & AML/CFT UAE 2
A Politically Exposed Person (PEP) in UAE AML regulation refers to: