CISI UAE FRR Financial Crime & AML/CFT UAE 4 — Questions and Answers
Question 1: The FATF's Mutual Evaluation of the UAE resulted in:
- Placement on the 'Grey List' in 2022 and removal in 2024 after significant reforms (Correct answer)
- Blacklisting in 2020
- A clean bill of health with no required actions
- Suspension from FATF membership
Correct answer: Placement on the 'Grey List' in 2022 and removal in 2024 after significant reforms
The UAE was placed on the FATF Grey List (Jurisdictions under Increased Monitoring) in 2022 due to strategic deficiencies, but was removed in 2024 following substantial legislative and enforcement reforms.
Question 2: Which type of AML risk assessment focuses on individual customers rather than the institution?
- Customer risk assessment (part of CDD) (Correct answer)
- National Risk Assessment (NRA)
- Sectoral Risk Assessment
- Business-Wide Risk Assessment (BWRA)
Correct answer: Customer risk assessment (part of CDD)
Customer risk assessments evaluate the ML/TF risk posed by individual customers based on factors such as their profile, products used, transaction patterns, and country of origin, forming part of CDD.
Question 3: Under UAE AML regulations, 'proliferation financing' refers to:
- Financing the development, acquisition, or transfer of weapons of mass destruction (Correct answer)
- Rapid expansion of money laundering networks
- Increasing the number of financial institutions
- Growing terrorist recruitment activities
Correct answer: Financing the development, acquisition, or transfer of weapons of mass destruction
Proliferation financing involves providing funds or financial services for the development, production, acquisition, or transfer of WMDs including nuclear, chemical, and biological weapons.
Question 4: What is the difference between an STR (Suspicious Transaction Report) and an SAR (Suspicious Activity Report)?
- STR focuses on specific transactions; SAR covers broader suspicious behaviour or activity patterns (Correct answer)
- STR is used in the UAE; SAR is only used in the US
- STR is mandatory; SAR is voluntary
- STR covers terrorism; SAR covers money laundering
Correct answer: STR focuses on specific transactions; SAR covers broader suspicious behaviour or activity patterns
While the terms are often used interchangeably, STRs relate to specific suspicious transactions, whereas SARs may capture broader patterns of suspicious activity not tied to a single transaction.
Question 5: The UAE's 'Beneficial Owner' threshold for mandatory identification of company owners is:
- 25% ownership or control (Correct answer)
- 10% ownership
- 50% plus one share
- Any shareholding regardless of size
Correct answer: 25% ownership or control
UAE regulations require identification of any natural person owning 25% or more of a legal entity's shares or voting rights, or exercising equivalent control, as a beneficial owner.
Question 6: Under UAE AML law, 'self-dealing' by a bank officer handling AML investigations refers to:
- An officer tipping off a customer about an STR in exchange for personal benefit (Correct answer)
- An officer conducting their own transactions through the bank
- An officer filing false STRs against competitors
- An officer reviewing their own account transactions
Correct answer: An officer tipping off a customer about an STR in exchange for personal benefit
Self-dealing in this context involves an AML officer corruptly disclosing STR information to a subject in exchange for personal gain, combining tipping off with corruption — a serious criminal offence.
CISI UAE FRR Financial Crime & AML/CFT UAE 4
The FATF's Mutual Evaluation of the UAE resulted in: