CISI UAE FRR Financial Crime Prevention 2 — Questions and Answers
Question 1: What is sanctions screening and why is it important for UAE financial institutions?
- Screening employees for criminal records
- Checking customers and transactions against international sanctions lists to prevent prohibited dealings (Correct answer)
- Reviewing marketing materials for compliance
- Auditing financial statements annually
Correct answer: Checking customers and transactions against international sanctions lists to prevent prohibited dealings
Sanctions screening involves checking customers, counterparties, and transactions against sanctions lists issued by the UN, US (OFAC), EU, and UAE to ensure the institution does not facilitate prohibited dealings.
Question 2: What is the Designated Non-Financial Businesses and Professions (DNFBPs) obligation under UAE AML law?
- Only banks have AML obligations
- Real estate agents, dealers in precious metals, lawyers, and auditors must also comply with AML/CFT requirements (Correct answer)
- Only insurance companies have reporting obligations
- AML only applies to foreign companies
Correct answer: Real estate agents, dealers in precious metals, lawyers, and auditors must also comply with AML/CFT requirements
UAE AML law extends AML/CFT obligations beyond financial institutions to DNFBPs including real estate agents, dealers in precious metals and stones, lawyers, notaries, and auditors.
Question 3: What is transaction monitoring and how must UAE institutions implement it?
- Manually reviewing every transaction daily
- Using automated systems to detect unusual patterns and flag potentially suspicious transactions for review (Correct answer)
- Only monitoring transactions above AED 1 million
- Monitoring only wire transfers
Correct answer: Using automated systems to detect unusual patterns and flag potentially suspicious transactions for review
UAE regulations require financial institutions to implement automated transaction monitoring systems that detect unusual patterns, flag potentially suspicious activity, and generate alerts for human review and potential SAR filing.
Question 4: What is the UAE's approach to combating terrorism financing?
- Only focusing on large cash transactions
- A comprehensive framework including criminalization, freezing of terrorist assets, and international cooperation (Correct answer)
- Relying entirely on international organizations
- Only monitoring foreign nationals
Correct answer: A comprehensive framework including criminalization, freezing of terrorist assets, and international cooperation
The UAE has established a comprehensive counter-terrorism financing framework including criminal penalties, mechanisms for freezing terrorist assets without delay, and active participation in international cooperation.
Question 5: What is the role of the UAE's National Anti-Money Laundering Committee (NAMLC)?
- To process individual SAR reports
- To coordinate national AML/CFT policies, conduct national risk assessments, and oversee implementation of AML strategy (Correct answer)
- To prosecute money laundering cases
- To regulate cryptocurrency
Correct answer: To coordinate national AML/CFT policies, conduct national risk assessments, and oversee implementation of AML strategy
NAMLC coordinates the UAE's national AML/CFT policy framework, conducts national risk assessments, and oversees the implementation of the national strategy to combat money laundering and terrorism financing.
Question 6: What are the record-keeping requirements for UAE financial institutions under AML regulations?
- No specific requirements exist
- Maintain all transaction records and customer identification documents for at least 5 years (Correct answer)
- Only keep records of suspicious transactions
- Records must be kept for 1 year only
Correct answer: Maintain all transaction records and customer identification documents for at least 5 years
UAE AML regulations require financial institutions to maintain comprehensive records of all transactions and customer identification documents for a minimum of 5 years, available for regulatory inspection.
CISI UAE FRR Financial Crime Prevention 2
What is sanctions screening and why is it important for UAE financial institutions?