Mixed Deck — All CISI UAE FRR Topics Flashcards

What is a 'shell company' in the context of AML typologies?

Answer: A company with no real operations used to obscure beneficial ownership

Shell companies have no significant assets or operations but are used to create layers of ownership that obscure the identity of the true beneficial owner, facilitating money laundering and tax evasion.

Under UAE Islamic banking law, what is the standard remedy when a transaction is retrospectively found to violate Sharia principles?

Answer: The transaction must be unwound where possible and any impermissible income donated to charitable causes

When a transaction is found non-compliant, the institution must reverse or restructure it where feasible and donate any income derived from the impermissible arrangement to charity, purifying its books in accordance with Sharia.

Under ADGM's Data Protection Regulations, a 'data breach' must be reported to the ADGM Registration Authority within:

Answer: 72 hours of becoming aware of the breach (where feasible)

Mirroring the EU GDPR requirement, ADGM's Data Protection Regulations require notifying the Registration Authority within 72 hours of discovering a personal data breach, enabling prompt regulatory response.

Under CBUAE regulations, what is the maximum loan-to-value ratio for a UAE national purchasing a first home valued above AED 5 million?

Answer: 70%

CBUAE mortgage regulations set a maximum LTV of 70% for UAE nationals purchasing a first home valued above AED 5 million, requiring a minimum 30% down payment to limit systemic mortgage risk.

The DIFC's 'Single Family Office' (SFO) regime allows:

Answer: A dedicated office to manage the wealth of a single family without DFSA authorisation if structured correctly

A properly structured SFO serving a single family's wealth management needs may be exempt from DFSA authorisation, reflecting that the family's own money is being managed without public solicitation.

Which free zone operates its own independent financial regulatory framework based on English common law?

Answer: Dubai International Financial Centre (DIFC)

The DIFC operates under its own legal and regulatory framework based on English common law, with the Dubai Financial Services Authority (DFSA) as its independent regulator.

The CBUAE's Governance Standards for banks require the Risk Committee to consist of:

Answer: Majority non-executive directors with relevant risk expertise

Board Risk Committees must be composed of a majority of non-executive directors with relevant expertise, ensuring independent oversight of the bank's risk appetite and risk management framework.

'Correspondent banking' in UAE regulation refers to:

Answer: Services provided by one bank (correspondent) to another (respondent) for cross-border transactions

Correspondent banking involves a bank providing payment, clearing, and other services to a foreign respondent bank, facilitating cross-border transactions but creating AML/CFT risks requiring due diligence.

The CBUAE's Open Banking framework aims to:

Answer: Enable customers to share financial data with third-party providers securely

The CBUAE's Open Banking framework allows customers to authorise sharing of their financial data with licensed third-party providers via secure APIs, fostering competition and innovation in financial services.

Which body is responsible for issuing regulations governing insurance companies in the UAE?

Answer: Central Bank of the UAE

Since 2020, the Central Bank of the UAE assumed regulatory authority over the insurance sector, previously handled by the Insurance Authority, consolidating financial supervision.

The FSRA's recognition of overseas regulators through 'equivalence' arrangements means:

Answer: Firms from equivalent jurisdictions may benefit from streamlined authorisation

Equivalence arrangements recognise that overseas regulatory frameworks provide comparable protection, allowing firms from those jurisdictions to obtain ADGM authorisation through an expedited process.

What is 'Expected Loss' (EL) in credit risk modelling used by UAE banks?

Answer: EL = Probability of Default × Loss Given Default × Exposure at Default

EL is calculated as PD (probability of borrower defaulting) multiplied by LGD (proportion of exposure lost if default occurs) multiplied by EAD (outstanding balance at time of default), providing the average expected loss.

Which UAE regulatory body is responsible for supervising insurance companies onshore?

Answer: Insurance Authority (now part of CBUAE)

The Insurance Authority was merged into the CBUAE in 2020, making the CBUAE responsible for regulating and supervising insurance companies operating onshore in the UAE.

Under UAE regulations, 'model validation' requires that the validation be conducted by:

Answer: A team independent of the model development team

Independent validation — by a team separate from those who developed the model — is essential to provide objective challenge, identify errors, and ensure the model performs as intended under a range of conditions.

What does the UAE's 'goAML' system facilitate?

Answer: Electronic submission of Suspicious Transaction Reports to the UAEFIU

goAML is the UNOG-developed platform adopted by the UAE FIUS for receiving electronic STR/SAR filings from reporting entities, enabling efficient collection and analysis of financial intelligence.

Under the CBUAE's Consumer Protection Regulation, 'bundling' of financial products is:

Answer: Permitted only if customers can purchase products separately and bundling offers a genuine benefit

Bundling is permitted only when customers have the option to purchase components separately and the bundle provides a genuine benefit; banks cannot force customers to buy unwanted products as a condition of obtaining another product.

What are the three stages of money laundering?

Answer: Placement, layering, and integration

Money laundering proceeds through placement (introducing illicit funds into the financial system), layering (obscuring the trail through complex transactions), and integration (reintroducing funds as legitimate).

What is 'trade-based money laundering' (TBML)?

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.

Under UAE consumer protection regulations, debt collection practices must:

Answer: Be conducted within CBUAE guidelines prohibiting harassment, threats, and contact outside permitted hours

CBUAE regulations prohibit abusive, harassing, or deceptive debt collection practices, restricting contact hours, prohibiting threats, and preventing contact with third parties such as family or employers.

Which UAE federal authority is primarily responsible for regulating the securities and commodities markets?

Answer: Securities and Commodities Authority (SCA)

The Securities and Commodities Authority (SCA) is the federal body responsible for regulating and supervising the UAE securities and commodities markets under Federal Law No. 4 of 2000.