United Arab Emirates: A Combat Against Dirty Money

Last Updated: 19 April 2018
Article by STA Law Firm
Most Read Contributor in United Arab Emirates, July 2019

Shorter distances, instant transfers, fast connections are a movement towards the emerging globalization. As it is getting easier and quicker to gain anything on a click of a mouse and enabling individuals and corporations to reach around the world farther, faster, deeper, and cheaper than ever before, it has also resulted in new risks. It has turned the international financial system into a money launder's dream. This inadvertent consequence of globalization offers a serious challenge to law enforcement agencies and financial regulators.Money-laundering is the process by which criminals cover the illegal origins of their means and safeguard their assets, to maintain a safe distance from suspicious law enforcement agencies and avert leaving a trail of incriminating evidence.The Wolf of Wall Street  is a perfect movie that shows the glamour and the dark side of money laundering where the fun doesn't last for long!

Money Laundering in UAE

Money laundering is one of the most creative crimes of the 20th Century. To understand the concept of Anti- Money Laundering, one must first understand what Money Laundering is. Numerous business persons around the world are known to make money through illegal means which could be frowned upon by the society as well as by the laws governing a state. Massive amounts of funds get generated from illicit activities such as drug trafficking, tax evasion, smuggling, theft, arms trafficking and corrupt practices. These dealings of funds are mostly in the form of cash. The criminals who generate these funds need to bring them into the legitimate financial system without raising doubt.

The conversion of currency into other forms makes it more usable. It also puts a distance between the criminal activities and the funds. 'Money laundering' is the term given to the process by which illegally obtained funds portray the appearance of having been legitimately acquired. Money can be laundered in many ways if one has the crookedness and the willingness to take the risk. One may reduce the amount to smaller cash flows and add it slowly into the business stating profits since if there is a lump sum amount of money flowing into the legitimate business at the same time, it could raise suspicion. Another cunning trick a launderer could play is by illegally depositing gained sums into an off-shore bank that has strict secrecy and would not disclose the details of the accounts to any government due to their rules and regulations. Over time, the involvement of trusts has also played an enormous factor in money laundering as such institutions do not necessarily have to disclose the details of the trustees or their income. Hence, it is a system which helps the launderer disguise his money as a legal form of revenue by not disclosing the illegal source through which the money gets obtained.

To eliminate the illegal means of converting illegitimate funds into legal obtained, Anti Money Laundering got enacted. Anti-Money laundering is a set of rules and regulations that govern how Credit institutions that accept credit and payment can detect if the cash deposit to said institutions involve illegal procedures or not. There has been an argument stating that the Anti Money Laundering laws only cover a limited number of transactions. Some comment that such deed does not expand to all types of criminal activity. One must, however, note that these laws help set up the basics for the institutions that accept credit from customers and it is up to the institutions and not up to the government or the launderers to be in touch with these rules and regulations and make sure that they follow it. The anti-money laundering laws are used to mainly target all sorts of suspicious activities which include tax evasion, funds of the public that could be corrupted and primarily the trading of goods which are illegal in the country where the laws are set up.

Implications of the Law

The Federal Law Number 4 of 2002 concerning Anti-Money Laundering (the Anti-Money Laundering Law) discusses the importance of Money Laundering and the incriminating rules and regulations that are put forward to combat this illegal movement. The Federal law also states that the launderers who commit this crime shall be criminally liable for this offense. The Law that has come into place in the United Arab Emirates allows the Central Bank to possess the power of freezing the assets of any suspected accounts that are believed to be laundering money for not more than a week. The Public Prosecution also has the authority to order the seizure of such suspected property or proceeds.

The Federal Law has given the Central Bank the authority in the United Arab Emirates. Under the Federal Law, the Bank has the power to set the limitation for the amount that one can deposit into the account without any need of showing proof or declaration. In the event of limit getting exceeded, the account holders are under obligation to show a certificate of declaration via the declaration system stating how the money had come into account. The Central bank has also set up event Unit that aids with detecting any suspicious activity that takes place which could relate in any way to money laundering. Once the Unit detects any suspicious event, they have to notify the Attorney General about said suspicion and the Attorney General should take the necessary action.

The Committee

The Anti-Money Laundering Law makes a provision for an Anti-Money Laundering Committee which is commonly known as national Anti- Money Laundering Committee' which is governed by the Governor and has representatives from all the Ministries established in the UAE. Their main scope is to compose anti- Money Laundering rules and regulations for UAE. They also have the responsibility to aid the exchange of information between the credit institutions, as well as represent UAE in cases related to International Money Laundering.

The Anti Money Laundering Law also states the punishment that is faced by the offenders for the crime related to Money Laundering, and since the United Arab Emirates take the offense very seriously, the penalty for such an act is usually very vigorous. The punishment itself includes a jail term of up to seven (7) years or a fine of AED 300,000 (UAE Dirhams three hundred thousand) or both. These provisions are one way of countering Money laundering by creating severe punishments for such offenses. Even if a person knows money is getting laundered but fails to report it to the authorities, he could be in cold waters facing a term of imprisonment as well as/ or a fine ranging around AED 10, 000 (UAE Dirham ten thousand).

Whistle Blowers

Whistle Blowing is a process where a person who is working in an organization finds out that the organization is dealing with an activity that is deemed illegal and comes out to talk about it to the higher authorities within the organization or to the outside world by publicly speaking about it. People who come forward to discuss are hence called Whistle Blowers, and they are said to undergo scrutiny for leaking the confidentiality of the organization. Since this happens, the whistleblowers are protected by specific laws, and in some instances, a third party could also offer protection to the whistleblowers.

In the United Arab Emirates, there has been no law regarding the Whistleblowers for a very long time until recently one implemented in 2016. All over the world, whistleblowers would get protected by the law, and they would have certain advantages to not lose their job due to the exposure of the unlawful activity. However, it is not the same in the United Arab Emirates, in this country, the whistleblower is said to be at risk, and they are liable to have breached the Law even if they have informed the police or the authorities of the illegal activities.  This provision is because the whistleblowers have violated the employment contract. For instance, when employees had entered into an employment contract, they would have signed a confidentiality agreement stating that they would maintain the confidentiality of the company and cannot spill out company secrets which will lead to a breach of the privacy of the organization. In the UAE, for being a whistleblower, the punishment could range up to imprisonment for one (1) year or a fine of up to AED 10, 000 (UAE Dirham ten thousand).

These rules have taken a change in the New Financial Crime Laws stating that protection can extend to the whistleblower depending on the crime that has reported. This law, even though in place has not yet been well implemented so is still a working progress and whistleblowers in U.A.E need to be cautious on how and who they share the trade secrets or the illegality of the organization with.

Global Insight

In India, laws that came into form at the beginning of the 21st century, the main objective was to reduce or eradicate money laundering and if an offender has been caught with money laundering, the government was instilled with the power of confiscating any property that the money launderer would have purchased from the profits that were derived by illegal means. Many people who have power and influence in India are able to get away with laundering money but sometimes they get caught due to the intensity of the amount as well as the power that the person has internationally. The best example for such a scenario is the case of Vijay Mallya, a billionaire at one point who has absconded and charged with offenses regarding Money Laundering. All the property that was in his name had been seized and were sold at auctions to the highest bidder. In summary, even though there could be many cases of people evading the government in India when they are caught for the offense, they are punished to the highest extent and the money is dissolved.

In the United States of America, money laundering is settled by two ways. One is the preventive method, which means that the financial institutions have a certain amount to which the client is able to deposit the money into the institutions and if the amount exceeds that given a certain amount, the client will have to declare the method through which they have obtained the funds and the means through which they received it. This is to prevent any sort of money laundering at the early stages.

The other way is the criminal route, where the offender has been caught with laundering money illegally and in this case, it would lead to criminal investigation and if guilty, offender is imprisoned. In the USA, there are strict punishments to combat money launderers.

Heads Up!

Money Laundering co-relates with Customer Due Diligence since it deals with the problem at its early stages. Most of these foreign banks knowingly as well as unknowingly are involved with the crime of money laundering because they wish to keep their client's information intact. It ends up attracting large customers and them in return deposit a considerable amount in these foreign banks since there are no questions asked, and no questions answered. Hence, there is a problem with the regulations in these types of institutions and even though the rules in Banks in the United Arab Emirates are strict. The businesses that take place here may also deposit the illegal money that has been made into offshore banks where the rules are more lenient, and the launderers do not face any problems.


The global threat of money laundering poses exceptional challenges to the law enforcement authorities.To contest the evidentiary path of a money launderer, law enforcement agencies must identify and use tools and techniques that can aid them when crossing international boundaries. The system of Anti Money Laundering in the United Arab Emirates is a very new concept and has a lot of room for enhancement but for a law that had come into place for just about ten years or so, the country is doing a solid job with reducing the offense of money laundering in the country. Due to the increased level of punishments and methods of cutting the offense at the early stages, the UAE is countering Money laundering in the best way possible.Legal authorities with financial institutions and regulators working together can combat this increasing problem of money laundering. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions