Filing a Suspicious Transaction Report in UAE 2023

STR Filing Requirements in UAE

Article 15 Federal Decree-Law No. (26) of 2021

“The Financial institutions and designated nonfinancial businesses and professions in addition to the virtual assets service providers shall, upon suspicion or if they have reasonable grounds to suspect a transaction or funds representing all or some proceeds, or suspicion of their relationship to the Crime or that they will be used regardless of their value, to inform the Unit without delay, directly and provide the Unit with a detailed report Including all the data and information available regarding that transaction and the parties involved, and to provide any additional Information required by the Unit, with no right to object under the confidentiality provisions.”

Penalties for not filing an STR (Article 24)

“Imprisonment and a fine of no less than (100,000) one hundred thousand dirham and no more than (1,000,000) one million dirham or any of those two sanctions is applied to anyone who violates on purpose or by gross negligence the provision of Article (15 – see above) of this Decree Law.”

Recognizing Suspicious Activity

As money launderers or persons involved in terrorist financing can use various types of transactions, it is difficult to define a suspicious transaction or activity. Suspicion is personal and subjective depending on a range of factors and falls far short of proof. However, by looking out for certain red flags in customer behavior/transaction, it is possible to ascertain to a degree whether a transaction is of normal business nature or if it is deemed suspicious. A suspicious activity or transaction may be:

• any transaction or instruction that is not logical from an economic or financial point of view
• any transaction that is inconsistent with the FI’s knowledge of the customer or expected account activity

When identification cannot be completed

In circumstances where a customer is unwilling or unable to provide all required CDD information, the relationship or request to open an account should be declined. In some cases, where a customer is unable or unwilling to provide required information or documentation and provides no valid explanation, staff should prepare and submit a suspicious transaction report to the compliance officer. The compliance officer should review the report and consider submitting it to the financial intelligence unit.

Tipping Off

Any employee who reports a suspicion or is otherwise aware that an investigation is being, or may be, conducted must take particular care at all times to avoid committing a tipping-off offense, that is, informing the customer or other parties that a report of suspicion has been provided to the compliance officer.

Penalties for tipping off (Article 25)

“Imprisonment for no less than one year and a penalty of no less than AED 100,000 (one hundred thousand dirham) and no more than AED 500,000 (five hundred thousand dirham) or any of these two sanctions shall apply to anyone who notifies or warns a person or reveals any transaction under review in relation to suspicious transactions or being investigated by the Competent Authorities or to investigate them or any Information related to a violation of the provisions of Article (17) of this Decree-Law”

Duty to report and investigate suspicions of money laundering or terrorist financing

It is the duty of every employee to report any suspicious transactions or activities to the compliance officer. When requested, the compliance officer should be provided with all information relating to any of the customers to enable them to determine whether there is any information in the FI’s possession that would remove the suspicion.

Where the compliance officer, on the basis of further investigations, determines that the suspicious transaction report prepared by staff is justified, the report should be submitted to the financial intelligence unit, as required by the law. In making this determination, the compliance officer should not require the approval of any other persons in the FI.

Protection Against Liability for Whistleblowers or Reporting Persons

AML-CFT Law Article 27; AML-CFT Decision Article 17.3

“The AML-CFTI apologize for the incomplete response. Here's the continuation of the code with the remaining content: ```php -Law and the AML-CFT Decision provide Financial Institutions, as well as their board members, employees, and authorized representatives, with protection from any administrative, civil, or criminal liability resulting from their good-faith performance of their statutory obligation to report suspicious activity to the FIU. This protection is also applicable if they did not know precisely what the underlying criminal activity was, and regardless of whether illegal activity actually occurred.”

Procedures for reporting suspicions

Staff who have suspicion of money laundering or terrorist financing must report it immediately to the compliance officer using the approved report form in the TMS. If there is a potential financial sanctions target match that clearly identifies a name or entity as suspicious, the compliance officer should be immediately notified. The transaction should not be completed, and an STR should be filed immediately.

Compliance officers’ procedures

When the compliance officer receives a suspicious transaction report, they need to log it, allocate a reference number, and acknowledge receipt. They will then undertake sufficient inquiries to determine whether, in their judgment, the concerned transaction is suspicious. This action must be undertaken promptly.

The compliance officer may review:

• the account opening records and CDD and other information obtained from the customer
• historical transaction patterns
• any previous suspicious transaction reports.

The compliance officer may discuss the report with:

• the members of the staff and/or the senior management
• other members of the management, as appropriate.

The compliance officer must:

• document his or her inquiries and the reason for deciding to/not to forward the suspicious transaction report to the financial intelligence unit.