Aligning AML/CFT Program with FATF's Grey List Updates.pdf
- 1. Aligning AML/CFT Program with FATF’s Grey List Updates 6th March 2025 11 AM - 12 Noon (GST) www.amluae.com www.niyeahma.com
- 2. AML Compliance Risk Management Expert Dipali is an Associate member of ICSI and a Certified Anti-Money Laundering Specialist (CAMS). She has an overall experience of 8 years in the compliance domain, including Anti-Money Laundering, due diligence, secretarial audit, and managing scrutiniser functions. She currently assists clients by advising and helping them navigate through all the legal and regulatory challenges of Anti- Money Laundering Law. She helps companies to develop, implement, and maintain effective AML/CFT and sanctions programs. She knows Anti-money laundering rules and regulations prevailing in major countries and specialises in Enterprise-wide risk assessment, Customer Due Diligence, and Risk assessment.
- 3. Introduction
- 4. Introduction to FATF Who is the FATF (Financial Action Task Force)? FATF is an international body that sets standards to fight money laundering, terrorist financing and proliferation financing What does FATF do? • Sets international standards and recommendations • Promotes the implementation of these standards • Monitors members' progress • Reviews money laundering and terrorist financing techniques • Researches how money is laundered and terrorism is funded • Assesses whether countries are taking effective action
- 5. FATF Grey List and Blacklist What is FATF Grey List? • A list of jurisdictions under increased monitoring due to deficiencies in their AML/CFT frameworks. • Jurisdictions are actively working with the FATF to resolve deficiencies. What is FATF Blacklist? A list of jurisdictions with serious strategic deficiencies to counter money laundering, terrorist financing, and financing of proliferation.
- 6. Why Does the FATF Update the Grey List? Regular Evaluation FATF conducts regular mutual evaluations and follow-up reviews. Identification of emerging risks or deficiencies. Potential increased scrutiny, tighter customer onboarding, and broader reputational considerations. Key Reasons for Updates Implications for Regulated Entities Jurisdictions completing or failing to complete recommended reforms.
- 7. FATF Grey List Update 21st February 2025
- 8. AML/CFT & CPF Laws in UAE to curb Financial Crimes Federal Decree-Law No. (20) of 2018 On Anti-Money Laundering and Combating the Financing of Terrorism and Financing of Illegal Organizations (the “AML-CFT Law”) and Cabinet Decision No. (10) of 2019 Concerning the Implementing Regulation of Decree-Law No. (20) of 2018 On Anti-Money Laundering and Combating the Financing of Terrorism and Illegal Organizations (the “AML-CFT Decision”). Cabinet Decision No. (74) of 2020 on implementation of the Targeted Financial Sanctions. AML and Sanctions Rules and Guidance issued by the Financial Services Regulatory Authority for units in ADGM. AML/CFT and Sanctions Module - Rulebook issued by the Dubai Financial Services Authority for units in DIFC. Other guidelines issued by the regulatory authorities (like the Central Bank of UAE, Ministry of Economy, Ministry of Justice, Virtual Asset Regulatory Authority, etc.)
- 9. UAE AML Regime’s Alignment with International AML Standard United Nations • UAE is a member nation • UAE aligns with United Nations Security Council Resolutions (UNSCRs) under the Cabinet Resolution No. 74 of 2020 • UAE aligns with United Nations Office on Drugs and Crime's (UNODCs) Global Programme against Money Laundering by launching UAEFIU’s goAML portal Financial Action Task Force • UAE recognises FATF’s role as an international ML/TF and PF watchdog • UAE ensures that its domestic laws align with FATF’s 40 Recommendations and 11 Immediate Outcomes. Egmont Group of Financial Intelligence Units • UAE FIU is part of the Egmont Group • UAE collaborates with other FIUs for secure information exchange and coordination to curb ML,FT, & PF threats. Middle East and North Africa Financial Action Task Force (MENAFATF) • UAE is the founder of MENAFATF, a FATF Style Regional Body (FSRB) • UAE cooperates with countries in the Middle East and North Africa (MENA) region to establish effective systems and counter ML/TF and PF threats.
- 10. FATF Grey List Update and its Impact on Compliance Obligations
- 11. Understanding the Impact of FATF Grey List Updates on a Regulated Entity’s AML Compliance Framework Regulated Entities in UAE such as FIs, DNFBPs, and VASPs are mandated to comply with: UAE AML Regime's Alignment with International AML Standards such as: Updates & Revisions to International Standards: As a consequence of FATF Grey List & Blacklist Updates: Anti Money Laundering, Counter Financing of Terrorism, and Counter-Proliferation Financing (AML/CFT and CPF) Laws, Regulations, Sector-specific Guidelines • United Nations • Financial Action Task Force (FATF) • The Middle East and North Africa Financial Action Task Force (MENAFATF) • Egmont Group of Financial Intelligence Units • FATF Grey List Update Additions and Removals of Countries • FATF Blacklist Update Additions and Removals of Countries AML Compliance Measures Implemented by FIs, DNFBPs, & VASPs needs to be revised
- 12. AML CFT & CPF Compliance Obligations in UAE
- 13. Action Items for FIs, DNFBPs, and VASPs consequent to changes in the FATF Grey List Enterprise-Wide Risk Assessment (EWRA) Update 1 AML/CFT/CPF Policy Update 2 Customer Risk Assessment (CRA) Methodology Update 3 Software Configuration Changes 4 Aligning CDD Measures with FATF Grey list Updates 5 Staff Awareness Training 6 Documentation and Record-Keeping 7
- 14. 1. EWRA Update What is EWRA? EWRA is a cyclical process which comprises identifying and analysing ML, FT, and PF risks originating from: • Products or Services offered • Customers • Geography • Delivery Channel • Transactions Reassessment of Risk Factors Reassessment of Control Mechanism Reassessment of Residual Risk Realignment of Residual Risk and Risk Appetite
- 15. 2. AML/CFT/CPF Policy Update Reference to the Latest Grey List Changes to Customer Acceptance/Exit Policy as per Risk-Based Approach AML/CFT/CPF Policy Version Update Get the Management Approval 1 2 3 4
- 16. 3. CRA Methodology Update Updated Grey List Inclusion Re-KYC Cycle Configuration Changes in Approval Workflow Changes in Procedures - Simplified, Standard, Enhanced Changes to Risk Scoring Mechanism (aligned with updated EWRA) 1 2 3 4 5
- 17. 4. Software Configuration Changes Incorporating Updated Grey List Re-KYC Cycle Configuration Triggering Fresh Screening, KYC, and Risk Assessment Changes in Transaction Monitoring Rules Alerts Configuration 1 5 4 3 2
- 18. 5. Aligning CDD Measures with FATF Grey List Updates Update in Customer Due Diligence (CDD) Measures Impact on Existing Customers Impact on New Customers (CDD as per updated methodology prescribed under revised Policy and Procedures) • Re-KYC • Risk Assessment • Simplified Due Diligence, Standard Due Diligence, Enhanced Due Diligence • Risk-Based Decision-Making • More frequent transaction monitoring and review cycles for high-risk customers • KYC • Risk Assessment • Simplified Due Diligence, Standard Due Diligence, Enhanced Due Diligence • Risk-Based Decision Making • More frequent transaction monitoring and review cycles for high-risk customers
- 19. 6. Staff Awareness Training Changes in Grey List Updated Policies and Procedures KYC Refresh CRA Refresh Risk-Based Decision Making 1 2 3 4 5
- 20. 7. Documentation & Record-Keeping Include a note on FATF Grey List Change Management in Compliance Officer's Semi- Annual Report Customer Records AML/CFT/CPF Policy Versions CDD Procedures EWRA Versions
- 21. Challenges and Best Practices
- 22. Common Challenges and Pitfalls Resource Constraints Data Quality Issues Regulatory Complexity Over-Reliance on Manual Processes Upgrading systems and training staff can be costly. Incomplete or outdated information from clients. Increases human error and delays in identification. Keeping up with varying regulations across multiple jurisdictions. 1 2 3 4
- 23. Practical Implementation Roadmap Assess Current State Develop an Action Plan Conduct internal review of the impact of grey list change Prioritise resources for high-risk areas Implement & Train Roll out updated procedures, enhanced CDD requirements, and relevant staff training Review & Optimise Conduct regular reviews and adapt to new FATF or regulator directives
- 24. Best Practices Proactive Monitoring of FATF Updates Regular Internal Audits and Risk Assessments Collaboration with Regulatory Authorities Implementing Robust Technology Solutions Continuous Staff Training
- 25. Resources
- 26. Scan Here to Post Your Questions