All UAE businesses have a responsibility to prevent money laundering and other forms of financial crimes,

Risk assessments are a key component of any firm's anti-money laundering (AML) tool kit, and can help businesses to measure the likelihood that they will inadvertently support or engage in criminal behaviour.

Pursuant to Article (44) 1 of 'Cabinet Decision No. (10) of 2019 Concerning the Implementing Regulations of Decree Law No. (20) of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Illegal Organizations', DNFBPS in UAE are required to file annual AML/CFT Report. 

What is an AML Risk Assessment?

A money laundering risk assessment is a process that analyses a business's risk of exposure to financial crime. The process aims to identify which aspects of the business put it at risk of exposure to money laundering or terrorist financing. It achieves this by monitoring and assessing known vulnerabilities, also commonly referred to as Key Risk Indicators (KRIs).

Anti-money laundering risk assessments form part of the required risk based approach. They should form part of, and tie into, a company’s overarching strategy to avoid facilitating the laundering of illicit funds.

There are two types of risk assessments required as part of a risk based approach. These are a company wide risk assessment and risk assessments of individual transactions.

A company-wide risk assessment is a floor to ceiling review of a business to identify what external risks of money laundering they face and where in their business is at risk of being exploited by criminals seeking to launder illicit funds. Once this is done it is used as the foundation for a company to design their risk assessment and anti-money laundering processes.

After identifying and highlighting the money laundering risks their company is facing, directors then must design an appropriate risk assessment procedure to ensure they identify any potential transaction that is part of a money laundering scheme.

Why are AML Risk Assessments Required

In the UAE, certain businesses are required to conduct anti-money laundering risk assessments under Article (44) 1 of 'Cabinet Decision No. (10) of 2019 Concerning the Implementing Regulations of Decree Law No. (20) of 2018 .

On a practical level, a risk assessment could help a business to:

• use a risk-based approach to identifying and preventing money laundering.
• understand the risks associated with various business relationships and commercial activities.
• create policies, procedures, and controls that actively reduce the risk of financial crime.
• make more informed decisions about employees and clients.
• identify transactions and relationships that involve an at-risk or sanctioned country.
• Evaluate risk reduction measures.

Ultimately, an AML risk assessment check can help businesses to reduce the risk of money laundering and terrorist financing. These measures are an essential part of any anti-money laundering compliance program, and can help organisations to stay on the right side of the law.

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