Under new guidance from the Central Bank of the UAE (CBUAE), financial institutions licensed to provide services to virtual asset traders (LFIs) will have to verify the identities of all customers. It will take effect from the end of June.
On May 31, CBUAE released a guidance document for Licensed Financial Institutions (LFIs) on the risks associated with virtual assets and virtual asset service providers (VASPs). The document sets out a number of new Anti-Money Laundering and Anti-Terrorist Financing regulations for banking institutions engaged in cryptocurrency trading in the UAE. These rules will comply with the Financial Action Task Force (FATF) global standard.
As defined by CBUAE, LFIs are financial institutions that do not deal with cryptocurrencies, but establish relationships with VASPs, including banks, financial companies, exchanges, service providers payments, registered Hawala (off-bank money transfer) service providers, and insurance companies.
The guidelines require LFIs to send notices to CBUAE to obtain permission to open accounts for virtual asset service providers (VASPs) on a case-by-case basis. Any cooperation with VASPs without a license is prohibited. In addition, the LFI needs to 'understand the nature of their clients' business', they may suggest creating a profile of the client, which outlines the asset classes and expected volume of transactions. family.
LFIs are also obligated to track individual clients' crypto trading volumes with VASPs coming from 'high-risk regions'. In these cases, customers are only allowed to transfer virtual assets to their accounts outside of the licensed VASP ecosystem in the UAE.
Previously, a representative of CBUAE met a partner from the Hong Kong Monetary Authority to discuss cooperation in the regulation of digital assets. The two central banks are also committed to facilitating discussions on joint fintech development projects and efforts to share knowledge with their respective innovation hubs in the two regions.
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