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Dubai Financial Services Authority (DFSA): Contents

Dubai Financial Services Authority (DFSA)
Laws
Rulebook Modules
Anti-Money Laundering, Counter-Terrorist Financing and Sanctions Module (AML) [VER16/07-19]
Sourcebook Modules
Consultation Papers
Policy Statements
DFSA Codes of Practice
Amendments to Legislation
Media Releases
Notices
Financial Markets Tribunal
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  • AML 7.4 Enhanced Customer Due Diligence

    • AML 7.4.1

      Where a Relevant PersonG is required to undertake Enhanced Customer Due DiligenceG under AML Rule 7.1.1(1)(b) it must, to the extent applicable to the customer:

      (a) obtain and verify additional:
      (i) identification information on the customer and any Beneficial OwnerG ;
      (ii) information on the intended nature of the business relationship; and
      (iii) information on the reasons for a transaction;
      (b) update more regularly the Customer Due DiligenceG information which it holds on the customer and any Beneficial OwnersG ;
      (c) take reasonable measures to establish:
      (i) the source of funds; and
      (ii) the source of wealth,

      of the customer or, if applicable, of the Beneficial OwnerG ;
      (d) increase the degree and nature of monitoring of the business relationship, in order to determine whether the customer's transactions or activities appear unusual or suspicious;
      (e) obtain the approval of senior management to commence a business relationship with a customer; and
      (f) where applicable, require that any first payment made by a customer in order to open an account with a Relevant PersonG must be carried out through a bank account in the customer's name with:
      (i) a BankG ;
      (ii) a Regulated Financial InstitutionG whose entire operations are subject to regulation and supervision, including AML regulation and supervision, in a jurisdiction with AML regulations which are equivalent to the standards set out in the FATF recommendations; or
      (iii) a SubsidiaryG of a Regulated Financial InstitutionG referred to in (ii), if the law that applies to the ParentG ensures that the Subsidiary also observes the same AML standards as its ParentG .
      Derived from RM117/2013 [VER9/07-13]
      [Amended] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]
      [Amended] DFSA RM231/2018 (Made 6th June 2018) [VER15/07-18]

      • AML 7.4.1 Guidance

        1. In AML Rule 7.4.1 Enhanced CDDG measures are only mandatory to the extent that they are applicable to the relevant customer or the circumstances of the business relationship and to the extent that the risks would reasonably require it. Therefore, the extent of additional measures to conduct is a matter for the Relevant PersonG to determine on a case by case basis.
        2. In AML RM117/2013(e), senior management approval may be given by an individual member of the Relevant Person'sG senior management or by a committee of senior managers appointed to consider high risk customers. It may also be outsourced within the Group.
        3. For high risk customers, a Relevant PersonG should, in order to mitigate the perceived and actual risks, exercise a greater degree of diligence throughout the customer relationship and should endeavour to understand the nature of the customer's business and consider whether it is consistent and reasonable.
        4. A Relevant PersonG should be satisfied that a customer's use of complex legal structures and/or the use of trust and private investment vehicles, has a genuine and legitimate purpose.
        5. For enhanced CDDG , a Relevant PersonG has to take reasonable measures to establish the source of funds. That is, where the funds for a particular service or transaction will come from (e.g. a specific bank account held with a specific financial institution) and whether that funding is consistent with the source of wealth of the customer or, if applicable, of the Beneficial OwnerG .
        6. For enhanced CDDG , where there is a Beneficial OwnerG , establishing the customer's source of funds and wealth may require enquiring into the Beneficial Owner's source of funds and wealth because the source of the funds would normally be the Beneficial OwnerG and not the customer.
        7. The DFSAG considers that taking reasonable measures to establish the source of funds includes obtaining independent corroborating evidence such as proof of dividend payments connected to a shareholding, bank statements, salary/bonus certificates, loan documentation and proof of a transaction which gave rise to the payment into the account. A customer should be able to demonstrate and document how the relevant funds are connected to a particular event which gave rise to the payment into the account or to the source of the funds for a transaction.
        8. The DFSAG considers that verification of source of wealth includes obtaining independent corroborating evidence such as share certificates, publicly-available registers of ownership, bank or brokerage account statements, probate documents, audited accounts and financial statements, news items from a reputable source and other similar evidence. For example:
        a. for a legal person, this might be achieved by obtaining its financial or annual reports published on its website or news articles and press releases that reflect its financial situation or the profitability of its business; and
        b. for a natural person, this might include documentary evidence which corroborates answers given to questions on the source of wealth in an application form or customer questionnaire. For example, if a natural person attributes the source of his wealth to inheritance, he may be asked to provide a copy of the relevant will or grant of probate. In other cases, a natural person may be asked to provide sufficient bank or salary statements covering a number of years to draw up a picture of his source of wealth.
        9. A Relevant PersonG may commission a third party vendor report to obtain further information on a customer or transaction or to investigate a customer or Beneficial OwnerG in very high risk cases. A third party vendor report may be particularly useful where there is little or no publicly-available information on a person or on a legal arrangement or where a Relevant PersonG has difficulty in obtaining and verifying information.
        10. In AML Rule 7.4.1(f), circumstances where it may be applicable to require the first payment made by a customer in order to open an account with a Relevant PersonG to be carried out through a bank account in the customer's name with a financial institution specified in that paragraph include:
        a. where, following the use of other Enhanced CDDG measures, the Relevant PersonG is not satisfied with the results of due diligence; or
        b. as an alternative measure, where one of the measures in AML Rule 7.4.1 (a) to (e) cannot be carried out.
        Derived from RM117/2013 [VER9/07-13]
        [Amended] RM196/2016 (Made 7th December 2016). [VER13/02-17]
        [Amended] DFSA RM231/2018 (Made 6th June 2018) [VER15/07-18]