New penalties announced for illegal crypto operations in the UAE.
The UAE has announced strict new measures to crack down on unlicensed cryptocurrency companies operating within the country.
The Central Bank of the UAE (CBUAE) and other financial regulators published joint guidance this week outlining civil and criminal penalties for virtual asset service providers (VASPs) working without proper licensing. According to the guidelines, owners and managers of unlicensed VASP companies can face fines and other sanctions.
The move comes as part of the UAE's ongoing efforts to strengthen anti-money laundering controls and combat financial crimes. The country was placed on the Financial Action Task Force's (FATF) "grey list" in 2022 over deficiencies in these areas.
Khaled Mohamed Balama, Governor of the CBUAE, stated that the guidance aims to raise awareness of the risks posed by unlicensed VASPs. "As our digital economy matures, our work on combating all kinds of financial crimes intensifies," he said.
The National Anti-Money Laundering and Combating Financing of Terrorism and Financing of Illegal Organisations Committee (NAMLCFTC) published a list of "red flags" to help identify suspicious unlicensed VASP activity. These include lack of physical presence, unrealistic promises, poor website quality, and lack of regulatory disclosures.
Licensed financial institutions and VASPs are expected to report any transactions linked to unlicensed crypto companies. The regulators said this will aid efforts to uphold the law and protect the integrity of the country's financial system.
The FATF is set to review the UAE's progress in 2024. Consistent compliance with the new guidelines could lead to the country's removal from the grey list.
