Understanding the Difference between UAE Federal AML Law and DIFC AML Rulebook

The regulated entities operating in the Dubai International Financial Centre (DIFC) are required to comply with the DFSA-issued AML Rulebook, along with the AML Federal Decree-Law and the corresponding Cabinet Decision. Though the DIFC AML Rulebook is developed in line with the Federal AML regulations, there are a few differences between the two, which the DFSA-regulated entities must take into consideration.

The above-mentioned infographic distinguishes the following AML provisions under the Federal Law and the DIFC AML Rulebook:

1. One of the differences, indirectly mentioned above, is related to the Supervisory Authority. The DIFC-based entities are subject to AML supervision by the DFSA – Dubai Financial Service Authority. While, the mainland companies subject to Federal AML regulations vary based on the nature of operations – such as the Central Bank of UAE for Financial Institutions, Ministry of Economy for the Designated Non-Financial Businesses and Professions (DNFBPs), and Virtual Assets Regulatory Authority (VARA) for Dubai-based Virtual Asset Service Providers (VASPs).

2. With respect to the real estate sector, only real estate brokers and agents are subject to AML compliance as per Federal Law. However, the DIFC AML Rulebook extends the compliance regime to the DIFC-based real estate developers as well.

3. Moreover, the following two classes of activities or professions are additionally covered under the definition of “Designated Non-Financial Businesses and Professions” (DNFBPs) under the DIFC AML Rulebook:

• Insolvency firms
• Person engaged in the issuance of Non-Fungible Tokens (NFTS) or utility tokens or providing related services.

4. The AML documentation requirement is for a minimum period of 6 years in DIFC, as compared to a minimum of 5 years under Federal AML Law.

5. The DIFC AML Rulebook mandates that regulated entities have a UAE resident as an AML Compliance Officer or Money Laundering Reporting Officer (MLRO). There is no such requirement under Federal AML Laws.

6. In addition to the AML compliance obligations imposed under Federal AML Laws, the DIFC entities are required to comply with the following two AML requirements:

• Filing an AML Annual Return with the DFSA (for the period starting from August of the previous year till July of the year in which reporting is to be done) and
• Appointing a Deputy (MLRO) to manage the AML program in the absence of MLRO.

Ensuring compliance with the DIFC AML Rulebook is very crucial for the regulated entities operating in or from the DIFC.

Let AML UAE be your handholding partner, guiding you throughout the AML compliance journey. With our experience in Federal AML Laws and the DIFC AML Rulebook, we can assist your business in customizing the AML program to stay regulatory compliant and safe against ML/FT vulnerabilities.