Recently, many companies registered in UAE Free Zones have been receiving emails from their respective Free Zone authorities regarding Anti-Money Laundering (AML) and Combatting the Financing of Terrorism (CFT) compliance.
This blog explains why these emails are being sent, what they mean for your business, and how you can respond smoothly and confidently.
What is AML/CFT?
Anti-Money Laundering (AML) refers to the framework of laws, regulations, and procedures implemented to prevent and detect the concealment of illegally obtained funds within the financial system. Combatting the Financing of Terrorism (CFT) refers to measures aimed at preventing the use of financial systems to fund activities or organizations involved in terrorism. Together, AML and CFT are critical components of the UAE’s financial and regulatory infrastructure.
In the UAE, AML and CFT efforts are governed primarily by Federal Decree-Law No. (20) of 2018 and its implementing regulation Cabinet Decision No. (10) of 2019
Why Are Free Zones Sending AML/CFT Emails?
As part of the UAE government’s efforts to prevent money laundering, a series of guidelines have been issued to strengthen AML/CFT compliance across all business sectors. In line with this, several Free Zone authorities have begun reaching out to the registered entities, requesting documents for review.
The Article 1 of the Cabinet Decision No. 10 of 2019 defines “Supervisory Authority” as “Federal and local authorities entrusted by legislation to supervise the Financial Institutions, the designated non-financial businesses professions, Virtual Asset Service Providers and non-profit organizations or the competent authority in charge of approving the exercise of an activity or a profession if the legislation does not specify the relevant regulatory authority”.
This implies that Free Zone authorities that issue licenses and act as regulatory bodies are included within the definition of a ‘Supervisory Authority’. Therefore, Free Zone authorities may, on a random basis, request various documents—ranging from audited financial statements to passport and visa copies of shareholders or partners.
Is This Applicable to My Business?
Even if you are a small or mid-sized company, AML/CFT compliance may still apply depending on your nature of work. The Free Zone authority reaching out to you is simply checking for basic readiness — not conducting a detailed audit.
What Are Free Zones Asking For?
The free zone authority, at the time of registration and issuing the license, would have already obtained the KYC. Post this, and they may ask for a few basic documents such as-
- Shareholder or partner registers- In some cases, they may even attach a format
- Beneficial owner register– Format may be attached in some cases
- Company bank statement for three months or latest audited financial statements
- Proof of address of all stakeholders
- Passport and Visa copies of all stakeholders
This is not an exhaustive list, but the documents requested are generally basic in nature.
What Should You Do Next?
There is no need to be concerned upon receiving such an email. Start by reviewing the contents carefully and noting the documents being requested. Confirm that the email is indeed from your respective Free Zone authority. Once done, proceed with the next steps accordingly.
- Respond to the Free Zone authority within the given timeline.
- If you don’t have an AML policy yet, start preparing a basic one.
- Assign a compliance contact person, even if informally for now.
- If needed, consult professionals for guidance and documentation support.
We, at BCL, understand that businesses must focus on their core activities. We offer one-stop solutions for accounting, VAT, corporate tax, TRC, transfer pricing, and payroll, enabling businesses to maximize the benefits of outsourcing critical functions. Our team of experts helps and guides you in obtaining all necessary registrations and certificates and filing returns to ensure compliance and stay ahead of the competition.
For further information, reach out to our experts at punith@bclglobiz.com
