TF and PF Sanctions in the UAE

The global fight against terrorism financing (TF) and proliferation financing (PF) requires countries and financial systems to implement stringent controls that prevent the misuse of funds and assets. In the United Arab Emirates (UAE), this responsibility is enforced through Targeted Financial Sanctions (TFS), aligning with the United Nations Security Council (UNSC) resolutions and international standards set by the Financial Action Task Force (FATF).

For authorised firms—including financial institutions, Designated Non-Financial Businesses and Professions (DNFBPs), and Virtual Asset Service Providers (VASPs)—compliance with TFS is not optional; it is a legal obligation under federal laws and cabinet decisions that form the backbone of the UAE’s sanctions regime.

The Legal Framework

The cornerstone of the UAE’s TFS regime lies in Federal Law No. 20 of 2018 (amended by Federal Decree No. 26 of 2021) and its implementing regulations. These laws mandate the prompt application of sanctions measures in line with directives from the UNSC under Chapter VII of its Charter.

Further detail is provided in Cabinet Decision No. 74 of 2020, which sets the framework for applying TFS obligations to all persons and entities within UAE jurisdiction, including those on the UAE Local Terrorist List and the UNSC Consolidated List.

Together, these laws ensure the UAE upholds its international commitments to prevent terrorism financing and the proliferation of weapons of mass destruction while safeguarding the integrity of its financial system.

Core Obligations of Authorised Firms

Under Cabinet Decision No. 74 of 2020, authorised firms must implement four main obligations:

1. Registration with the Notification Alert System (NAS)
   Firms must register with the Executive Office for Control and Non-Proliferation (EOCN)’s NAS to receive real-time updates on sanctions list amendments.
2. Screening
   Firms must conduct regular and ongoing screening of customers, transactions, beneficial owners, and counterparties against the UAE Local Terrorist List and UNSC Consolidated List. Screening must occur at onboarding, prior to transactions, during periodic reviews, and whenever sanctions lists are updated.
3. Freezing Without Delay
   If a confirmed name match is identified, authorised firms must immediately (within 24 hours) freeze the funds or assets of the designated person or entity without prior notice. Freezing applies to direct ownership, indirect control, and cases where individuals act on behalf of designated persons.
4. Reporting
   Firms must promptly submit Confirmed Name Match Reports (CNMRs) or Partial Name Match Reports (PNMRs) to the EOCN via the goAML platform. They are also required to raise Suspicious Transaction/Activity Reports (STRs/SARs) for potential sanctions evasion.

Additionally, firms must establish strong internal controls, staff training, and technical systems to ensure compliance. They are prohibited from “tipping off” customers before freezing measures are applied.

Enforcement and Liability

Non-compliance with TFS obligations carries significant legal consequences. Any entity found in violation may face imprisonment of one to seven years and fines ranging from AED 50,000 to AED 5,000,000. Supervisory Authorities also hold the power to impose administrative penalties, ranging from warnings to license cancellations.

Importantly, firms acting in good faith—for example, freezing assets or rejecting services to comply with TFS—are granted exemption from liability for any resulting claims.

The Strategic Importance of Compliance

The UAE’s role as a global financial hub makes strict adherence to TFS obligations critical. Authorised firms act as the first line of defence in preventing illicit actors from abusing the financial system to support terrorism or proliferation networks.

Beyond avoiding penalties, compliance protects firms’ reputations, reinforces their credibility with regulators, and ensures their continued participation in the global financial system.

Conclusion

Targeted Financial Sanctions are more than just a regulatory requirement—they are a vital tool in safeguarding international peace and security. For authorised firms in the UAE, the responsibility to comply with TF and PF sanctions rests not only on robust systems and procedures but also on fostering a culture of vigilance and accountability.

By registering with the EOCN NAS, screening diligently, freezing assets without delay, and reporting effectively, firms can uphold both their legal obligations and their ethical responsibility in the global fight against terrorism and proliferation financing.

FIs, DNFBPs and VASPs, who want guidance on Targeted Financial Sanctions, contact Crowe’s expert AML/CFT compliance solutions team at [email protected] | +971553438693