Challenges in customer due
diligence for banks in the UAE
Thomas Jefferson School of Law, San Diego, California, USA
Purpose –The purpose of this paper is to unpackthe customer due diligence (CDD) vulnerabilities and to
examine and analyze the UAE speciﬁc dynamics that make the country exposed to these threats. This
research also intends to put on the table suitable solutions and remedial action steps that the UAE
government,regulators and ﬁnancial institutions (FIs) can adopt.
Design/methodology/approach –This study is qualitativein nature.
Findings –Despite the impressive regulatoryframework and the satisfactory practices by FIs, there still
remains some UAE speciﬁc challenges that make it difﬁcult to undertake CDD for certain customers. The
challengesthat were identiﬁed include difﬁculties in Arabic names,complications in identifying the beneﬁcial
owners, impediments in establishing the source of wealth/funds,concerns with politically exposed persons,
the increasingcost of compliance that resulted in a patternof de-risking within FIs.
Research limitations/implications –The international bodies whose mandate is to formulate the
necessary anti-money laundering and combating the ﬁnancing of terrorism policies and regulations
for global implementation together with Association of Certiﬁed Anti-Money Laundering Specialists
(ACAMS) have published sufﬁcient studies on CDD-related issues in the UAE. Yet on the other hand,
very limited literature was found by independent scholars. This paper will, therefore, largely
reference publications by Financial Action Task Force, the International Narcotics Control Strategy
Report and ACAMS. It will also include works by respected law ﬁrmsthathaveoperationsinthe
UAE, local publications, government documents, academic papers by the International Monetary
Fund and the World Bank, legal journals and others.
Originality/value –Illicit actors exploit the UAE’s relatively open business environment, a
multitude of global banks and exchange houses and global transportation links to undertake illicit
ﬁnancial activity [...] the UAE does not have any major anti-money laundering (AML) deﬁciencies.
However, the monitoring of FIs for AML purposes, particularly in the area of CDD, could be improved.
This paper unpacks the CDD vulnerabilities and analyzes the UAE speciﬁc dynamics that make the
country exposed to these threats. This research also puts on the table suitable remedial action steps
that the UAE government, regulators and FIs can adopt.
Keywords AML/CFT Framework, CFT
Paper type Research paper
The Financial Action Task Force (FATF) and other key stakeholders, in particular
the Basel Committee on Banking Supervision (BCBS), place customer due diligence
(CDD) at the heart of an effective anti-money laundering and combating the ﬁnancing
of terrorism (AML/CFT) framework. CDD is intended to ensure that ﬁnancial
institutions (FIs) know the person on whose behalf they are holding funds for or
conducting transactions for and to identify any potential risk that he/she may pose.
CDD is identifying who the customer is and verifying his/her identity on the basis of
documents, data and/or information obtained through reliable sources. This requires
the validation of customer’s name, address, date of birth and other ofﬁcial
identiﬁcation. An effective CDD undertaking requires the following:
Journalof Money Laundering
Vol.23 No. 2, 2020
© Emerald Publishing Limited
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