UAE: „Know your Client“ Law

 

The introduction of Federal Decree-Law No. (30) of 2024 (the “Law”), establishing a „Know Your Client“ (KYC) Digital Platform, enabling identity verification is an important step forward for the United Arab Emirates (UAE) whereby UAE has committed to tackle financial crimes in the country.

Objectives

The decree law aims at achieving the following objectives:

Developing the financial infrastructure and enhancing digital transformation within the state;
Verification of client’s identity and assessing their compliance with the financial regulations;
Enhancing transparency in financial transactions;
Regulate the collection and utilization of the KYC data in the state, and;
Facilitate the exchange of information to combat financial crime.

KYC Data Collection, Digital Platform and the Company

The flow of KYC data as per the decree-law shall be in the manner wherein a user requests the KYC report of a client, obtains valid consent from the client, and the report in turn shall be issued by the company to such user.

The KYC Digital Platform will be managed by a company especially incorporated by this Decree Law and is designed to serve as a centralizes system for verifying the identities of clients across various sectors, including banking, finance and real estate (the „Company“). The Company will be responsible for regulating the process of collection, storing, and sharing of KYC Data, development of tools for risk assessment, issuing KYC reports and coordination with data providers to regulate the acquisition of the KYC data.

The Company has an obligation to:

Not disclose, use trade or exchange the KYC data for any purpose other than stipulated by law;
Implementing modern systems for processing KYC data;
Protect KYC data from loss, damage, or unsafe access, and;
Notify the Central Bank of UAE in case of violations.

Penalties

 The law provides for a penalty of two years of imprisonment and/or a fine of AED 50,000 for the following violations:

Unauthorizes disclosure of KYC data/report;
Obtaining KYC report without approval;
Violating confidentiality required for KYC data/report, and;
Willful misrepresentation or providing false data to the Company.

Conclusion

The law provides authority to the Central Bank of UAW to prepare suitable comprehensive Executive regulations to better implement this law. The KYC Digital Platform and the surrounding infrastructure will improve customer experience and remove administrative burdens on businesses. In addition, the KYC Digital Platform has the ability to strengthen the nation’s anti-money laundering (AML) and counter-terrorism financing (CTF) frameworks.

 

For further information, please contact:

Thomas Paoletti, Managing Partner

Paoletti Legal Consultants, UAE

e: t.paoletti@paoletti.com

t: +971529113255

 

#WLNadvocate #UAE #Dubai #AbuDhabi #business #law #legalnews #finance #economy #corporatelaw #companylaw #commercial #data