Dubai’s Virtual Assets Regulatory Authority (VARA) has issued a crucial directive for all Virtual Asset Service Providers (VASPs) operating within the emirate. As of September 18, 2024, VASPs must register with the Executive Office for Control & Non-Proliferation (EOCN) system for sanction alerts. This measure aims to ensure robust compliance with targeted financial sanctions (TFS) in accordance with UAE regulations, UN standards, and the Financial Action Task Force (FATF) guidelines.
Strengthening Compliance: UAE’s International Commitment
The UAE’s commitment to enhancing its financial system has been underscored by its recent removal from FATF’s grey list and its entry onto the green list. This achievement reflects the UAE’s significant efforts to align with international anti-money laundering (AML) and counter-terrorist financing (CFT) standards. VARA’s latest directive is part of this broader strategy to reinforce the country’s compliance and maintain trust in its financial ecosystem.
For further insights into the UAE’s 2024-2027 National Strategy for AML and CFT, which outlines the steps being taken to bolster these efforts, you can refer to this article.
Key Compliance Requirements
Immediate Registration: All licensed VASPs and those holding initial approvals must register on the EOCN website under the “Local Terrorist List” and subscribe to the “Sanctions List” for automated updates.
Timely Database Screening: VASPs are required to screen their user databases within 24 hours of any TFS list update to identify potential matches and take appropriate action.
Preventing Access: Providers must ensure that designated entities cannot access financial assets or economic resources directly or indirectly linked to them.
Reporting Obligations: Any activity involving designated entities must be reported to the Financial Information Unit (FIU) within five business days of any frozen assets.
Consequences of Non-Compliance
VARA has outlined that failure to comply with these requirements could result in severe penalties, including both criminal and civil repercussions. Potential consequences include temporary suspension, operational restrictions, or complete revocation of licenses. These measures highlight VARA’s rigorous approach to maintaining market integrity and preventing financial misconduct.
Building a Compliant Future
This directive is part of VARA’s continuous efforts to strengthen compliance and risk management within Dubai’s virtual asset landscape. Previously, VARA issued detailed rule books in February 2023 to ensure that all VASPs adhere to comprehensive compliance and risk management practices.
With these new measures, Dubai’s VASPs are urged to act swiftly, complete their registration with the EOCN system, and remain vigilant in meeting all compliance obligations.
