UAE Cracks Down on Unauthorized Digital Assets
The United Arab Emirates (UAE) has published new guidance aimed at preventing the use of unauthorized digital assets by service providers. The objective is to protect the integrity of the UAE’s financial system.
UAE’s Emphasizes Regulatory Guidance
The new guidance aims to educate licensed financial institutions (LFIs) and the broader public sector about the risks associated with unlicensed virtual asset service providers. It aligns with Federal Law No. (20) of 2018, which addresses Combating the Financing of Terrorism (CFT), Illegal Organizations, and Anti-Money Laundering (AML).
In response to this, Mohamed Balama, Governor of the Central Bank of UAE, emphasized that the strategy comes at a time when virtual assets are becoming more accessible through digital channels.
The guide was jointly issued by the UAE and the National Anti-Money Laundering and Combating Financing of Terrorism and Financing of Illegal Organizations Committee (NAMLCFTC). The decision is consistent with Financial Action Task Force’s (FATF) regulatory guidelines on virtual assets and service providers.
New Guidance Backed With Penalties
The new guide is reinforced with penalties for non-compliance by crypto service providers. Failure to adhere to the rules may result in civil and criminal penalties.
Additionally, financial entities operating without proper licensing documents or weak AML/CFT and Counter-Proliferation Financing controls might face enforcement action.
Hot Take: UAE Takes Strong Stance Against Unauthorized Digital Assets
The United Arab Emirates has taken a proactive approach to combating unlicensed virtual asset service providers, emphasizing stricter regulations and penalties for non-compliance. This move underscores the country’s commitment to safeguarding its financial system from potential risks associated with unauthorized digital assets.
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