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The Decree-Law establishes the core legal framework for anti-money laundering (AML), counter-terrorism financing (CTF), and the prevention of fund flows to illegal organisations in the UAE. While it does not detail the operational aspects of wire transfer regulation, it provides the legal basis for requiring financial institutions to maintain transparency and traceability of financial transactions. These obligations directly support compliance with the information requirements underlying wire transfers.
Scope of Covered Transactions
The Decree-Law applies to all financial institutions, designated non-financial businesses and professions (DNFBPs), and virtual asset service providers operating in the UAE. It defines “funds” in broad terms, encompassing tangible, intangible, digital, or encrypted assets, including those transmitted by wire transfer. The law also defines "transactions" as any disposal or use of funds, including transfers, which brings wire transfer activity directly into scope.
Obligations on Financial Institutions
Financial institutions are required to implement due diligence measures, identify and verify customers and beneficial owners, understand the purpose of transactions, and maintain comprehensive records. These obligations apply equally to transactions made through wire transfers. Institutions must not allow anonymous or pseudonymous transactions and are prohibited from dealing with shell banks.
Institutions are required to file Suspicious Transaction Reports (STRs) with the Financial Intelligence Unit (FIU) when they suspect a transaction involves proceeds of crime, including wire transfers that raise red flags due to their structure, parties, or geography.
Record Keeping & Reporting
Article 16 mandates financial institutions to keep detailed records of all transactions, including those related to domestic and international fund transfers. These records must be retained and made immediately available to competent authorities upon request. This reinforces the traceability component of WTR by ensuring that originator and beneficiary information is accessible when needed.
Institutions must also report suspicious transfers or attempted transfers, regardless of the amount involved. There are no de minimis thresholds for STR filing. Legal protections are granted for good faith reporting of suspicious transactions.
Role of the Financial Intelligence Unit
The FIU is the central national authority responsible for receiving, analysing, and disseminating information about suspicious transactions. It has the authority to request further information about transfers and to freeze funds if suspicious activity is identified. This supports WTR enforcement by ensuring a centralised, empowered body can intervene in suspicious wire transfers.
International Cooperation & Cross-Border Transfers
The Decree-Law permits and encourages international cooperation with foreign counterparts, including the exchange of financial information related to wire transfers. Judicial assistance may be granted for freezing, seizure, and confiscation of funds, including those transmitted through international wire transfers. The law specifies that obligations under WTR cannot be avoided due to secrecy laws or differences in the legal characterisation of offences.
Sanctions & Enforcement
Criminal penalties for non-compliance include fines, imprisonment, and, in the case of legal persons, closure of business and licence revocation. Administrative penalties can be imposed by regulatory bodies. Violations related to wire transfers, such as non-disclosure of suspicious activity or refusal to provide required information, are subject to prosecution.
Conclusion: WTR Compliance Integration
While Federal Decree-Law No. (20) of 2018 does not spell out the technical standards for wire transfer data, it establishes the legal infrastructure that enables and enforces Wire Transfer Regulation in the UAE. By mandating due diligence, record-keeping, STR reporting, and oversight by the FIU, the law ensures that originator and beneficiary data associated with wire transfers can be traced, verified, and acted upon. This framework upholds the core principles of the FATF Travel Rule and supports the UAE’s commitment to combating illicit finance through transparent and accountable fund movement.