New Central Bank Guidance for UAE Financial Institutions on Suspicious Activity/Transaction Reporting

Dubai Financial LandscapeOn June 7, 2021, the UAE Central Bank issued new guidance requiring all UAE financial institutions to file suspicious activity reports (SARs) or suspicious transaction reports (STRs) with the UAE’s Financial Intelligence Unit (FIU) using the goAML portal within 35 calendar days of detection of any conduct that they reasonably suspect may be linked to money laundering, terror financing, or other criminal activity.  By the end of the first 20 calendar days, a case investigator must have analyzed the alert or other indicator of suspicion, conducted any further investigation that may be necessary, and made an internal recommendation to the MLRO as to whether an SAR/STR filing is warranted.  Also within those first 20 calendar days, the MLRO must have reviewed the case report, considered the recommendation, and finally dispositioned the alert or activity one way or the other.  By the end of a further 15 calendar days, the MLRO must have filed an SAR/STR with the FIU in respect of anything determined to be suspicious.  Note that these are maximum timeframes and UAE financial institutions are ultimately responsible under the local AML/CFT Law to report suspicious activity “without delay.”

Our new client alert summarizes the Central Bank’s new expectations around timely alert dispositioning and SAR/STR filings.  Importantly, we also examine important guidance from the Central Bank regarding best practices for drafting SARs/STRs and recommended post-SAR/STR filing processes.  Additionally, we cover the Central Bank’s warning to UAE financial institutions not to engage in defensive filings and, finally, we examine common typologies and red flag indicators of money laundering or terror financing in the UAE, as identified by the FIU.

Anti-Money Laundering Act Update: Six Months In

The National Defense Authorization Act for Fiscal Year 2021 (“NDAA”) became law earlier this year, after a congressional override of then-President Trump’s veto.  Division F of the NDAA consists of the Anti-Money Laundering Act of 2020 (“AMLA”).  The AMLA expands numerous Bank Secrecy Act (“BSA”) requirements, and FinCEN has been active in the first sixth months of the AMLA’s passage in issuing guidance, reports, and proposed regulations.

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Preparing an application for the SBA’s Community Navigator Program, from a compliance perspective

The American Rescue Plan Act allocated $100 million to the Small Business Administration to be distributed to various “Hub” organizations to further disseminate among their “Spoke” partners. The purpose behind this funding structure is to better reach small businesses in underserved communities, which may not have received the full benefit of COVID-19-related economic relief in earlier legislation. To accomplish this goal, the SBA is launching the Community Navigator Program to partner with community organizations with stronger ties and relationships to such businesses. These community organizations— “Hubs”—will coordinate the activities of the Program and provide assistance to their partners—“Spokes”—which will in turn provide services to their respective communities. Isabella Casillas Guzman, the SBA administrator, explained this model in greater detail by stating that “we’ll be using a hub and spoke model in local regions across the nation to bridge the gap between local entrepreneurs and SBA’s resources and programs. If we’re going to build back better, we need to ensure that all entrepreneurs have the support they need to recover.”

The SBA recently extended the application deadline for the Community Navigator Pilot Program to July 23, 2021.  See link.  Given the current robust regulatory environment, Hubs should use this extra time to ensure that their applications reflect their commitment and ability to comply with the terms and conditions of the award and applicable laws and regulations. Continue Reading

Beware: The Report Expressly Prepared for Trial Counsel May Not Be Privileged After All

In this article for the Consumer Privacy World Blog, John Burlingame and Kristin Bryan discuss a recent federal district court decision which calls into question the application of attorney work-product privilege to work-product prepared by consultants in anticipation of litigation.

FinCEN and Federal Reserve Seek Comments on Proposed Amendments to the Recordkeeping and Travel Rules

healthcare moneyOn October 23, 2020, the Board of Governors of the Federal Reserve System (the ‘‘Board’’) and the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) (collectively, the “Agencies”) issued a joint Notice of Proposed Rulemaking (“NPRM”) soliciting public comment on questions relating to potential amendments to Bank Secrecy Act (“BSA”) regulations. The proposed amendments seek to modify the existing Recordkeeping Rule and Travel Rule by:

  • Lowering the requirement to collect, retain, and transmit information on funds transfers and transmittals of funds from $3,000 to $250 for transactions that begin or end outside the United States; and
  • Superseding the existing definition of money to include convertible virtual currencies (“CVCs”).

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FinCEN Imposes First of its Kind Civil Penalty against Cryptocurrency Money Service Business

On October 19, 2020, the Financial Crimes Enforcement Network (FinCEN) released its assessment of a $60 million civil monetary penalty against the operator of two cryptocurrency “mixers” for violations of the Bank Secrecy Act (“BSA”).[1] The action marks the first effort by FinCEN to target the use of these “mixers” to facilitate money laundering and demonstrates FinCEN’s ongoing commitment to regulate entities that transmit cryptocurrencies as money service businesses (“MSBs”) under the BSA.[2]

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DOJ Prioritizes Health Care Fraud in the Pandemic

man in wheel chairThe Department of Justice (“DOJ”) recently announced its largest ever health care fraud and opioid enforcement action.  In a coordinated effort, DOJ charged 345 defendants with more than $6 billion in fraud losses for submitting false and fraudulent claims to federal health care programs and private insurers.

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4 Compliance Tips Amid Increased Ransomware Scrutiny

In light of two new US Treasury Department advisories signaling increased oversight of ransomware payments, victim companies and their third-party response teams considering making payments should follow certain due diligence and compliance best practices, write Colin Jennings, Ericka Johnson, Dylan Yépez and Elizabeth Weil Shaw in an article for Law360.

Cryptocurrency Exchange and its Executives Face Allegations of Failing to Maintain an Adequate AML Program

Two U.S. authorities recently announced actions against four individuals and numerous entities associated with BitMEX, an online trading platform for futures contracts and other derivative products tied to the value of cryptocurrencies.  Both actions allege that BitMEX failed to put in place required anti-money laundering programs and procedures, and serve as a reminder that institutions offering new and innovative financial products should assess the potential applicability of and compliance with U.S. anti-money laundering laws and regulations.

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