The Central Bank of the United Arab Emirates (UAE) has released new guidelines for financial institutions dealing with virtual assets, including crypto and NFTs. The new guidance is expected to enter into force by July. The guidelines will apply to various financial institutions, including banks, financial services providers, payment processing companies, exchange houses, brokers, agents, and insurance companies in the region. - The move came nearly two months after the global financial crimes watchdog, the Financial Action Task Force (FATF), included the UAE in its gray list involving regions where increased monitoring is required.
- At the time, the UAE said it was committed to working closely with the FATF.
- Hence, the new guidance grounds the FATF's standards regarding anti-money laundering and counter-terrorism financing.
- The central bank's guideline also covers the risks associated with virtual assets and virtual asset service providers, discussing due diligence requirements for regulated financial institutions while contacting the clients and counterparties from the crypto market.
FATF's moves mostly accelerate the regulatory efforts regarding the crypto industry in many countries. - Most recently, Japan announced that it would start implementing stricter anti-money laundering rules for crypto and adopt the FATF's Travel Rule as of June 1, shortly after the agency found the country's anti-money laundering measures insufficient.
- The Travel Rule requires crypto exchanges to share information on senders and recipients, including the names, addresses, and account information, with the recipient platform and legal authorities when they process a transfer worth more than $3,000.
- The rule has come under fire by the crypto community many times since it contradicts the industry's characteristics related to anonymity.
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