Criminals’ money laundering techniques are continually developing, and they are often tailored to the characteristics of a particular market or type of commercial activity. Auditors must be able to determine if a possible transaction is suspicious or not as part of their DNFBP. This is not an exhaustive list of red flags that suggest possibly suspicious transactions. Compliance officials at Auditors might utilise the list to judge whether or not a transaction is suspicious. Continue to the next section.
Client-specific personal information
When a client refuses to give personal information, or when the auditor has reasonable grounds to assume that the information provided is erroneous or incomplete, the auditor will conduct a risk assessment. This raises the alarm about money laundering, and AML compliance officers in the UAE should do thorough due diligence on such customers.
Refusal to divulge information about the business
If the client can’t or won’t submit the following information, that’s a red flag:
Corporate history and business activity
Identity of the beneficial owner
Wealth or financial resources
Why are things done the way they are?
They know who they’re dealing with.
The nature of business relationships with foreign parties, particularly those based outside the United Arab Emirates
Clients’ Suspicious Behavior
If the client avoids personal contact for no apparent reason, due diligence is required. Also, if the client is under investigation, has ties to criminals, has been charged with a crime, or has been accused of corruption or criminal conduct in credible publically available information sources, audit experts should be on high alert. Transactions involving politically exposed persons (PEP) require a thorough investigation.
Requests and unusual activities
Following the initial consultation, the client is usually asked to communicate with the audit firm. However, if the client avoids this without good reason, the risks of money laundering increase dramatically. Keep an eye out for the following as well:
Refuses to cooperate with the audit or give the necessary information, data, and documents.
Requests strange things from the audit company or its workers.
Show an unusual interest in compliance-related issues, such as customer due diligence or transaction reporting requirements, or ask excessive questions about them.
Attempts to keep the beneficial ownership of the company hidden from the authorities.
Opaque Client’s Personal History
An audit firm does not require all clients to have a clean and transparent past. A thorough background investigation is required if the client’s background or history looks to be shady.
Some red flags in this category include the following:
Companies who are unable to demonstrate a track record of successful operations
After a long time of slumber, it reactivates for no apparent reason.
Can’t be found on professional social networking sites like LinkedIn.
Uses sloppy email addresses like Hotmail, Gmail, and Yahoo.
Changes in ownership that aren’t explained
Legal arrangements alter frequently.
Signals of trouble Transactions pertaining to the client
Suspicious transactions could take any of the following forms:
There’s a lot of money at stake.
There are people involved that have shady connections.
Involvement of relatives who don’t have a valid business reason to be involved
Loans from private third parties with insufficient supporting agreements/documents/collateral, and so on.
Frequent high-value transactions involving a limited group of closely linked natural or legal people
People from tax havens or high-risk countries are involved.
Payment Methods Issued Red Alerts
Money laundering strategies linked to the payment method may be used by criminals. If it looks like this, a savvy AML compliance officer will be able to see it right away:
Using cash or negotiable instruments without identifying the genuine payer
The payment is broken down into smaller chunks with a short gap between each one.
The payment raises questions about the authenticity of the documents supplied in conjunction with the Transaction.
A loan is issued, or an attempt is made to acquire a loan, using cash collateral, particularly when the collateral is deposited abroad.
There is no clear relationship or reasonable explanation for the payment, which is made with third-party funds.
Auditor selection
Given the auditor’s size, location, or speciality, this is unreasonable and without a convincing rationale.
Has changed several times in a short period of time (i.e., the client has changed or hired multiple auditors) without good justification.
Is as a result of another auditor refusing the business relationship or terminating the agreement without appropriate explanation.
Threats of Major Concern
Audit experts are in a unique position to uncover potentially suspicious conduct or transactions because of the nature of their work, which includes checking their clients’ accounts, books, records, transactions, and documentation. As a result, auditors must be aware of the major ML/FT threats that their UAE-based customers face. Threats of ML/FT are linked to the predicate offences listed below:
Product Piracy, Fraud, and Counterfeiting
Money laundering services provided by a third party
Insider trading and market manipulation are two terms that come to mind when thinking about insider trading and market manipulation.
Fraudulent taxation (related to direct taxes and indirect taxes)
During the audit, there were a number of red flags that were raised.
Customs, excise, and value-added taxes, as well as any other type of tax fraud, are all involved in these transactions.
Loans or other financings from private third parties that do not have proper supporting agreements, collateral, or regular interest or principal repayments.
Uses professional intermediary services that give or rely on more anonymity than is typical in the circumstances.
Include contracts with strange or nonsensical clauses for the parties involved.
Funds received from a legal entity that goes into liquidation, receivership, or is stricken off the register (either voluntarily or compulsorily).
Frequently involve intercompany loan transactions or repayment, as well as multijurisdictional wire transfers, especially when there is no obvious legal or commercial purpose.
Payments of “consultancy fees” to shell corporations based in foreign jurisdictions or jurisdictions with a history of forming a large number of shell companies.
AML Compliance Services can be by us:
The Ministry of Economy regulates audit companies as Designated Non-Financial Businesses and Professions (DNFBP) for AML/CFT compliance. The auditors must comply with AML / CFT duties as DNFBPs, such as registering in the goAML system. Failure to comply with necessary AML / CFT duties can result in heavy penalties of up to AED 1 million, necessitating the aid of top AML experts in Dubai.
We have a highly qualified team that can assist DNFBPs such as auditors, real estate brokers, gold and precious metal merchants, trusts, and corporate service providers in putting in place a solid anti-money laundering system. We can help with designing compliance policies and procedures, assessing current AML policies, implementing AML/ KYC/ CFT plans and frameworks, AML auditing and reporting, assisting with due diligence frameworks, and giving AML training to staff, among other things. Hire our AML compliance services in Dubai to combat money laundering using the most up-to-date regulatory standards.
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