On Monday, the Central Bank of the United Arab Emirates' anti-money laundering division released rules for handling unlicensed virtual asset service providers (VASPs).

Operating in the United Arab Emirates (UAE) without a valid license, VASPs face civil and criminal penalties from the National Anti-Money Laundering and Combating Financing of Terrorism and Financing of Illegal Organizations Committee (NAMLCFTC). These penalties include fines against the entity, owners, and senior managers. The latest guidelines aimed at countering the usage of unauthorized virtual asset service providers coincide with an increase in the accessibility of virtual assets via digital channels. The chairman of the NAMLCFTC and governor of the Central Bank of the UAE, Khaled Mohamed Balama, stated, "As our digital economy develops, our work on combating all kinds of financial crimes intensifies through raising awareness of their risks and emphasizing the importance of compliance with relevant regulations and legislation to ensure the integrity of the UAE's financial system." The rules were released in collaboration with the nation's other regulatory organizations, including the Virtual Assets Regulatory Authority, the Ministry of Economy, the Ministry of Justice, the Abu Dhabi Global Market, the Securities and Commodities Authority, and the Dubai Financial Services Authority. The supervisory authorities observed that suspicious parties are committing fraud using a variety of creative methods. The absence of a regulatory license, lack of physical presence, fictitious promises and Ponzi schemes, subpar websites and communications, pressure to invest quickly, investments in unlicensed products (virtual assets), lack of consumer protection, regulatory disclosure lacking, lack of record of compliance, social engineering, fraudulent initial coin offering (ICO), fake wallets and exchanges, illicit use of virtual currencies, and the purchase or sale of freehold property/real estate are some of the most notable indicators of fraudulent companies. According to the Central Bank, the new recommendations will assist LFIs, designated non-financial companies and professions (DNFBPs), and VASPs in enhancing their operational and governance procedures. These will particularly oblige companies to be watchful of the numerous dishonest practices used by unlicensed virtual asset services companies, and they will direct them to review the FATF Report on Red Flag Indicators of Money Laundering and Terrorist Financing concerning virtual assets. Also, they will support businesses in effectively managing risks related to money laundering, funding of terrorism, and financing of proliferation. In accordance with FATF regulations, these procedures will guarantee that due diligence is carried out to find instances of faked documents and sanctions evasion. Additionally, the organizations must pinpoint the specific situations in which clients or investors actively seek out or frequently use unauthorized virtual asset service providers. In order to implement new reporting guidelines, the regulators requested that organizations thoroughly examine transactions in order to identify any new, high-risk patterns and modify their alerting and monitoring systems.