FIU Quarterly Feedback

Report – Q4/2022
January 2023
UAE Financial Intelligence Unit

1
CONTENTS
INTRODUCTION.................................................................................................................................... 3
GLOSSARY ............................................................................................................................................ 3
SNAPSHOT OF Q4 2022: STATISTICAL INFORMATION .......................................................................... 5
Snapshot – STRs, SARs, AIF/AIFTs ........................................................................................................ 5
Snapshot – DPMSRs and REARs ........................................................................................................... 6
Snapshot - Disseminated Intelligence Packages and Typologies .......................................................... 8
CASE STUDY: BEHAVIORAL SUSPICIONS ............................................................................................... 9
Case Background .................................................................................................................................. 9
Case Outcome ...................................................................................................................................... 9
Case Takeaways ................................................................................................................................. 10
Suggested Actions based on the Case Takeaways .............................................................................. 10
FEEDBACK: GENERAL MATTERS RELATED TO goAML ......................................................................... 10
Keeping contact details updated in goAML ........................................................................................ 11
Usage of Incorrect Report Types ........................................................................................................ 11
FOCUS – REASONS FOR REPORTING (RFRs) ........................................................................................ 11
FEEDBACK TO THE REAL ESTATE SECTOR ........................................................................................... 12
Weak suspicion identification ............................................................................................................ 13
Usage of incorrect report types ......................................................................................................... 13
Quality of STRs/SARs ......................................................................................................................... 13
FIU COMMUNICATION CHANNELS ..................................................................................................... 14

2
 INTRODUCTION

This document aims to provide feedback on different areas, including the reports submitted by
Reporting Entities (REs) to the FIU during the quarter in scope, highlighting issues noticed and
areas of possible improvement.

The report also acts as a means to share snapshots of the quarter in terms of reporting, quality
and disseminations. The FIU also highlights case studies that include important information and
lessons for all REs that may be used to enhance policies, procedures, and internal controls.

This document is circulated to all Reporting Entities and Supervisory Authorities registered on
goAML quarterly.

GLOSSARY

Terms Description

AIF Additional Information File

AIFT Additional Information File with Transactions

CDD/EDD Customer Due Diligence/Enhanced Due Diligence
CSP Company Service provider
DNFBP Designated Nonfinancial Businesses And Professions
DPMS Dealers in Precious Metals and Stones
DPMSR Dealers in Precious Metals and Stones Report
FI Financial institution
FIU Financial Intelligence Unit
LEA Law Enforcement Authority
RE Reporting Entity
REAR Real Estate Activity Report
RFR Reason for Reporting

3
RBA Risk Based Approach
SA Supervisory Authority
SAR Suspicious Activity Report
UBO Ultimate Beneficial Owner
VASP Virtual Assets Service Provider

4
 SNAPSHOT OF Q4 2022: STATISTICAL INFORMATION
Snapshot – STRs, SARs, AIF/AIFTs
The numbers of Suspicious Transaction Reports, Suspicious Activity Reports, and AIF/AIFTs
being reported by REs continue to show a healthy increase throughout the year. The total
reports received by the FIU from all sectors of the types highlighted in the below graph
increased from 10,890 during Q3 2022 to 13,881 reports during Q4 2022. This is a significant
increase of 27% quarter on quarter.

12,000
10,093
10,000
7,973
7,558
8,000

5,710
6,000

4,000
2,088
2,000 1,466 1,700 1,451
1,068 1,284 964 1,014

-
STR SAR AIF/AIFT

Q1 2022 Q2 2022 Q3 2022 Q4 2022

Comparing total STRs/SARs between 2022 and 2021, there has been an increase of 80% in
reports received from REs with 80% of all reports coming from the banking sector and 95% of
reports coming from the FI sector.

That said, sector-wise data highlights that reporting is increasing across most sectors in line with
recent changes to reporting requirements, the inclusion of some sectors under the AML regime
and the better understanding of those sectors in terms of their risks and reporting obligations.

It is important to highlight that although the bulk of reports are raised by banks, the year on
year increase of reports being received from banks was 81% between 2021 and 2022. The top
five sectors however with the most dramatic increases in reporting in 2022 when compared to

5
2021 were as follows:

% of Increase in STR/SAR reporting

Sector
(2022 compared to 2021)
Real Estate Agents and Brokers 592%
Trusts and Company Service Providers 219%
Dealers in Precious Metals & Stones 177%
VASPs 125%
Finance Companies 122%

The UAE FIU welcomes such steps taken by REs to continue growing their reporting in line with
the risks that they manage and urge specific sectors to make sure their internal processes take
into account both the general feedback as well as sector specific feedback that the FIU shares
via this report on a quarterly basis. This feedback can assist REs in making sure that they apply
a unified level of quality to their reports along with any and all guidance from various
Supervisory Authorities to their licensed entities.

Snapshot – DPMSRs and REARs

The FIU has also seen a huge increase in the filing of Dealers of Precious Metals and Stones
Report and the Real Estate Activity Report, the latter having gone live in July 2022.

Specific to DPMSRs, we have seen a healthy increase in reporting by this important sector
throughout the year with a similar number of reports being raised for both Q3 and Q4 2022.
The normalizing of the reporting numbers for the past 2 quarters could be attributed to the
enhanced level of understanding at the RE’s side to their reporting obligations.

In total the number of DPMSRs during 2022 was in excess of 350,000 reports.

6
 Dealers in Precious Metals & Stones Reports
92,000 91,251 90,844
90,000

88,000 86,632
86,000

84,000
82,024
82,000

80,000

78,000

76,000

Q1 2022 Q2 2022 Q3 2022 Q4 2022

These reports are invaluable in conducting strategic level analysis to help ascertain trends and
typologies which are in turn shared with REs. In addition these reports have assisted in
highlighting certain aspects of cash and precious metals movements that were part of various
disseminations to LEAs. REs are reminded to continue raising such reports in line with SA
guidance.

Real Estate Activity Reports

300
238

200

100 77

Q3 2022 Q4 2022

Although a newly released report, the REAR has seen great usage by the Real Estate sector
whereby the FIU has noted an increase of over 200% during Q4 when compared to Q3 2022. As
with the DPMSRs, the REARs are invaluable for the FIU’s strategic analysis going forward into
2023. REs are asked to continue using this specialized report in line with the guidance provided
both by specific SAs and by the FIU.

7
Snapshot - Disseminated Intelligence Packages and Typologies

During Q4 2022 the UAE FIU disseminated Intelligence Packages to LEAs and other stakeholders
that included 752 STRs, SARs and other report types. This was an increase of 55% when
compared to those reports that were part of disseminations during Q3 2022. The
disseminations included intelligence received from various sectors and were disseminated to
LEAs throughout the UAE.

When it comes to typologies of disseminated intelligence packages during Q4 2022, the UAE
FIU’s disseminations to LEAs and other stakeholders continued to focus on higher risk
typologies in line with the focuses at the national level. The disseminated intelligence packages
during Q4 2022 included the below typologies:

Typologies Percentage
Professional/third party money laundering or networks of third
32%
party laundering.
Fraudulent Transfer (Domestic & International Fraud Recall) 14%
Laundering the proceeds of drugs 13%
Trade based money laundering. 13%
Linked to Sanctioned Parties/Countries 8%
Possible Terrorist Financing 8%
Case involved complex ML methodologies and/or
businesses/companies in higher risk sectors, Cash and PMS 5%
smuggling
The laundering in UAE of proceeds from foreign predicate offences
4%
(including direct and indirect tax crimes)
Other Typologies including possible Money Laundering through
3%
unlicensed Hawala Activities

It is worth mentioning that a large amount of the information that ends up in disseminated
intelligence packages originates from STRs/SARs or other types of reports. Thus information

8
received from REs is extremely important in the building of intelligence that is used by both Law
Enforcement Authorities and the Public Prosecution.

CASE STUDY: BEHAVIORAL SUSPICIONS

The UAE FIU has noted that DNFBPs have increased their awareness when it comes to possible
risks that are may be unique to their specific sector. For example, when it comes to Company
Service Providers, it has been noted that these REs are not only raising STRs/SARs but also
providing an increasing quality of information where they are linking the dots of various
entities, various suspicious activities and even activities that are happening in different
branches of their business. This is a welcomed way of managing risks and identifying suspicions.
The following case study highlights this.

Case Background
The genesis of the case was in the form of an SAR that the UAE FIU received from a DNFBP (a
Company Service Provider). The SAR included information on suspicions that were noted by the
RE in regards to individuals (now, suspects) who visited one of their overseas branches. The
reason for the visit was to enquire about the procedures related to moving a company
registered in UAE to a European country. The suspects presented themselves as being the UBOs
of the said company. They had also stated that they intended to receive hundreds of millions
of dirhams into their company’s account for the purpose of trading in luxury cars.

The report also mentioned the existence of negative media against the subjects, that was
identified through the due diligence process followed by the RE. The negative media remarks
identified by the reporting entity highlighted that the subjects are under investigation overseas
for various crimes including suspicion of tax evasion through the trade of luxury cars.

Case Outcome
The case highlights many concerns and red flags indicating that suspects may have been
providing professional money laundering services by the creation and manipulation of a shell
entity with a front man being the 100% owner of the entity while the FIU’s investigations and
analysis revealed a pattern of UBO concealment.

9
Furthermore, based on intelligence obtained through co-operation between the UAE FIU and
counterpart FIU’s in linked jurisdictions, it was concluded that the front man is the registered
owner of multiple entities overseas suspected of being shell companies.

The FIU conducted an exhaustive funds tracing exercise based on the transactions of the
company’s UAE bank accounts and concluded that the source of funds were other shell entities
registered overseas under the name of the same front man.

The case has since been disseminated to Law Enforcement for criminal investigation.

Case Takeaways
This case is being highlighted as it offers many lessons for all stakeholders involved. Below are
some key takeaways from this case:

1. This case highlights the importance and usefulness of suspicions that can arise based on
the daily business of a CSP.

2. This case shows the significance of behavioral reasons of suspicion in identifying criminal
activates. Especially when the act is related to a higher-risk business (The dealing in
luxury cars) or jurisdictions (Free Zones).

Suggested Actions based on the Case Takeaways

Reporting entities, including DNFBPs are encouraged to further improve their EDD procedures
so that suspicions can be looked into and genuine suspicions raised bearing in-mind the risk of
tipping-off and clients personal information’s confidentiality. In addition, DNFBPs that do not
participate in transactions on behalf of their clients are encouraged to emphasize on the
behavioral acts and conducting open-source searches to identify suspicions.

FEEDBACK: GENERAL MATTERS RELATED TO goAML

10
Keeping contact details updated in goAML
The UAE FIU continues to notice that REs are not keeping the contact information of compliance
officers and their team members updated in goAML. Some of the specific issues that have been
noted include:

1. Details of ex-staff not being removed from goaml once they leave the team, section or
even entire organization.

2. Details of current staff not being inputted correctly whereby contact numbers might
include incorrect digits or are left blank.

The FIU cannot stress enough the importance of being able to contact the correct staff at the
Reporting Entity side. Some cases are live and require quick co-operation, especially when
possible actions, such as funds freeze are being considered by the FIU, LEAs or PPs.

All REs are urged to undertake an exercise to make sure that all contact details are available,
correctly filled and updated in goAML. REs are further asked to make sure that keeping goaml
details updated is a normal part of their internal procedures when staff movement takes place.

Usage of Incorrect Report Types

Although in general REs have become more accustomed to the various reports that they should
raise and when to raise them, the FIU still notes some issues in this regard specifically affecting
the DPMS sector.

This issue was discussed in detail in the Q3/2022 feedback report issued in October 2022.
Although there is an increase in the awareness of this matter, and the FIU notes that it has
become less prevalent, the occurrence does happen enough for the issue to be re-iterated once
more.

REs are urged to follow the guidance from both the FIU as well as Supervisory Authorities with
regards to the raising of appropriate report types that fit the need of the case and situation.

FOCUS – REASONS FOR REPORTING (RFRs)

11
As all REs are aware a key input into the report raising process are the RFRs that are made
available. These are in essence red flags that REs should choose and tell the FIU in a systematic
way what the red flags of the case are and why the report is being raised.

The RFRs are used by the FIU to help automate the application of a risk based approach when
it comes to reviewing, triaging and analyzing reports that are received.

The risk based approach employed by the UAE FIU may bear some resemblance to the
application of a RBA in some REs, specifically FIs whereby various risk parameters are assigned
risk ratings and a cumulative risk level is assigned to every report received.

The RFRs in goAML are directly connected to the FIU’s automated risk matrix and so the better
the input the better the output. This means that the more accurate REs are in choosing correct
RFRs, the more accurate the risk rating of that specific report will be and the sooner it will be
prioritized.

This topic is being highlighted as a topic of focus as the FIU continues to receive reports
whereby, upon analysis, have been tagged to incorrect RFRs. This may lead to the FIU focusing
on reports that, due to the incorrectly chosen RFRs, are tagged as higher priority when it fact
post analysis, are found to be of a lesser priority when compared to others.

REs are asked to make sure that staff are aware of the importance of all aspects of the STR/SAR
raising, specifically the ability to choose RFRs that fit the reality of the suspicions being reported.

FEEDBACK TO THE REAL ESTATE SECTOR

The UAE FIU recently undertook an exercise that aimed at looking into the quality of reports,
mainly STRs and SARs, that are raised by REs from the Real Estate sector. Although the number
of reports being raised has increased almost 600% during 2022 when compared to 2021, the
aim was to see if the reports included any patterns in terms of quality that might shed some
light on the level of understanding of the sector with regards to the reporting obligation. The
findings are provided as guidance to the sector below:

12
Weak suspicion identification
While reviewing reports raised by the real estate sector, the UAE FIU found that some STRs are
raised without fully exploring the possible grounds for suspicion. Not understanding the
suspicions can reduce the quality of the raised STR and what the FIU can actually do with the
information or lack thereof.

REs are expected to conduct a level of EDD whereby genuine suspicions can be identified and
reported to the FIU.

Usage of incorrect report types

It has been noted that in some instances the real estate sector is mixing up the requirements
of raising STRs/SARs with those of the REAR. Specifically instances have been seen where STRs
have been raised to only include the fact that a transaction took place above the AED 55,000
threshold requiring a REAR to be raised. No other suspicions were noted in those STRs.

REs are reminded that the raising of correct report types using accurate and full information is
paramount to the fight against illicit activity and failure to do so can mean that focus is not
being used for the most pressing of cases.

Quality of STRs/SARs
The UAE FIU has noted that some reports being raised by the Real Estate Sector include write-
ups of the cases that are not clear, too brief or do not highlight what the actual suspicions are.
In some cases the STR/SAR is missing important details such as:

1. The name of the main subject that the report is being raised against.

2. Details of the suspicion(s) being reported.

3. Inclusion of all supporting documents such as Identification documents, contracts,

copies of payment methods, KYC documents, and CDD/EDD documents.

4. A detailed account of the issue, why it is suspicious and what has the RE done, in
chronological order if possible.

The FIU also noted that often times the STR write-ups are very generic in terms of not

13
mentioning what triggered the suspicion nor investigation methodologies used such as
mentioning ways of communication with the subject and questions asked or documentation
requested.

A clear summary of the case, clear suspicions, involved parties, actions taken and supporting
documentation are all expected to be part of the raised STR/SAR. Having this submitted right
the first time will lead to faster turnaround time for the possible investigation to take place and
will remove the need for the FIU to revert back to the RE on quality concerns.

FIU COMMUNICATION CHANNELS

REs must use the following channels of communications depending on the below stated
purposes:
S.N. Communication channels Purposes
1 [email protected] For goAML related technical queries such as the
use of systems, user support, troubleshooting,
login issues… etc.
2 [email protected] For any subject matter advice on a situation for
which a report is not already filed.

3 Message Board on goAML web For the queries related to any report submitted
portal on goAML* including requests to prioritize a
specific report deemed to be time sensitive or of
higher urgency.
4 [email protected] For any queries related to AML/CTF laws,
Regulations, Guidance and Best Practices

 *While communicating via goAML Message Board, kindly use the most relevant
‘Message Type’ and ensure to include the Web Reference Number of the report in
the Subject of the message.

14