Sanction Screening in the UAE: What to Do if a Customer is Listed

As a global financial hub, the UAE follows strict anti-money laundering (AML) regulations, in line with both local laws and international standards like the Financial Action Task Force (FATF) guidelines. Financial institutions in the UAE are required to have strong sanction screening systems in place to identify and block transactions involving sanctioned individuals, entities, or countries.

What is Sanction Screening in the UAE?

UAE Licensed financial institutions (LFIs) must regularly screen customers, transactions, and associated entities against applicable sanctions lists, ensuring compliance before entering business relationships or executing transactions.

“ Appropriate systems must be introduced for real time screening, as part of the KYC process, on all parties involved in a transaction against all applicable sanction lists (i.e. the UN sanction lists (“UN Consolidated List’), the UAE Cabinet local list (“Local Terrorist List”)). Screening must be conducted prior to the execution of any transaction.” - According to the Central Bank of the UAE.

The efficiency of sanction screening in the UAE depends on the accuracy and completeness of customer and transactional data, which is derived from strong Customer Due Diligence (CDD) and Know Your Customer (KYC) measures.

Also, compliance teams should address any data gaps or inaccuracies in customer and transactional information. Institutions should also conduct sample testing of payment messages to ensure adherence to AML compliance sanction screening standards.

4 Elements of an Effective Sanctions Screening Program in the UAE

As per Article 21.2 of Cabinet Decision 74, institutions should have structured oversight and quality assurance mechanisms to validate the accuracy and effectiveness of their screening processes, reinforcing a strong compliance culture from the top down.

• Risk-Based Framework: LFIs must continuously refine their sanctions screening process and mechanisms in response to changing risks, regulatory updates, or operational changes.

• Integration with Broader Compliance Efforts: Screening results should inform risk management strategies, including enhanced due diligence for high-risk customers.

• Active Oversight: Senior management and the board must oversee and enhance sanctions screening processes, addressing any inefficiencies, system failures, or staff-related issues while ensuring alignment with the institution’s risk appetite.

• Training and Awareness: Employees responsible for sanctions screening should be well-trained and aware of AML compliance sanction screening risks.

Sanctions Check vs. Name Screening

While both terms are related, they serve distinct functions a) sanctions check involves verifying whether a person or entity is listed on official sanctions lists, such as those maintained by the United Nations or the UAE government, and b) name screening is a broader process that includes checking names against various watchlists, including sanctions lists, politically exposed persons (PEP) lists, and other databases to identify potential risks.  

Who Should Be Screened?

All natural and legal entities, including customers, beneficial owners, and business partners, must be screened for sanctions.

In terms of frequency of sanction monitoring, regular updates are essential to maintain compliance, so implementing real-time screening to promptly detect matches as sanctions lists are updated.

How is Sanction Screening in the UAE Conducted?

Before establishing a business relationship, financial institutions must screen potential clients against the UAE Local Terrorist List and the UN Consolidated List. It is important for FIs and designated non-financial businesses and professions (DNFBPs) to coduct sanction screening prior to the execution of any transaction. Sanction screening in the UAE has four main obligations on all persons, natural or legal entities, that is 1) subscribe, 2) Screen, 3) Apply Targeted Financial Sanctions, and 4) Report.

1. Financial institutions must register with the Executive Office of the Committee for Goods Subject to Import and Export Control to receive automated notifications of updates to the UN Consolidated List and the Local Terrorist List.

2. Institutions are required to screen their customers, potential customers, and beneficial owners against these lists regularly to identify any matches.

3. Upon identifying a match, institutions must freeze all funds and assets associated with the designated individual or entity within 24 hours and without prior notice. (See below for more details)
   Also, no person or company is allowed to provide financial assistance or services, directly or indirectly, to individuals or entities listed on sanctions lists (unless a request is submitted and approved in writing by the Executive Office for Control & Non-Proliferation or the relevant authority).

4. FIs, DNFBPs, and VASPs must report any freezing or suspension actions they take after finding name matches to the goAML platform.

UAE’s Sanctions Regulatory Framework

The UAE has established comprehensive sanctions screening regulations to enforce sanctions and combat money laundering.

1. Regulatory Authorities and Their Roles

1. The CBUAE oversees FIs, ensuring compliance with AML and CFT regulations. It provides guidance on implementing targeted financial sanctions (TFS) and monitors adherence to these measures.

2. The EOCN is responsible for implementing UNSCRs related to the suppression and combating of terrorism, terrorist financing, and countering the financing of the proliferation of weapons of mass destruction. This includes managing the UAE's sanctions lists and coordinating with other authorities to enforce these measures.

3. The UAE’s FIU analyzes suspicious transactions and activities that may involve financial criminal activities.

2. Regulatory Requirements for Sanction Screening in the UAE

In accordance with Article 21.2 of Cabinet Decision 74, LFIs are required to conduct sanctions screening regulations by consistently conducting sanctions screenings on their databases and transactions.

These screenings must occur regularly, as well as promptly upon receiving notifications of updates or changes to these lists. The screening process must cover customer databases, parties involved in transactions, potential customers, beneficial owners, and anyone with whom the LFI has direct or indirect ties.  

Furthermore, LFIs are obligated to conduct screening on their customer database prior to engaging in any transactions or establishing business relationships to ensure that individuals or entities are not listed on either the UN Consolidated List or the Local Terrorist List.

3.UAE Regulations on Sanctions Evasion Prevention

LFIs in the UAE must also take steps to prevent any actions that could facilitate the evasion of sanctions. As part of this, LFIs are prohibited from participating in activities that might be linked to sanctions evasion schemes, such as informing customers or counterparties in ways that help them avoid detection or providing inaccurate or incomplete data to counterparties or authorities responsible for imposing sanctions.

What is the Importance of Sanction Screening?

Sanctions have different types and these types of sanction monitoring serve as restrictive measures imposed by countries or international organizations to influence the behavior of a state, group, or individuals, often in response to actions that threaten international peace, security, or human rights violations.

4 Types of Sanctions

1. Economic sanctions limit trade and financial activities for political or security reasons.

2. Diplomatic sanctions are measures that reduce or stop diplomatic relations, such as recalling ambassadors or closing embassies, to express disapproval.

3. Travel and sports restrictions stop individuals from entering certain countries or taking part in international events.

4. Military sanctions are restrictions that prevent a country from buying weapons or military equipment.

Consequences of Being Sanctioned

When an individual or entity is sanctioned, they may face asset freezes, travel bans, and restrictions on conducting business internationally. These measures can severely limit access to financial resources, technology, and markets, leading to economic hardship and isolation.

Real-Life Example: Sanctions on Russia

One of the most significant modern examples of sanctions is the global response to Russia’s invasion of Ukraine in 2022. In reaction to the war, The U.S. and EU froze Russian Central Bank assets worth hundreds of billions of dollars, restricting Russia’s access to its foreign currency reserves.

The UAE has not imposed its own sanctions against Russia following the 2022 invasion of Ukraine. However, as a member of the United Nations, the UAE is committed to implementing UN Security Council Resolutions, including those related to sanctions regimes. The UAE has established frameworks to enforce targeted financial sanctions, particularly concerning the suppression and combating of terrorism and the proliferation of weapons of mass destruction.

What to Do if a Customer is Listed?

If a customer or potential customer is not listed on the sanctions list, no further action is required, aside from ongoing due diligence.

However, if it is a potential customer and they are found to be a confirmed match (i.e., all identifiers match the sanctions lists), you must reject the customer and report the match by submitting an FFR (the Fund Freeze Report) to the goAML platform within five business days.

If the match is only partial (i.e. some identifiers match but it’s unclear if the customer is fully listed), you should report the match by submitting a PMNR to the goAML platform, suspend all transactions immediately and without prior notice, and wait for further instructions from the UAE Financial Intelligence Unit (FIU).

For an existing customer, if there is a confirmed match, you must freeze their assets within 24 hours and report the match by submitting an FFR to the goAML platform within five business days. If it is a partial match, follow the same process as for a partial match with a potential customer: report it, suspend transactions, and wait for instructions from the UAE FI.

How to identify a match?

Natural Person: Name, aliases, date of birth, nationality, ID or passport details, and last known address.

Legal Entity: Legal name, aliases, registration address, branch addresses, Tax Identification Number (TIN), directors or beneficial owners, and any other relevant information.

Screen Sanction Lists in the UAE with FOCAL

FOCAL helps businesses in the UAE identify high-risk customer entities through continuous screening against over 1,300 sanctions, PEP, and RCA. With FOCAL, you can ensure compliance with UAE sanctions requirements, leveraging both country-specific and international sanctions data.

The platform keeps its sanctions database up-to-date and performs screenings in under a second, allowing you to stay ahead of compliance needs and protect your business from exposure to sanctioned entities, groups, or individuals.

To learn more and see how FOCAL can support your business, book a demo today and meet with one of our experts.