Strategic Analysis Report on the Abuse of Legal Entities

UAE is a country with diverse and multicultural population with a secure and stable economy and strong institutions. As such, the UAE has an accessible financial system, a strategic geographic location between Asia, Europe, the Middle East, and Africa and is a well-developed international trading and financial hub.

There are over 500,000 Legal Entities (LEs) established in the UAE. While LEs are generally established for licit purposes, the analysis suggests that they are still vulnerable and can be abused for illicit purposes, considering some gaps in the identification of the Ultimate Beneficial Ownership (UBO), the extensive use of cash and the recurrence of complex international schemes.

This report provides an overview of the main sources underlying the strategic analysis related to Legal Entities (LEs) and the link between the abuse of LEs and ML/TF schemes, including some of the key features, such as the types of transactions and activities carried out by LEs, the volume of transactions, and the main Jurisdictions involved.

It also emphasizes the possible shortcomings related to the quality of the STRs and SARs in connection with the current list of indicators or   ‘Reason For Reporting’.

It considers possible links between the abuse of LEs and other relevant elements and risk factors, such as:

• Identification of Ultimate Beneficial Owner (UBO);
• Trade Based Money Laundering (TBML);
• Complex ownership structure;
• Political Exposed Persons (PEPs).

This report includes risk indicators and guidance for reporting entities to effectively detect and report cases of possible abuse of legal entities for ML/TF and other illicit purposes.

Click here to read the full report.