Imposition of fines to begin in July
85% of establishments in the country implement ultimate beneficial owner procedures while 15% fail to comply during the period granted for registration.
The Ministry of Economy (MoE) in cooperation with the concerned licensing authorities in the country, announced that it has begun implementing the first phase of administrative penalties on establishments that do not comply with ultimate beneficiary owner procedures.
In the first phase, written warnings are being issued to establishments that violate Cabinet Resolution No. (58) of 2020 on the Regulation of Ultimate Beneficial Owner Procedures, starting from July 1, 2021.
The Ministry added that the implementation of the 2nd phase of administrative penalties on establishments that fail to adopt the necessary measures to correct their status during this period will start on July 8, 2021. In this phase, fines stipulated by Cabinet Resolution No.53 of 2021 will be imposed on non-compliant establishments.
Furthermore, the Ministry stated that nearly 85 per cent of the establishments responded to the legal requirements and ensured their compliance with the relevant decisions and legislation by fulfilling the requirements of the ultimate beneficial owner procedures. These establishments have provided required data to the licensing authorities to which they administer, while the remaining 15 per cent failed to register during the registration period and provide the required data to the authorities.
In addition, the Ministry confirmed that the submission of ultimate beneficial owner data by licensed and registered establishments in the country to the licensing authorities is an obligatory legal requirement and that non-compliance in this regard will lead to the imposition of administrative penalties stipulated in Cabinet Resolution No. (53) of 2021. The penalties begin with the issuance of a written warning and if the non-compliance by an establishment continues, including but not limited to, a fine of AED 100,000, as well as additional administrative penalties such as the suspension of the license for a year or restrictions on the powers of the board of directors. Establishments can appeal against the punitive measures within the specified legal period of 30 days from the date of notification of the violation, in accordance with the decision.
The Ministry further explained that the detection of violations will be carried out through a desk inspection, which is the examination of an establishment’s records with the licensing authority to ascertain the extent of its commitment to providing the required ultimate beneficial owner data. If a violation is found during this examination, administrative penalties will be imposed, starting with the issuance of a written warning in the first stage. Apart from that, field inspections will also be conducted to detect violations, during which, visits will be conducted to the offices of the establishments within the framework of the inspection campaigns of the relevant authorities.
The Ministry of Economy called upon the establishments that have not yet adopted the required ultimate beneficial owner procedures to immediately prepare ultimate beneficial owner data and maintain it within their records in order to avoid violations. It called for the establishments’ cooperation with the relevant government entities in supporting the strengthening of the anti-money laundering systems, combating the financing of terrorism and the financing of illegal organizations, and strengthening the overall systems of governance, disclosure and transparency in the business environment. These measures enhance confidence in the national economy and supports the country’s efforts in providing a safe and stable environment for businesses and investments.
The ultimate beneficial owner procedures at least include 1) creating a record of the ultimate beneficial owner data and maintaining it within the establishment, 2) verifying the accuracy and validity of the data and updating it on an ongoing basis, 3) submitting the real beneficiary owner data to the licensing authorities through the designated channels.
The Ministry indicated that in the event of any changes to the ultimate beneficial owner data of an establishment, the establishment is required to notify the relevant licensing authority within 15 days of the change in order to avoid the administrative penalties resulting from that. The establishments shall also appoint a person residing in the country with whom the licensing authority can communicate with, in relation to the establishment’s basic information, ultimate beneficial owner data and other information.