ADGM Launches Inaugural Money Laundering and Terrorist Financing Risk Assessment Report

ADGM RA 31/05/2023

Abu Dhabi Global Market (ADGM), the international financial centre of the capital city of the United Arab Emirates, is pleased to announce the launch of its inaugural Money Laundering and Terrorist Financing (ML/TF) Risk Assessment of ADGM Legal Persons and Arrangements Report (LPA Report). This announcement reaffirms ADGM's commitment to combating financial crime and underscores its dedication to maintaining an effective Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) system within its jurisdiction.

ADGM's comprehensive legal framework encompasses 16 distinct Legal Person and Arrangement (LPA) types. Recognising the significance of understanding the specific ML/TF risks associated with each LPA type, ADGM has conducted a rigorous assessment exercise, resulting in the development of a highly detailed risk assessment model.

The in-house scientific model and methodology devised by ADGM incorporates best practices derived from the Financial Action Task Force (FATF) recommendations and benchmarking against other key international bodies and jurisdictions such as the European Commission, the United Kingdom, Luxembourg, and Ireland. This model employs a systematic approach that evaluates threats, inherent vulnerabilities, the probability of exploitation, and the effectiveness of mitigating measures for each LPA type.

The ADGM LPA risk assessment findings are designed to supplement and support the UAE's national Legal Persons and Arrangements risk assessment (UAE LPAs). This collaborative effort strengthens the overall AML/CFT framework and ensures a granular understanding of the ML/TF risks associated with ADGM LPAs. Stakeholders, including Financial Institutions (FIs) and Designated Non-Financial Businesses and Professions (DNFBPs), can utilise these insights to enhance their risk assessments when engaging with ADGM entities.

"We are steadfast in our commitment to combat financial crime and uphold the highest standards of integrity," stated H.E. Ahmed Jasim Al Zaabi, Chairman of the Abu Dhabi Department of Economic Development and ADGM. "The launch of this Money Laundering and Terrorist Financing (ML/TF) Risk Assessment of ADGM Legal Persons and Arrangements Report represents a significant stride forward in fortifying our AML/CFT framework and aligning with the UAE's national risk assessment endeavours. This assessment not only enhances our granular understanding and detailed knowledge of risks specific to each ADGM Legal Person and Arrangement type but also fosters stronger collaboration with regulated entities, regulatory bodies and law enforcement agencies."

The insights gained from this assessment will empower ADGM, especially registry staff, to conduct more effective risk assessments of registration applications and to monitor the compliance of existing firms. This will also safeguard the continued integrity of ADGM's financial ecosystem through enhanced policies, procedures, and controls to manage ML/TF within its jurisdiction. Furthermore, this assessment will be reviewed and updated periodically with the aim of using the findings as a basis to strengthen knowledge and insights on ML/TF risks and ADGM LPA vulnerabilities.

ADGM's commitment to addressing ML and TF risks aligns with its role as a responsible International Financial Centre and reinforces its dedication to align with international standards and the international financial community.

A detailed walkthrough of the LPA Report, including the risk assessment methodology and findings, as well as a panel discussion featuring leading experts from UAE government and industry is scheduled for Thursday 8 June at ADGM and entitled, ‘Understanding the Abuse and Risks of Legal Persons and Arrangements’. Registration to attend can be made here.

To view the LPA Report, please click here.