In the UAE’s rigorous regulatory environment, a single transaction with a sanctioned individual or entity can have catastrophic consequences, including multi-million dirham fines, imprisonment, and irreversible reputational damage. Targeted Financial Sanctions (TFS) are not an abstract concept for a compliance department to consider; they represent a strict, zero-tolerance obligation for every business on the front line. This post provides a clear, step-by-step checklist to help your company understand and implement the UAE’s TFS requirements, from initial screening to immediate action and reporting.
The Legal Foundation: What is Cabinet Resolution No. 74 of 2020?
The cornerstone of the UAE’s TFS framework is Cabinet Resolution No. 74 of 2020. This critical piece of legislation establishes the legal mandate for businesses to implement financial sanctions in line with United Nations Security Council (UNSC) resolutions and creates the UAE’s own national terrorist list to address domestic threats.
Overseeing the implementation of this framework is the Executive Office for Control and Non-Proliferation (EOCN), the national body responsible for guiding and enforcing TFS compliance across the country.
Your Screening Obligations: The Who, What, and When
Effective TFS compliance begins with a robust and continuous screening process. It is not enough to simply check a list once; you must integrate screening into the fabric of your business operations.
The Two Critical Lists
Your screening process must, at a minimum, cover two primary sanctions lists:
- The UN Consolidated List: This is the master list issued by the UN Security Council, containing the names of individuals and entities subject to sanctions by UN member states worldwide.
- The UAE Local Terrorist List: This list is issued and maintained by the UAE Cabinet and includes individuals and entities identified as posing a threat to the nation’s security.
Who and What to Screen
Screening is not limited to new customers at the onboarding stage. To be compliant, you must screen a wide range of parties associated with your business, including:
- Potential customers before establishing a business relationship.
- The entire existing customer database.
- The ultimate beneficial owners of your corporate clients.
- All parties to a transaction (e.g., buyers, sellers, agents, guarantors).
- Directors and senior management of corporate clients.
When to Screen
Sanctions lists are dynamic and can change at any moment. Relying on an outdated list is a major compliance failure. Screening must be a continuous process. The most critical step is to register on the EOCN’s automated notification system. This will ensure you receive real-time email alerts whenever the UN or UAE lists are updated, allowing you to screen your databases immediately against the new designations.
The Match Protocol: Your Immediate Actions Upon Finding a Sanctioned Party
Identifying a confirmed match with a sanctioned party triggers a series of immediate and critical obligations. The UAE’s TFS framework is designed for speed and silence, requiring a pre-planned internal protocol that your staff can execute flawlessly. This process is less about the technology of screening and more about the human element of a robust, confidential, and rapid internal response.
- Step 1: Freeze Without Delay (and Without Tipping Off): This is your most important duty. Upon confirming a match, you must freeze all funds and other assets belonging to the sanctioned person immediately, and certainly within 24 hours. Crucially, this action must be taken without notifying the customer or any other party. “Tipping off” a sanctioned individual that they are the subject of a freeze is a serious offense in itself.
- Step 2: The ‘No De Minimis’ Rule: The obligation to freeze is absolute. There is no minimum value threshold. All funds and assets, no matter how small, must be frozen without exception.
- Step 3: Prohibit Services: Your obligation extends beyond just freezing assets. You must also prohibit making any funds, financial services, or other economic resources available, directly or indirectly, to the sanctioned party. This includes activities like managing their business, facilitating property transfers, or managing their securities.
- Step 4: Report to the Authorities: After freezing the assets, you must promptly report your actions to the UAE Financial Intelligence Unit (FIU). This is done by filing a Confirmed Name Match Report (CNMR) or a similar report via the goAML platform, typically within five business days of taking action.
The Consequences of Failure
The penalties for non-compliance with TFS obligations are severe and reflect the gravity of the offense. A failure to meet these requirements can result in :
- Imprisonment for responsible individuals.
- A fine of no less than AED 50,000 and no more than AED 5,000,000.
Conclusion: Making TFS Screening a Business Reflex
TFS compliance is a high-stakes, non-negotiable aspect of doing business in the UAE. The key to success is to move beyond periodic checks and build a system where screening is a constant, reflexive action. Subscribe to the EOCN for real-time updates, screen all relevant parties continuously, and ensure your team is trained on the critical “freeze, don’t tell, then report” protocol.
Your business is on the front line of protecting the UAE’s financial system. Contact DPMS Global to implement a robust sanctions screening framework and shield your business from severe legal, financial, and reputational risks.