Countering financial crime – A proactive stance

What is mutual legal assistance?

MLA is a system by which nations agree to cooperate to provide assistance with an investigation or prosecution of criminal offences. Requests for MLA are made through a formal international Letter of Request by relevant authorities. 

Under the MLA Treaty, MLA requests can be made by authorities who are authorised under the domestic law to do so. All requests have to be made through diplomatic channels and further, where appropriate, via ‘Central Authorities’ i.e. the Secretary of State in the UK (or in urgent cases Interpol) and, in the UAE, via the Ministry of Justice. 

MLA can be used for a variety of types of assistance, which includes (but is not limited to):

• requesting material that cannot be obtained locally – for example testimony or statements; providing documents, records or other evidentiary material; obtaining judicial orders for the production of documents, search or seizure etc;
• freezing and confiscating assets; 
• investigating the proceeds of crime.

Many countries have MLA treaties and the UK in particular has over 40 such treaties in place at the moment, including the 2008 MLA Treaty with the UAE that we discuss in this article. The UAE has also issued guidance on International Judicial Cooperation in Criminal Matters¹. 

Recent English case law, for instance KBR Inc v The Director of the Serious Fraud Office [2021] UKSC 2, has emphasised that MLA is the preferred and intended method for UK authorities to use to obtain information from international companies. It is therefore critical for businesses, and individuals, to understand the scope of MLA between jurisdictions if they become involved in a criminal investigation.

MLA between UAE and the UK

In April 2020, the intergovernmental Financial Action Task Force (FATF), a global financial crime watchdog, published its Mutual Evaluation Report on Anti-Money Laundering (AML) and counter-terrorist financing measures in the UAE. It placed the UAE on a “grey list”, which is for jurisdictions under increased monitoring. 

In response to this, several new laws and regulations were passed to emphasise the UAE’s commitment to combatting financial crime. For example:

Beneficial ownership regime 

In August 2020, Cabinet Resolution 58 of 2020 introduced new requirements for all entities licensed in the UAE (with the exception of entities registered in the ADGM, DIFC or wholly government owed) to prepare, maintain and file with the relevant licensing authority a register of ultimate beneficial owners. 

Specialist Anti-Money Laundering Court to combat financial crime

In August 2021, it was announced that the Dubai Courts had established a specialist court to combat money laundering and financial crime. This development followed the establishment, in February 2021, of the Executive Office of AML & Countering the Financing of Terrorism (CFT) (the Executive Office) to improve the national and international coordination and cooperation on money laundering and terrorist financing issues at both policy and operational levels. 

Notably, the Executive Office has established a public-private partnership committee that creates a channel for communication with the major players in the UAE’s finance and banking industry to encourage a more proactive approach to combatting financial crime and understanding what the latest developments are. For example, both the finance and banking sectors have increasingly relied on the use of technology to conduct their day-to-day business activities and its increased prevalence has led to technology being used to commit financial crime, as well as to disguise illegal conduct as legitimate. The Executive Office has started deploying its own advanced software, with systems such as goAML (a suspicious transaction reporting system first developed by the United Nations Office on Drugs and Crime), Fawri Tech (a system that integrates and shares details on financial crime and enables federal and local authorities to respond effectively) and IEMS (the UAE Financial Intelligence Unit’s integrated enquiry management system) being incorporated into its strategy to effectively address the misuse of new technologies.

Intelligence Sharing

In September 2021, the UK and the UAE signed a new agreement called the UK-UAE Partnership to Tackle Illicit Financial Flows. This agreement is the first of its kind and includes a pledge to improve intelligence-sharing. 

DFSA Whistleblowing Regime

On April 7, 2022 changes to the DIFC Regulatory Law 2004 and the Dubai Financial Services Authority’s (DFSA) Rulebook came into force introducing a new whistleblowing regime to ensure a more consistent approach to reporting and recording misconduct by DFSA-regulated entities. Every regulated entity must now:

• have appropriate and effective written policies and procedures in place to a) facilitate the reporting of regulatory concerns by whistle-blowers and b) to assess and, where appropriate, escalate regulatory concerns reported to it; and 
• maintain a written record of each regulatory concern reported to it by a whistle-blower, including details of the concern and the outcome of its assessment. 

Extradition

There has been an extradition treaty in force between the UAE and the UK since 2008, however the UAE has more recently signed a host of extradition treaties, including with Denmark in March 2022. These developments signal a move to increased global cooperation, not just between the UAE and the UK, but on a global scale.

Reuters and other news outlets, for example the UAE’s state news agency WAM, have recently reported, in April 2023, that a UAE official confirmed that the UAE has approved 30 extradition requests so far in 2023 alone and that its intention is on honouring ‘the letter and spirit’ of their extradition and MLA treaties². Recent extraditions to the UK include that of Leon Cullen, a criminal gang leader, who was successfully extradited from the UAE to the UK in 2021.

These changes have been brought in order to bring the UAE into line with global best practices in the financial crime and regulatory fields and advance the UAE’s wish to be recognised as a leading financial hub.

What does this mean for individuals and companies based in the UAE?

Individuals in the UAE (and more generally across the world) should remain conscious that being based outside the UK’s jurisdiction does not render them immune from prosecution by UK authorities and that the UAE government are more likely than ever to cooperate with requests for MLA and extradition. The extra-territorial nature of certain offences, such as those set out in the Bribery Act 2010, also makes it possible for individuals to commit offences under English law if any act or omission which forms a part of the offence took place in the UK or if the offender otherwise has a “close connection” to the UK, even if the relevant individual is not based in the UK.

Companies based in the UAE may also be subject to requests for MLA from UK authorities. In particular, UK authorities will request MLA when they require information from foreign companies who do not carry on business or more generally have a presence in the UK. Given the increasing cooperation between the UAE and the UK, companies based in the UAE should remain vigilant that they may be required to cooperate and hand over information to the UK authorities following MLA procedures, and should therefore have in place adequate policies and procedures, and maintain detailed records of relevant financial and compliance information.