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The United Arab Emirates has continued with its tough approach to money laundering compliance, taking action against the cross-border payments fintech.
London-based fintech Wise has been fined by Abu Dhabi’s Financial Services Regulatory Authority (FSRA) for failure to comply with anti-money laundering (AML) requirements.
“The FSRA is committed to ensuring that all regulated entities maintain high standards to address money laundering risks and, where appropriate, the FSRA will take strong action to ensure firms comply fully with the anti-money laundering requirements in ADGM,” said Emmanuel Givanakis, CEO of the FSRA.
In a statement, the FSRA said that the company, formerly known as TransferWise, had failed to “establish and maintain adequate AML systems and controls to ensure full compliance with its AML obligations".
According to the FRSA, Wise had failed to identify and verify the source of funds and wealth from a number of high-risk customers and only began carrying out checks above a high-value payment threshold after it had already established a business relationship with those customers.
In addition, the money transfer service did not consider nationality or business category as part of its risk-based assessment and due diligence checks.
Since the review of Wise took place in 2021, the regulator said that the company has cooperated fully and taken steps to remedy its AML compliance weaknesses.
However, Wise will still now be required to pay a penalty of $360,000. This would have been higher, but the fintech reached an agreement to settle at an early stage.
Wise was first issued a licence by the regulator in 2019, becoming fully operational the following year.
This fine appears to be the Abu Dhabi Global Market's (ADGM) only publicised AML enforcement in recent years, with previous penalties being imposed due to failures in common reporting requirements.
However, the UAE has been taking a tougher stance on money laundering following its greylisting by the Financial Action Task Force (FATF) earlier this year.
For example, in August, it was announced that payments for real-estate transactions executed in the UAE through virtual assets, the sale of virtual assets or cash amounts above AED55,000 will now be subjected to additional reporting to authorities.
In addition, at the end of July, the country’s central bank imposed financial sanctions on six banks operating in the UAE for failures to achieve appropriate levels of compliance regarding required due diligence and reporting procedures and standards.
