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Cryptocurrency and aml compliance


Published on October 12 , 2023

Since Anti Money Laundering (AML) and compliance regulations became a global necessity for a law risk rating, most of the countries including UAE require their local bodies; entities and individuals to comply with related regulations, especially these of which issued by the central banks.

The accelerating development in Technology, especially in FinTech and Blockchain, require countries to continuously update their compliance regulations.

Although Cryptocurrency is still high risk according to AML and compliance regulations, some countries have licensed some platforms to trade in cryptos.

A step backward

Cryptocurrency is a digital currency encrypted by the blockchain system, the blockchain system is very secure by itself, whereas the risk of trading in these cryptos comes from the platform that traders use, which might be able to be hacked depending on their security level.

In addition, traders can use fake identities rather than their real ones, which prevent tracing the source of funds for their trading, although each wallet is linked with one bank account, but anyone can easily transfer cryptos from one account to another in another country without any prior permits or needs to comply with any regulation in any country, which doesn’t comply with AML regulations.

This is the reason that most of the central banks limit the amounts of deposits and withdrawals, to reduce the risk of transferring huge amounts of black money

UAE easing its crypto regulations

The United Arab Emirates doesn’t recognize cryptocurrencies as a legal form of tender, but it’s not banned either. While the UAE warns against it, buying and selling Bitcoin is pretty easy in the UAE.

For a long time, the UAE has been one of the more progressive crypto countries. The Dubai Financial Services Authority also announced it is working on a framework for crypto as part of its 2021 business plan in DIFC.

In Abu Dhabi, ADGM is working on a framework on NFT platforms and trading.

The UAE seems to be building a framework for a complete crypto-enabled system.

All of these frameworks need to comply with The Central Bank of UAE regulations.

CVML frequently support our clients with all updates in relation to compliance and AML Regulations, in addition, we provide legal opinions in relation to the use of crypto platforms, NFT platforms, and all other legal issues concerning digital and blockchain systems.

In addition, CVML can offer the best advice and services in relation to setting up cryptocurrency and Digital Art platform companies in the most efficient regulated free zone.

For further information, please contact Fadi Kilani.