The UAE has <a href="https://www.thenationalnews.com/business/markets/2023/06/01/adgm-launches-report-to-help-mitigate-money-laundering-and-terrorism-financing-risks/" target="_blank">issued guidance</a> to help financial institutions <a href="https://www.thenationalnews.com/business/banking/2023/07/04/uae-begins-hosting-egmont-plenary-as-part-of-efforts-to-curb-financial-crimes/" target="_blank">combat the use </a>of unlicensed virtual asset service providers, as the Arab world’s second-largest economy continues to strengthen financial sector regulation. The guidance was issued by the National Anti-Money Laundering and Combating Financing of Terrorism and Financing of Illegal Organisations Committee, the UAE Central Bank said on Monday. It aims to educate<a href="https://www.thenationalnews.com/business/economy/2021/07/13/uae-engages-dnfbps-to-fight-money-laundering-and-terrorist-financing/" target="_blank"> licensed financial institutions</a> (LFIs) and the wider public sector on the risks associated with unlicensed virtual asset service providers (Vasps). The guidance, prepared in collaboration with UAE supervisors, comes at a time when virtual assets have become more accessible through digital channels, the Central Bank said. “As our digital economy matures, our work on combating all kind of financial crimes intensifies through raising awareness of their risks and emphasising the importance of compliance with relevant regulations and legislation to ensure the integrity of the UAE's financial system,” said Khaled Balama, Governor of the UAE Central Bank and chairman of the committee. The Emirates has made significant progress in combating money laundering, the financing of terrorism and weapons proliferation over the past few years. The country has passed strict laws and issued a number of regulations over the years to clamp down on financial crime. The new guidance aligns with the Financial Action Task Force's instructions and aims to provide the reporting entities – including LFIs, designated non-financial businesses and professions, as well as licensed virtual asset service providers – with a comprehensive road map to enhance their governance and operational processes. It also explains how to identify and address governance challenges and emerging risks, and also underlines the importance of compliance with anti-money laundering regulations issued by supervisory authorities. “It specifically requires them to remain vigilant of the various fraudulent methods unlicensed Vasps adopt [and] continue to manage money laundering, financing of terrorism and proliferation financing risks effectively,” the Central Bank said. It also aims to ensure emerging risks are factored into their business and customer risk assessments and ensure due diligence is conducted to identify instances of forged documents and sanctions evasion, the regulator added.