The United Arab Emirates (“UAE”) has recently implemented a new compliance requirement related to the international importation of goods. Specifically, pursuant to UAE Cabinet Resolution No. 38 of 2022 on the Attestation of Documents, Commercial Invoices and Certificates of Origin at the Ministry of Foreign Affairs and International Cooperation (“MoFAIC”), all imports into the UAE worth AED 10,000 (approximately USD 2,723) or more must now be accompanied by a commercial invoice and other trade documentation attested by MoFAIC. The new rule came into effect on February 1, 2023.
As we explore in our blog, the corollary of having to present transactional documents to a UAE governmental ministry for verification could be a reduction in trade-based money laundering (“TBML”) involving a UAE port of discharge/unloading.
Details of the New Rule
The attestation process can be completed electronically on the MoFAIC website, or at MoFAIC offices, through the UAE’s representative missions abroad, in branches of banks operating within the UAE, or at local customs office. The attestation process costs a fixed fee of AED 150 per commercial invoice, which must be paid within 14 days of the completion of the customs declaration. Non-compliance will result in an administrative fine of AED 500 per violation, while repeat violations will likely result in additional and more serious fines. There are several exemptions to the new rule, including personal imports, goods imported from Gulf Cooperation Council (“GCC”) countries, goods imported into free zones, goods imported for charitable, diplomatic, police or military purposes, goods ultimately transiting the UAE (goods being re-exported) and, of course, any imports worth less than AED 10,000.
To ensure compliance, businesses should immediately review their import processes and ensure that the MoFAIC attestation is an obligatory component. To operationalize compliance, businesses should ensure that their supply chain and procurement personnel are aware of the new requirement and, to the extent necessary, trained on how to use MoFAIC’s online system.
Rapid growth in the global economy, coupled with an intense focus on countering traditional money laundering risks to the financial sector, has made international trade an increasingly attractive avenue to bad actors seeking to clean illicit funds. To that end, it has been estimated that more than USD 60 billion was laundered through TBML between 2011 and 2021. Unfortunately, TBML can be a complex phenomenon since its constituent elements cut across sectoral boundaries and national borders and, therefore, extremely hard for authorities to detect, as the Financial Action Task Force (‘FATF”) has observed many times.
Over-invoicing, under-invoicing, and multiple invoicing are some of the more prevalent TBML techniques, and inconsistent or incomplete documentation is one of the most obvious red flags. For these reasons, the new rule affords the UAE an opportunity to continue taking the fight to money launderers. International trade necessarily leaves behind a layered documentary trail consisting of commercial agreements/contracts, commercial invoices, airway bills, bills of lading, packing lists, certificates of origin, customs clearances, letters of credit and guarantee, factoring documents, insurance documents, and more. UAE officials now have the opportunity to scrutinize this paperwork, looking for such things as documents that appear on their face to be falsified or illegitimate, discrepancies in documents regarding the description, quality and quantity of goods being imported, import transactions involving goods or commodities that are deemed to be of particular vulnerability, import transactions involving parties of specific concern, consignments of unusual size or that do not appear to make economic sense, and so on, which could make it significantly harder for financial criminals to misuse trade transactions with a UAE nexus to launder their ill-gotten gains.
 Asia/Pacific Group on Money Laundering, APG Typology Report on Trade Based Money Laundering, (July 20, 2012); FATF, Egmont Group on Financial Intelligence Units, Trade-Based Money Laundering Trends and Developments, (December 2020).