Meet Mr. A, the newly appointed compliance officer at ABC LLC in Dubai.
He’s been tasked with revamping the company’s AML/CFT program to meet regulatory standards and recent business changes.
While conducting a gap analysis, Mr. A discovered that ABC LLC has recently started dealing with US-based clients, which involves cross-border fund transfers.
The company’s sanctions screening procedures only cover the UAE’s local sanctions list and the UN Security Council list.
The AML software in place also supports only these two lists.
Should Mr A recommend that ABC LLC update both its sanctions screening procedures and software to include the OFAC list?
Start by separating what UAE law requires from what commercial reality may require. Under UAE law the mandatory screening obligation runs against the Local Terrorist Lists and the United Nations Security Council Consolidated List, which the Executive Office disseminates and which must be applied without delay and without prior notice to the designated person. Those are the lists that carry a legal freezing duty in the UAE. The OFAC list is a United States designation regime and is not, in itself, a UAE legal requirement.
That said, screening against OFAC is often the right commercial and risk decision. A business with US dollar clearing, US customers, US-linked counterparties or correspondent banking relationships can face account closure or secondary consequences if it deals with an OFAC-designated party, and its own bank will usually expect the screening to be in place. So the answer for most UAE businesses is to configure the software for the UAE lists as a legal obligation, add OFAC and other relevant international lists as a risk-based control, and record in the AML policy why each list was selected. Whatever lists are used, screening must be run on an ongoing basis and refreshed when a list is updated, not only at onboarding.
Legal Reference (UAE):
· Cabinet Resolution No. 74 of 2020, Article 15, which requires funds of persons on the Sanctions List and the local terrorist lists to be frozen without delay and without prior notice.
· Cabinet Resolution No. 74 of 2020, Article 12, under which the Executive Office disseminates the Sanctions List and the local terrorist lists to regulated businesses without delay.
· Federal Decree-Law No. 10 of 2025, Article 19(1), which requires entities to apply the measures set out in the Executive Regulations, including those relating to targeted financial sanctions.
Where the position is finely balanced, document your reasoning and raise it with your compliance officer.