What AML red flags should a UAE auditor look for in a client’s financial statements?
Auditors are positioned to see indicators that a transactional service provider would miss, because they see the whole ledger over time. The national guidance for auditors highlights that professional money laundering is among the highest assessed threats in the UAE, and that legal entities are frequently the vehicle.
Common indicators include revenue that is inconsistent with the client’s stated business model, staffing or premises; large or repeated related party transactions with no commercial rationale; loans between group entities that are never repaid and never enforced; write-offs of uncollected debts or the use of reserve accounts without adequate support; asset valuations that cannot be substantiated; and sudden changes in capital structure, dividend policy or ownership shortly before or after a significant transaction. Payments received by the firm itself in unusual form or from a third party unconnected to the engagement are also a flag, since audit fees can themselves be proceeds of crime.
Where an indicator cannot be resolved by ordinary audit enquiry, it should be escalated internally to the Compliance Officer, who decides whether to file. The auditor should not attempt to resolve suspicion by confronting the client with the reporting question.
Legal Reference (UAE):
· Cabinet Resolution No. 134 of 2025, Article 17 — obligation to establish indicators enabling identification of suspicion for STR purposes
· Federal Decree-Law No. 10 of 2025, Article 18 — reporting to the Financial Intelligence Unit where suspicion arises
For more details, consult the full text of Federal Decree-Law No. 10 of 2025 or seek guidance from your AML compliance officer.