New UAE rule mandating attestation of import invoices could help combat trade-based money movement By Richard Gibbon and Collis Abrahams, September 4, 2023
Dubai@Whatox.com | Concierge Business Consulting in Dubai and UAE | Your Path to Success
The UAE has recently introduced a new compliance requirement for international import of goods.
According to UAE Cabinet Decision No. 38 (2022), imports into the UAE worth AED 10,000 (approx. USD 2,723) now require MoFA and MoS-certified documents, including commercial invoices. 📄
This innovation is a step towards even stricter control and transparency in international trade in the UAE. 💼 The new rule came into force on February 1, 2023.
As we explore in our blog, the need to submit transaction documents to the UAE ministry for verification could result in a reduction in trade-based money movement (TBML) using a UAE port for unloading.
Details of the new rule
The MFA and MS certification process is available online on their website, in their offices, through UAE missions abroad, in UAE banks or at local customs offices. 🌐🏢
The certification costs AED 150 per commercial invoice and must be paid within 14 days of customs declaration. 💵
Failure to comply will result in a fine of Dh500 per violation. Repeated violations may result in more severe fines. 🚫💰
There are exceptions to the rules, such as personal imports, goods from GCC countries, free zones, charitable, diplomatic, police or military supplies, transit goods and transactions under AED 10,000. 🔄🛃🚛
To comply with regulatory requirements, businesses need to immediately review their import processes. Particular attention should be paid to ensuring that MFA and MS certification becomes an integral part of these processes.
It is also vital that staff involved in supply chain management and procurement are aware of these new requirements and, if necessary, receive specialized training on how to use the MFA and MS online system.
This will ensure that all transactions are conducted in accordance with the latest regulations and standards, thereby increasing transparency and reducing the risks associated with illegal activities in international trade.🌍
Additional considerations
The rapid growth of the global economy has increased the focus on combating the risks of moving money in the financial sector. This makes international trade attractive to unscrupulous individuals looking to launder illicit funds. Estimates indicate that over US$60 billion was laundered through trade-based money laundering (TBML) from 2011 to 2021. Unfortunately, TBML is a complex phenomenon. Its elements cross sectoral and national boundaries. This makes it extremely challenging for authorities to detect such activities. The Financial Action Task Force (FATF) has repeatedly highlighted these difficulties.
🌍💼 This requires coordinated efforts at the international level to effectively combat such complex financial crimes.
Over-invoicing, under-invoicing, and multiple invoicing are some of the most common TBML practices, and inconsistent or incomplete documentation is one of the most obvious red flags. For these reasons, the new rule provides the UAE with an opportunity to continue the fight against money launderers.
International trade generates a vast amount of paperwork. It includes commercial contracts, invoices, airline tickets, bills of lading, packing lists, certificates of origin, customs declarations, letters of credit, guarantees, factoring and insurance documents. All of this makes up the multifaceted mosaic 🌍 of international commerce. 📜
Now UAE officials can scrutinize this documentation. They are looking for suspicious documents. For example, those that appear to be fake or illegitimate. 🕵️♂️
They pay attention to discrepancies in the description, quality and quantity of imported goods. Import operations with goods that are particularly vulnerable or with the participation of suspicious parties are important. 🚢
Also on the agenda are consignments of unusual size or transactions that are not economically feasible. This makes it difficult for financial criminals to easily use trade transactions to launder criminal proceeds in the UAE. 💼
