The Economic Substance Regulation (ESR) refers to rules that require entities engaged in certain business activities to have substantial economic activities in the jurisdiction where they are established. These regulations are designed to prevent profit shifting to low or no-tax jurisdictions and to ensure that entities performing high-risk activities have sufficient economic substance in the jurisdiction where they are tax-resident. ESR applies to entities conducting particular types of activities, often referred to as “relevant activities.” These can include banking, insurance, fund management, financing, leasing, headquarters, shipping, and intellectual property activities, among others.

In UAE Entities subject to ESR are required need to file an annual economic substance notification and report with local tax authorities. This report should provide evidence of compliance with the economic substance requirements.

We assist our client in ascertaining ESR applicability and filing required notification and reports.

In UAE business which have been Degisnated Non Financial Business and Professions (DNFBP) are subject to anti-money laundering (AML) and (CTF) regulations, as outlined primarily by relevant laws and its Executive Regulations. We advise and assist clients in meeting following applicable obligations to DNFBP-

• Customer Due Diligence (CDD): DNFBPs must carry out CDD procedures to verify the identity of their clients and understand the nature of their business. Enhanced due diligence is required for high-risk clients or transactions.
• Suspicious Transaction Reporting: DNFBPs must report any suspicious transactions or activities to the UAE Financial Intelligence Unit (FIU). This is crucial for detecting and preventing money laundering and terrorist financing.
• Record Keeping: DNFBPs are required to maintain comprehensive records of their transactions and customer identification documents. These records should be kept for a minimum of five years.
• Internal Controls and Procedures: DNFBPs must implement effective AML policies and procedures. This includes establishing internal controls, conducting regular staff training on AML/CTF requirements, and having procedures for reporting suspicious activities.
• Compliance Officer: DNFBPs should appoint a compliance officer responsible for overseeing and implementing AML/CTF measures within their organization.
• Training: Regular training programs for employees on AML/CTF obligations and how to identify and report suspicious activities are required.