Chapter 5 - Market Conduct

Question 1

What is the SCA definition of Money Laundering?

Answer 1

Money laundering refers to the purchase of securities with funds, the source of which is not identified
accurately, or emanating from an unknown or disguised source, so that it appears to have originated from a
legitimate source, where in fact it has not. In very simple and superficial terms, it is purchasing securities with
criminally derived money.

Question 2

What is the legal definition of Criminally Derived “Property”?

Answer 2

Funds derived from:

• narcotics and psychotropic substances;
• kidnapping, piracy and terrorism;
• violation of environmental laws;
• illicit dealing in firearms and ammunition;
• bribery, embezzlement and damage to public property;
• fraud, breach of trust and related offences; and
• any other offences referred to in international conventions to which the UAE is a party.

Question 3

How long can the Central Bank order “Property” to be frozen in financial institutions?

Answer 3

7 days

Question 4

Who can seize suspected property?

Answer 4

Public Prosecution Office

Question 5

Who is the chairman of the National Anti-Money Laundering Committee

Answer 5

Governor of the Central Bank

Question 6

Punishment for Individuals Money Laundering?

Answer 6

Prison not exceeding 7 years or by a fine between AED 30,000 and AED 300,000

Question 7

Punishment for Institutions Money Laundering?

Answer 7

Fine between AED 300,000 and AED 1 million

Question 8

Punishment for failure to report suspicions?

Answer 8

Prison, and a fine between AED 10,000 and 100,000

Question 9

Punishment for Tipping Off?

Answer 9

Prison up to 1 year, and a fine between ASED 5,000 and 50,000

Question 10

Punishment for importing cash over the allowance?

Answer 10

Fine between AED 2,000 and AED 10,000

Question 11

What documents are required for account opening?

Answer 11

• Full names(s) of customer(s) and his/their address(es);
• Trade licence(s);
• Place of work;
• Checking the original passport and keeping a copy

Question 12

What is the required record retention for financial markets?

Answer 12

5 years

Question 13

What are the three requirements on firms in regards to money laundering?

Answer 13

• Administrative: carry out certain identification procedures, implement certain internal reporting
  procedures for suspicions and keep records in relation to anti-money laundering activities.
• Training: adequately train staff in the regulations and how to recognise and deal with suspicious
  transactions.
• Preventative: ensure the establishment of internal controls appropriate to identify and prevent
  money laundering. This is a catch-all requirement.

Question 14

What are the three stages of Money Laundering?

Answer 14

• Placement
• Layering
• Integration

Question 15

What are the 5 offenses of Money Laundering?

Answer 15

• Concealing
• Arrangement
• Aquisition/Use/Purchase
• Failure to Report
• Tipping Off

Question 16

What is Market Abuse?

Answer 16

Behaviour which is:

• Based on MNPI
• Likely to give a false impression of supply/demand/value
• Likely to distort the market

Question 17

What are the 4 defences to Insider Trading?

Answer 17

• no advantage was expected,
• the defendant believed the information had been widely disclosed
• he would have dealt anyway, regardless of the information
• for the offence of disclosing only

Question 18

Can Market Makers be guilty of Insider Trading?

Answer 18

Not if acting in “Good Faith”