Customer Screening in The UAE: A Comprehensive Guide

Customer screening in the UAE is a determining factor for a number of reasons,: a) the UAE’s position as a global hub for trade and finance attracts businesses and investors from all over the world, and unfortunately, this also attracts some risky activities too b) with large amounts of money moving across borders daily, the risks of facilitating money laundering increase c) financial institutions in the UAE also deal with a wide range of customers, from local startups to international investors, which makes it harder to identify legitimate clients.

What is Customer Screening in The UAE?

As per the UAE’s central bank rule book, customer screening is part of the bigger screening operations. Customer screening in the UAE is defined as: Screening should happen at different points in the customer journey to keep things safe and compliant.

First, periodic name screening: Whenever there’s a change in the customer’s details or made updates to the UN or Local Terrorist Lists, it’s important to automatically rescreen the customer.

Then, there’s ad hoc name screening: This happens when it’s needed for a specific business reason, when a government or relevant authority asks for it, or when another financial institution provides feedback that requires checking.

Lastly, re-screening comes up when a transaction monitoring system flags a high-risk country in the customer’s updated information, prompting a rescreening to ensure everything stays secure.

What is AML Screening?

AML Screening focuses on checking customer information against global watchlists, monitoring transactions for suspicious activity, and identifying red flags like unusual behavior or connections to financial crimes.

The key difference between customer screening and AML screening and monitoring is that AML screening specifically focuses on preventing money laundering. In contrast, customer screening is the overall process of knowing your customers and assessing their risk.

What is Adverse Media Screening?

The adverse Media Screening process is when we check the news or other media sources for any harmful information about a person or a company such as stories about financial crimes (or crimes in general), fraud, corruption, or anything else that might indicate a risk.

How Does Customer Screening Impact UAE’s Financial Institutions?

As a central financial hub in the Middle East, this is how customer screening impact FIs in the UAE:

• Compliance with UAE-Specific Regulations: The UAE has strict local regulations such as the Federal Law No. 20 of 2018 on AML/CFT. Financial institutions must conduct regular customer screening to adhere to these laws and avoid legal penalties or sanctions from UAE authorities like the UAE Central Bank and the Financial Intelligence Unit (FIU).

• Maintaining the UAE's Global Financial Reputation: The UAE's reputation relies on strong AML measures. The customer screening process helps UAE financial institutions maintain credibility with international investors and regulators.

• Alignment with FATF Recommendations: It was only on February 23, 2024, that the UAE was removed from the FATF grey list (keep in mind that the UAE is a member of FATF and must align with its recommendations), so it is inescapable for UAE's financial institutions to conduct screening processes to ensure they are compliant with international AML/CFT standards, which will in turn help avoid any negative assessments or grey-listing by FATF.

• Countering the Use of the UAE as a Transit Hub for Illicit Funds: Given its strategic location as a global trade and financial hub (the fact that the UAE is a key player in the global oil and gas sector, and its economic stability is crucial, also it is a center for global wealth management and cross-border transactions), the UAE faces the risk of being used as a transit point for illicit financial flows. Effective customer screening processes help institutions block suspicious transactions and prevent the UAE from being exploited for money laundering or fraud activities.

• Support for Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM): The UAE’s financial free zones, such as DIFC and ADGM, are vital to the country’s global economic status so customer screening for these zones is essential to maintain high standards of regulatory compliance, enhance investor confidence, and avoid reputational damage.

• Ensuring Compliance with UAE Sanctions Lists: The UAE maintains its own set of sanctions and blacklists, including the UAE Cabinet Resolution No. 74 on the "List of Individuals, Entities, and Groups" involved in illegal activities. Customer screening ensures that FIs do not inadvertently deal with prohibited individuals or entities.

• Avoiding Economic Sanctions: If FIs in the UAE don’t follow the right rules, they could face punishments from other countries, like the US or European nations. Screening customers helps avoid this, keeping the UAE’s financial reputation safe.

Who Needs to Perform Customer Screening in the UAE?

As you strive to manage financial risks effectively and mitigate risks, risk and compliance screening is key to monitoring and evaluating every customer interaction. All these companies have to do customer screening in the UAE:

1. Banks and Financial Institutions

2. Insurance Companies

3. Real Estate Companies

4. Lawyers and Accountants

5. Money Transfer and Exchange Services

6. Investment Firms

7. Free Zone Companies

8. Crypto Businesses

9. Trust Companies

10. Gold and Jewel Dealers

11. Informal Money Transfer Services (Hawala)

12. Pawnshops

13. Car Dealerships

14. Debt Collection Agencies

15. Payment Services

16. Credit and Loan Companies

17. Auditors and Consultants

18. Importers and Exporters

19. Charities and Nonprofits

20. Luxury Goods Retailers

Read more: AML Screening and Monitoring: Understanding its Purpose & Techniques

When Does the Customer Screening Process have to be Performed?

Customer screening in the UAE must be conducted at various critical stages of the customer relationship and according to the UAE’s regulatory guidelines, customer screening must be performed in the following scenarios: 1) upon onboarding new customers 2) upon updates to the local terrorist list or UN consolidated list 3) during ongoing monitoring and periodic reviews 4) before processing any transaction 5) upon KYC reviews or changes in customer information 6) when a customer’s transaction behavior is unusual 7) when dealing with high-risk transactions or countries 8) at the request of competent authorities.

Read more: AML Transaction Monitoring in The UAE: Regulations & Best Practices

What are the Key Checks Involved in Customer Screening?

This is a checklist of the prominent and essential measures taken during the customer screening process:

1. Identity Verification and KYC

First, the financial institution confirms who the customer is by checking official ID documents, like a passport or ID card.

2. Check Against Sanctions and Watch Lists

Companies must check if the customer is on lists of people or organizations with a history of criminal activity or terrorism (e.g: the UN Consolidated List and UAE Terrorist List.

Read more: The Best 10 Sanctions Screening Software Reviewed and Compared in 2025

3. Politically Exposed Person (PEP) Check

PEP screening also checks if the customer is someone who holds or has held important government/political positions.

4. Risk Assessment

A risk assessment is done to determine how risky the customer might be in terms of: 1) the customer's job, 2) the country, and 3) the amount of money they deal with, if the customer’s risk score is high, then they would need extra checks.

Companies must constantly evolve their strategies to mitigate risks and protect themselves from potential threats.

5. Source of Funds

It’s important to know where the customer’s money is coming from, especially if they are transferring large sums.  

6. Transaction Monitoring

Companies monitor what customers do with their money over time because it helps catch anything unusual or suspicious, like big transfers that don’t make sense for that person. So if Ahmad’s job is a waiter who makes $1576 per month (and this is his only declared source of income), it does not make sense for Ahmad to transfer tens of thousands of dollars every month to another country.

7. Address Verification

The customer’s address must be checked to confirm it’s real through documents like utility bills or bank statements.

8. Ongoing Monitoring

Companies have to keep checking in on customers, especially if their situation or information changes over time.

15 Key Red Flags to Look for in Customer Screening

Customer screening red flags are warning signs that may (but not necessarily) indicate risky or suspicious behavior during customer onboarding or transaction monitoring. These suspicious signals suggest that a customer might be involved in money laundering, or fraud. Businesses in the UAE must watch for these red flags to be able to report them in a timely manner.

1. Unusual Transactions That Don’t Match Their Usual Behavior

2. Unclear Source of Money

3. Complicated Business Structures

4. Frequent Changes in Information

5. Reluctance to Provide Documents

6. Strange Money Transfers

7. Quick Movement of Funds

8. Involvement in Risky Industries

9. Politically Exposed Persons (PEPs)

10. False or Inconsistent Business Details

11. Risky Locations or Countries

12. Too Much Cash

13. Strange Use of Financial Products

14. Avoiding Reporting Rules

15. Frequent Cross-Border Transfers

How Do Financial Institutions Handle Red Flags in Customer Screening?

Financial institutions in the UAE handle red flags in customer screening by following clear steps to prevent illegal activities like financial fraud or money laundering. These steps follow both local and international rules:

1. Identifying and Reporting Suspicious Activity

When something looks off whether in the customer screening in banking or something else, like unusual transactions or trouble confirming a customer’s details, the bank has to report it. They do this through the Suspicious Activity Report (SAR).

As stated in Article 15 of the AML-CFT Law and Article 17 of the AML-CFT Decision, Licensed Financial Institutions are required to submit a STR to the UAE FIU whenever they have reasonable grounds to believe that a transaction, attempted transaction, or certain funds are either partially or entirely the proceeds of crime, related to a crime, or intended for criminal use.

Besides the obligation to file an STR when there is suspicion of a crime/financial crimes, LFIs should also consider filing one in the following cases involving legal entities or arrangements:

• A potential customer, who is a legal entity, decides not to open an account or purchase other financial services after becoming aware of the LFI's Customer Due Diligence (CDD) requirements.

• A current legal entity customer fails to provide necessary details about its business or beneficial owners.

• A legal entity customer cannot clearly explain transactions, provide documents like invoices, or offer adequate information about the counterparty.

• The LFI is uncertain after completing CDD procedures about the actual individuals controlling or owning the legal entity or arrangement. In such cases, the LFI should refrain from establishing or continuing a business relationship and may need to file an STR.

2. Enhanced Due Diligence (EDD)

If something suspicious is found, the bank will dig deeper into the customer’s information. They may ask for more details about where the money is coming from, the customer’s business, and if they have any connections to risky people or countries. The bank will check everything more carefully.

3. Monitoring and Freezing Accounts

If the bank finds a serious issue, like a link to illegal activity, they might freeze the customer’s account or stop some transactions. For example, if they believe the customer is involved in money laundering, they must freeze their assets according to the law.

4. Risk-Based Approach

Banks use a risk-based approach to handle red flags. They figure out how risky a customer or transaction is and focus more attention on higher-risk customers.

Risk and compliance screening evaluates both internal and external factors that could impact your institution’s legal standing.

5. Internal Controls and Compliance

Banks must have strong systems in place to spot red flags and this means having a person in charge of ensuring the bank follows the rules, training employees, and checking that everything matches AML and CFT guidelines.

6. Collaboration with Authorities

Banks also work with local and international authorities. In the UAE, this means collaborating with the Central Bank and other government agencies. They share information about suspicious activities to make sure the law is being followed correctly.

Read more: What is Adverse Media Screening? How Does It Work?

Customer Screening Solution for UAE Financial Institutions

FOCAL Customer Screening for UAE financial institutions provides real-time detection of high-risk entities. It screens against over 1300 global sanctions, PEP, RCA, and adverse media watchlists, ensuring you're always ahead of potential risks.

During customer onboarding, FOCAL automatically filters and checks against these updated lists. If any customer is flagged, you’ll be alerted instantly, helping you stay compliant and secure.

FOCAL’s platform is fully customizable, allowing you to adjust the KYC processes to suit your clients' specific needs and risk profiles. Whether you want to select certain products or features, FOCAL gives you full control.

Integrating FOCAL is easy. Whether you choose the API for seamless syncing with your internal systems or the user-friendly interface for quick setup, it’s built to adapt to your infrastructure and timelines.

Effective onboarding with FOCAL boosts operational efficiency, automates processes, improves customer experience, and strengthens fraud prevention. It’s a vital tool for maintaining AML compliance and protecting your institution from reputational damage while building customer trust.

FOCAL ensures compliance with industry standards and regulatory requirements, keeping you safe from legal risks.

Conclusion

The goal of the AML screening process is simple: preventing dirty money from entering the financial system. This involves checking customer names against global watchlists, tracking transactions for any unusual or potentially risky activities, and assessing behaviors to see if they match what’s expected from each customer.

FOCAL’s customer screening is designed to help UAE financial institutions prevent illicit money from entering the financial system. With FOCAL, your institution can easily and quickly check customer names against global watchlists in real time. This ensures you're always up to date with the latest sanctions, including UN and EU lists.

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