The Central Bank of the United Arab Emirates (CBUAE) has recently taken a significant regulatory action by revoking the license of Sundus Exchange, a money exchange firm operating in the UAE, and imposing a financial penalty of AED 10 million (approximately USD 2.72 million). This enforcement follows investigations that revealed serious violations of anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations. The move highlights the UAE’s intensified efforts to safeguard its financial system from illicit activities and to comply with global standards in financial crime prevention.
Background and Regulatory Context
Sundus Exchange was a licensed money services business in the UAE, but its license was revoked following findings of multiple breaches of the UAE’s stringent AML and CFT laws, particularly under Article 14 of Federal Decree Law No. (20) of 2018. This law governs Anti-Money Laundering, Combating the Financing of Terrorism, and Illegal Organizations, setting rigorous compliance standards for financial institutions and exchange houses in the country.
The Central Bank’s investigations uncovered that Sundus Exchange failed to maintain adequate customer due diligence, ongoing transaction monitoring, suspicious activity reporting, internal policy implementation, staff training, and record-keeping. These lapses exposed the UAE’s financial system to significant risks of money laundering and terror financing, necessitating decisive regulatory intervention.
Link to Somalia-Based Haleel Electronics Group and Terror Financing
A critical aspect of this case is Sundus Exchange’s connection to the Somalia-based Haleel Electronics Group, which has subsidiaries spread across Kenya, Uganda, Cyprus, and Dubai. This group was sanctioned by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) in March 2024 for allegedly facilitating financial support to al-Shabaab, an al-Qaeda affiliated terrorist organization operating in East Africa.
The OFAC sanctions targeted 16 entities and individuals linked to the Haleel Group, accusing them of laundering over $100 million annually to fund al-Shabaab’s terrorist activities. Sundus Exchange’s association with this group raised red flags about the potential misuse of its financial services for terror financing. Previous investigations by Ugandan authorities in 2018 had also scrutinized Sundus Exchange for money laundering and terror financing allegations, though the firm’s legal representatives denied these claims at that time.
Central Bank of UAE’s Statement and Regulatory Stance
In announcing the revocation, the Central Bank of the UAE emphasized its unwavering commitment to maintaining the integrity and transparency of the country’s financial system.
“The revocation and financial sanction were imposed based on the results of examinations conducted by the CBUAE, which revealed failures and violations of the AML/CFT framework and related regulations,”
the Central Bank stated.
The regulator reiterated that all exchange house operators, including owners and employees, are expected to fully comply with UAE laws and the standards set by the Central Bank. This action against Sundus Exchange is part of a broader regulatory crackdown on financial institutions involved in currency exchange, remittances, and cross-border transactions, which are often vulnerable to exploitation for illicit financing.
Enforcement and Financial Penalty
Alongside the license revocation, the CBUAE imposed a substantial financial penalty of AED 10 million on Sundus Exchange. This fine signals the seriousness with which the UAE treats breaches of AML and CFT regulations. It also serves as a deterrent to other financial service providers that might consider circumventing compliance obligations.
The penalty and revocation align with the Central Bank’s supervisory mandate to uphold transparency and prevent the misuse of the UAE’s financial infrastructure. The CBUAE’s actions reflect a zero-tolerance policy toward non-compliance, especially in sectors susceptible to money laundering and terrorism financing risks.
Broader Implications for the UAE Financial Sector
The Sundus Exchange case is emblematic of the UAE’s intensified efforts to align its AML/CFT frameworks with international best practices. The country has made substantial progress in recent years, collecting nearly $1.048 billion in AML/CFT-related penalties in 2021 alone, encompassing fines, asset seizures, and confiscations. These measures underscore the UAE’s commitment to closing compliance gaps and enhancing regulatory oversight.
The Central Bank’s crackdown on Sundus Exchange sends a clear message to all licensed exchange houses and financial institutions operating within the UAE: strict adherence to AML/CFT laws is mandatory, and violations will be met with severe consequences. This approach aims to protect the UAE’s reputation as a secure and transparent financial hub and to prevent its financial system from being exploited by criminal and terrorist networks.
International Perspectives and Support
The U.S. Treasury’s involvement in sanctioning the Haleel Electronics Group and its affiliates, including Sundus Exchange’s links, highlights the global dimension of combating terror financing. Brian E. Nelson, U.S. Treasury Under Secretary for Terrorism and Financial Intelligence, described the sanctions as part of a comprehensive effort to support Somalia’s economic offensive against al-Shabaab, which remains a destabilizing force in the region.
This international cooperation underscores the importance of robust regulatory frameworks and enforcement actions like those taken by the CBUAE. By targeting financial facilitators of terrorism, authorities aim to disrupt the financial lifelines that enable terrorist groups to operate and expand.
Upholding Financial Integrity Through Vigilance
The revocation of Sundus Exchange’s license and the imposition of a substantial financial penalty represent a landmark enforcement action by the UAE’s Central Bank. It reflects the country’s firm stance against money laundering and terror financing, particularly in light of the firm’s connections to entities sanctioned for supporting al-Shabaab.
“The Central Bank of the UAE reaffirmed its commitment to ensuring full compliance by all licensed exchange houses, their owners, and staff, including strict adherence to UAE financial regulations and anti-financial crime standards,”
reinforcing the message that the UAE’s financial system will not tolerate breaches that threaten its integrity.
This case serves as a cautionary tale for financial service providers in the UAE and beyond. It highlights the critical need for robust AML/CFT compliance programs, vigilant monitoring, and transparent operations to prevent exploitation by illicit actors. The UAE’s decisive regulatory action not only protects its financial infrastructure but also contributes to the global fight against terrorism financing.