The UAE government’s zero-tolerance policy on money laundering has resulted in a crackdown on businesses that do not comply with the requirement to disclose the details of the Ultimate Beneficial Owner (UBO). The government has given a specific time frame to submit the UBO declaration, which was extended a few times. Many companies failed to keep up with the deadline and some companies failed to meet other UBO-related compliance requirements. In Dubai alone, a large number of companies are being subjected to penalties in the range of AED 15,000 as per the latest media reports.
The penalties can go bigger (up to AED 100,000) depending on the type of non-compliance. UBO consultants in Dubai attribute this as a general awareness of the law and the consequences of non-compliance. For instance, many business owners are not aware that a company that has initiated liquidation procedures needs to meet the UBO requirements. The authorities will issue a warning note in the first instance to all types of violations and it will be followed by a penalty.
Considering the gravity of the situation, we have made a comprehensive guide about the UBO-related fines and penalties for your perusal based on Cabinet Decision No. 53 of 2021. Read on.
1. Penalties Related to Real Beneficiary Owner Register
Clause (1) of Article 8 of the Cabinet Decision No 58 of 2020 mandates the companies to create and maintain a register that contains the data of the ultimate beneficial owner. Any company that violates this requirement is liable for a penalty of AED 50,000. A warning note will be issued to the entity to rectify this situation within 30 days from the issuance of the note. If the violation is repeated, the penalty will be AED 100,000 and the company’s trade license will be suspended for at least 12 months. This is the highest penalty for not complying with this requirement. You can seek the help of UBO consultants in Dubai to prepare and maintain the UBO register.
2. UBO Register without Proper Data
An entity’s UBO register must include the data stated in Clause (2) of Article (8) of Cabinet Resolution No. (58) of 2020. Failing to include the data will attract a penalty of AED 20,000 along with a warning to rectify the situation within 15 days. Repeating the offence will attract a penalty of AED 40,000 and the trade license of the company will be suspended for at least six months. The mandatory data are as follows:
- Full name, nationality, date of birth, place of birth
- Residential address or the address to which notices can be sent
- Passport number or ID number, country of issuance, date of issuance and expiry
- Date and basis on which the person became the ultimate beneficial owner of the company
- The date on which the person ceased to be an Ultimate Beneficial Owner
3. Penalties related to inaccurate, inadequate data
Companies that fail to maintain adequate, accurate, specific and updated data of the Beneficial Owner or fail to correctly record the Beneficial Ownership are liable for a penalty of AED 10,000 with a provision to rectify its situation within 15 Days. Repeating the violation will lead to a penalty of AED 20,000 and suspension of the trade license for at least one month.
4. Not Disclosing details of the director or nominal board member
This is a serious violation that attracts a penalty of AED 20,000 with a warning to rectify its situation within 15 Days. Repeating the violation will lead to a penalty of AED 40,000 along with limiting the powers of the board members or directors, who are held liable for the violation.
5. Penalties related to Partners or Shareholders Register
A company that fails to create a Partners or Shareholders Register (PSR) will attract a fine of AED 50,000 along with a warning to rectify its situation within 60 days. If the crime is repeated the company has to pay a fine of AED 100,000 and its trade license will remain suspended for at least 12 months. Creating and maintaining a Partners or Shareholders Register becomes easier with the help of the best UBO consultants in Dubai.
If the company fails to maintain the information of all partners or shareholders in the PSR, a penalty of AED 30,000 with a warning to rectify the non-compliance within 15 days. On repetition, the penalty will be AED 60,000 and their trade license will be suspended for at least 6 months.
On the other hand, if the company fails to provide the Registrar with information of the beneficial owner and the Register of Partners or Shareholders and maintain such registers from damage, loss or destruction a penalty of AED 15,000 will be imposed with a warning to rectify their situation within 15 days. If it is repeated, the company has to face a penalty of AED 30,000 and suspension of the trade license for three months.
6. Additional Information Requested by Registrar
The registrar has the power to ask for additional information and the companies are bound to oblige. If an entity fails to comply with this, it will attract a penalty of AED 5,000 with a warning to rectify its situation within 15 days. If the violation is repeated, the company will have to pay a penalty of AED 10,000 and the suspension of the trade license for at least one month.
7. Failure to disclose Beneficial Owner’s name
If a company fails to disclose to the Registrar the name of a natural person residing in the UAE a penalty amount of AED 1,000 will be incurred. If the violation recurs, the company will be looking at consequences such as a penalty of AED 2,000 and suspension of the trade license for at least one month.
8. Penalties related to shareholder’s share guarantees
A company is required to issue shareholder’s share guarantees or face a penalty of AED 5,000. Entities are subjected to a fine of AED 10,000 if the violation is repeated.
It’s a gross violation of the company fails to disclose to the Registrar the information in respect of such shares or stocks and the identity of such persons or board members within 15 days as of such issuance. It will lead to a penalty of AED 5,000 with 15 days time granted to rectify its situation. If the violation is repeated, consequences include a penalty of AED 10,000 and restriction of the powers of the board members, directors or owners, who are proved liable for the violation.
9. Penalties Concerning Companies under Liquidation
A company undergoing liquidation in the UAE must hand over the RBR and PSR to the Registrar within 30 days of the liquidator’s appointment. Failure to do so will attract a penalty of AED 5,000 will be imposed along with a warning to rectify its situation within 15 days. If the violation is repeated, the penalty can be upgraded to AED 10,000 along with the suspension of the trade license for at least one month.
The company administrators or liquidators must maintain the Registers and records for at least five years as of the date of dissolution, liquidation or de-registration. Violators are required to pay a penalty of AED 20,000. They will be subjected to a fine of AED 40,000 if the violation is repeated. Talk to the best UBO consultants in Dubai to avoid such hefty penalties.
How can Jitendra Business Consultants Help You?
As more and more companies are being fined by the government for UBO non-compliance, the business owners need to tread carefully with the regulations. Filing the UBO declarations without any expert assistance can lead to errors or inadequacy which may lead to non-compliance. However, the best UBO consultants in Dubai such as Jitendra Business Consultants (JBC) can assist you.
JBC has the right team and resources to help you meet the UBO requirements. Our UBO compliance services in the UAE include creating and maintaining RBR and PSR, help with record keeping, and helping you with recommendations to rectify your non-compliance position. With proper assistance, you can easily avoid the hefty UBO penalties in the UAE