The conference assumed larger significance given the rapid adoption of digital currencies in the UAE.
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Push for strict regulatory compliance
Nicholas McNicholas, Senior Director of Regulatory Enablement and Enforcement at the Virtual Assets Regulatory Authority (VARA), emphasised the dual-edged nature of virtual assets during a panel discussion on combating crypto-enabled crime.
“The rise of virtual assets has transformed financial crime globally, providing criminals with new avenues to move illicit funds and complicating anti-money laundering efforts. There are certain areas which are still not regulated in the virtual asset space. For example, decentralised finance (DeFi) still poses risks. There are questions about ownership over peer-to-peer transactions (reduces transparency). So decentralised means deregulated. So, this requires some clever thinking around how we may centralise violation.
He added,“In the Middle East, Dubai's position as a global financial hub and rapid digital asset adoption has heightened the need for balancing innovation with strict regulatory compliance to maintain Dubai's reputation as a safe and dynamic market for digital finance.”
The conference highlighted the challenges regulators face due to the rapid evolution of financial technologies and the need for adaptive policies and international cooperation.
Experts stressed the importance of a balanced approach that encouraged innovation while enforcing stringent anti-money laundering (AML) and counter-terrorist financing (CTF) measures.
Public-private partnerships and advanced technologies, such as AI, were identified as essential tools to address these challenges effectively.
“Since 2022 we have a full regulatory landscape here where anybody engaging in virtual assets must be licensed... if they're engaging in virtual asset activities, either in or from Dubai. Our primary focus is to ensure that we have a level playing field, and that everybody is compliant with that role, and comes to VARA to be regulated. We also put many outreach programs in terms of making sure that everybody knows that is the position,” said McNicholas.
The experts highlighted staying ahead in the fight against financial crime requires vigilance, collaboration, and cutting-edge technology.
The country's approach has evolved to include a highly responsive 'watch list' that is updated daily,
“We are committed to using the most advanced horizon scanning tools, including the use of various different intelligence providers. So, we populate our watch list based on different sources, and this can also include tip-offs from other regulators, any law enforcement agencies or international regulators, or anybody in the public... whistleblowers. Every lead undergoes swift initial assessment in alignment with the National Anti-Money Laundering Task Force, with a focus on assigning a risk rating. For instance, transactions involving cash-for-crypto are considered as high risk due to their vulnerability to money laundering and the absence of robust KYC measures,” added McNicholas.
Industry professionals also stressed the need to foster international cooperation and address the complexities of modern policing,
“Grant Tuchten, Portfolio Director at Intersec organiser Messe Frankfurt Middle East, said,“The conference underscores the need for global collaboration in tackling the evolving challenges of law enforcement. This platform enables industry leaders to share knowledge, explore innovative solutions, and build partnerships to secure the future of policing.”