What Has Changed and Why It Matters
The United Arab Emirates has continued to strengthen its financial integrity framework through the July 2025 update to the Guidance on Targeted Financial Sanctions (TFS). Issued by the Executive Office for Control & Non-Proliferation (EOCN), the revised guidance reflects the UAE’s evolving risk environment, international obligations under United Nations Security Council Resolutions (UNSCRs), and expectations arising from Financial Action Task Force (FATF) standards.
While the core legal foundation of TFS remains unchanged, the 2025 update introduces substantive procedural clarifications, enhanced reporting mechanisms, and operational expectations that materially affect Financial Institutions (FIs), Designated Non-Financial Businesses and Professions (DNFBPs), and Virtual Asset Service Providers (VASPs). This article examines the key updates, compares them with the previous guidance, and analyses their compliance implications.
Structural Continuity with Targeted Enhancements
At a high level, the 2025 guidelines preserve the four-step TFS implementation model:
- Register
- Screen
- Implement freezing measures
- Report
This continuity ensures regulatory stability. However, the depth and precision of obligations within each step have significantly increased, signalling a shift from principle-based compliance to demonstrable operational effectiveness.
Major Change in Reporting Terminology and Framework
Then (Pre-2025)
Previously, reporting a confirmed sanctions hit required submission of a Funds Freeze Report (FFR). Partial matches were addressed but lacked detailed procedural clarity.
Now (2025 Update)
The guidelines formally replace the FFR with two distinct and clearly defined reports:
- Confirmed Name Match Report (CNMR)
- Partial Name Match Report (PNMR)
This is not merely a terminological change. The update introduces:
- Clear thresholds distinguishing confirmed, partial, false positive, and negative matches
- Mandatory decision trees and flow charts for reporting actions
- Explicit timelines for each scenario
This refinement reduces ambiguity, enhances supervisory review, and aligns reporting outcomes across sectors.
Substantially Enhanced Guidance on Partial Name Matches
A Key Weakness Addressed
Under the earlier framework, partial matches were an area of regulatory uncertainty, often leading to inconsistent practices across institutions.
2025 Improvements
The new guidelines introduce granular instructions for handling partial matches, distinguishing between:
- Existing customers
- Potential customers or counterparties
- Availability or absence of identification documents
Key enhancements include:
- A 10-business-day rule to obtain missing ID documents
- Mandatory transaction suspension where verification is inconclusive
- Clear triggers for escalation from PNMR to CNMR upon EOCN confirmation
These clarifications significantly reduce both over-reporting and under-reporting risks.
Weekend and Public Holiday Screening Obligations
The earlier guidance did not explicitly address screening and freezing obligations during non-business days, leaving room for operational gaps.
The 2025 update expressly requires Reporting Entities to:
- Maintain mechanisms to prevent access to funds or assets even during weekends and public holidays
- Apply screening immediately upon resumption of business if systems were not operational
- Ensure no designated person can exploit timing gaps
This change reflects supervisory concerns around temporal sanctions evasion risks, especially in digital and virtual asset environments.
Expanded and More Prescriptive Reporting Requirements
Reporting Scope Expanded
The updated guidance explicitly requires CNMRs and PNMRs to cover:
- Closed accounts
- Dormant relationships
- Past transactions up to five years prior to designation
This retrospective reporting obligation was less explicit earlier and now strengthens the UAE’s ability to:
- Trace historical exposure
- Support international information-sharing
- Demonstrate FATF compliance effectiveness
Stronger Emphasis on Documentation and Evidence
A notable evolution in the 2025 guidelines is the repeated insistence on evidence-based decision-making.
The guidance now consistently states that:
- Freezing measures based on control, ownership, or acting on behalf must rely on documented legal evidence
- Actions must not be based on suspicion alone
This protects Reporting Entities from:
- Over-compliance risk
- Legal exposure
- Arbitrary decision-making
It also reinforces the availability of good-faith liability exemptions when actions are taken in compliance with the guidance.
Clearer Treatment of Ownership, Control, and Direction
While the ownership threshold (>50%) remains unchanged, the updated guidance provides:
- More detailed control indicators
- Expanded examples involving voting rights, power of attorney, and authorised signatories
- Explicit warnings against speculative freezing
Compared to the earlier version, this section is more operationally usable, reducing interpretative divergence across sectors.
Separation of Grievance Procedures
Before, grievance and delisting procedures were embedded within the TFS guidance.
Now, all grievance-related content has been removed and issued as a standalone guideline.
This separation:
- Improves readability
- Prevents procedural confusion
- Allows institutions to focus the TFS guidance strictly on implementation and compliance
Improved Alignment with goAML and Supervisory Expectations
The 2025 update integrates reporting obligations more tightly with the goAML platform, including:
- Clear identification of applicable report types
- Mandatory attachment requirements
- Defined supervisory review pathways
This reflects a broader UAE strategy of leveraging data-driven supervision and enhancing reporting quality.
Broader Coverage of Virtual Assets and DNFBPs
While VASPs and DNFBPs were already subject to TFS, the updated guidance:
- Provides sector-specific examples
- Clarifies freezing mechanisms for virtual assets, crypto wallets, and digital accounts
- Reinforces parity of obligation across traditional and emerging sectors
This responds directly to FATF’s increasing focus on non-traditional financial channels.
The July 2025 UAE Targeted Financial Sanctions Guidelines represent a mature and operationally focused evolution rather than a regulatory overhaul. By refining reporting mechanisms, clarifying grey areas, and addressing real-world implementation challenges, the UAE has strengthened its TFS regime in a manner that is both internationally credible and domestically enforceable.
Compared to the previous framework, the updated guidance:
- Reduces ambiguity
- Enhances consistency
- Strengthens accountability
- Improves supervisory effectiveness
For Reporting Entities, the message is clear that TFS compliance is no longer just about intent, it is about execution, evidence, and timeliness. Institutions that proactively adapt their systems, policies, and training to these updates will be better positioned to meet regulatory expectations and mitigate sanctions-related risks in an increasingly complex global environment.
