Even after a recent government attempt to wipe out illicit transactions, the United Arab Emirates is at risk of being added to a global watchdog’s list of countries subject to heightened scrutiny for deficiencies in countering money laundering and terrorist funding.
According to people familiar with the matter who requested anonymity because the discussions are private, the Financial Action Task Force is leaning toward adding the UAE to its “gray list” early this year, one of two major categories used by the intergovernmental body for nations determined to have “strategic deficiencies.”
Given the UAE’s position as the Middle East’s main financial hub, the FATF’s approval of the designation would be one of the most momentous in the group’s three-decade existence.
The FATF is presently scrutinising 23 nations, including Albania, Syria, and South Sudan, with only North Korea and Iran on its “black list” of the highest-risk countries.
As per Ibtissem Lassoued, A UAE- based head of advising in financial crime at law firm Al Tamimi & Co, the UAE government has taken various initiatives to better conform with global norms on anti-money laundering and counter-terrorist financing since the FATF’s warning in 2020.
Authorities established financial crime courts and now demand businesses to reveal their real owners to the authorities. Officials in the UAE also created the Executive Office, directed by Al Zaabi, to guarantee that the central bank, the Finance Ministry, and other government agencies work more closely together.
Multiple banks have been fined by the central bank in recent months for violating anti-money laundering regulations, and additional limitations have been placed on hawalas, charities that are frequently accused of facilitating terrorism-related money flows, claimed a report by Bloomberg.
A gray-listing will be a disappointment at a time when the oil-rich country is facing more competition from Saudi Arabia, which is expanding its capital sector and taking moves to attract more investment. Dubai and Abu Dhabi are also attempting to generate billions by listing state-owned companies, and the UAE has altered its work week from Monday to Friday since the beginning of the year in an effort to attract international business.
According to Bauer, the scale of any repercussions for the Emirates would be difficult to assess, primarily because foreign financial institutions and investors may already view it as a high-risk location.