The UAE is about to be placed in the FATF's 'grey list' about dirty money; the decision to be taken at Paris Plenary Session
Following our publication earlier this year (https://www.flexi-group.net/post/uae-s-target-of-becoming-one-of-the-most-credible-and-attractive-business-financial-hubs) the speculations are about to become a reality and seems almost inevitable that the UAE will avoid its addition to the FATF grey list.
As we had mentioned earlier this year even though the Emirates had been ramping efforts to align with the global struggle against money laundering and terrorist financing it seems all but officially confirmed that it will be “grey-listed”
Several sources seem to confirm that the United Arab Emirates was bracing for its inclusion on the Financial Action Task Force (FATF)'grey list' today Friday 04th of March 2022.
The move came after weeks of speculation about the Middle East's financial hub's future. The 'grey listing' will be decided at this week's FATF Plenary Session in Paris.
The news, which are expected to be confirmed today, would be a setback for the Middle East's glittering financial hub. Unfortunately, it seems that several FATF members are claiming that the country has not made enough progress in combating anti-money laundering concerns.
In April 2020, the FATF issued a warning to the UAE authorities, advising them to engage more closely with foreign peers and enhance compliance in certain vulnerable sectors such as gold dealing and luxury real estate. Regardless of taking important steps to mitigate their vulnerabilities as a jurisdiction nonetheless it seems that FATF members will proceed and list the Emirates in their increased monitoring list.
Following the conclusion of the FATF Plenary Session, the decision is expected to be released later today.
At least three FATF members have stated that the UAE has not gone far enough to avoid being 'grey listed,' a decision that could be costly to the UAE's economy.
We had reported in January that the International Monetary Fund was considering 'grey listing' the UAE due to "strategic deficiencies" in its anti-money laundering framework.
Even though Western officials are agreeing that indeed the UAE made important steps towards compliance with recommendations and warnings, nonetheless these steps are not likely to halt the placement of the Emirates in the grey list. In a matter of fact, at least three members of FATF have stated that grey listing cannot be avoided.
The UAE submitted its latest report to FATF in November, but sources said the Gulf state had not met "many of the thresholds required" to avoid grey listing.
Earlier this year David Lewis (ex-FATF executive chairman) praised the UAE efforts which according to him the Gulf state “…doubled the number of staff in its Financial Intelligence Unit, signed extradition treaties with 33 countries, secured a 94% conviction rate from the 243 money laundering cases investigated between 2019 and 2021, created a register of beneficial ownership, introduced regulation of accountants and dealers in precious metals and stones,”.
The global financial watchdog also stated that the UAE needed to make "fundamental and major improvements" to "demonstrate that the system cannot be used for ML/TF and the financing of the proliferation of weapons of mass destruction."
In an interview earlier this week, H.E. Hamid Al Zaabi, Director of the UAE's Executive Office of AML/CFT, said the country was "firmly committed to combating financial crime and the global AML/CFT agenda."
Despite declining to comment on the FATF grey list, H.E. Al Zaabi stated that financial crime is a "global and evolving problem." This is why "AML/CFT efforts in the UAE are an ongoing process," he admitted, adding that the UAE's approach is "comprehensive, integrated, and consistently evolving."
If the UAE is grey listed, it will join 23 other countries under 'increased monitoring,' including Syria, Pakistan, and South Sudan. The formal decision is expected later today and all interested parties are anxious for the results, even though sources suggest that it is almost impossible for UAE to avoid the categorization.
By fLEXI tEAM