UK helps UAE address financial grey list challenges

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• Financial institutions have to do extra diligence on UAE clients
• UK officials are helping to advise on necessary improvements
• Johnson says it is not an obstacle in ongoing UK-GCC FTA talks

The UK is helping the UAE deal with shortcomings highlighted by the Financial Action Task Force when it grey listed the Gulf state, a British government minister has told AGBI.

“Our officials have very strong links in terms of assisting the UAE in how to improve systems and internal compliance and what sort of transparency is needed in order to evolve this situation,” Lord (Dominic) Johnson, a minister of state in the UK’s Department for Business & Trade, said.

In February the Financial Action Task Force (FATF) upheld its decision to keep the UAE on its grey list, a status it assigned in March 2022, citing that the country must improve anti-money laundering and terrorism funding standards.

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Financial institutions dealing with a grey-listed state have to conduct extra diligence on individuals and entities based there.

Johnson said that illicit activity “acts as an enormous drag on the economy” but he did not believe the UAE’s grey listing is a concern for UK investors.

He also did not believe it is an obstacle in the UK-GCC free trade agreement talks which entered their fourth round on Monday this week.

Johnson was speaking after a three-day visit to Kuwait and the UAE last week. He said that the specific focus of the trip was building relationships with major investors into the UK such as the Kuwaiti and the UAE sovereign wealth funds.

“We discussed further investment – how we plan that, how we structure it – branching up into all sorts of interesting research and development opportunities, as well as direct investment into property and infrastructure, clean energy and nuclear,” he said.

Kuwait News Agency

Earlier this month Johnson told AGBI that continued Gulf investment was essential if Britain is to achieve its infrastructure ambitions. 

In March he said that the UK’s decision to scrap a planned tax on sovereign wealth funds showed the importance its government places on Gulf investors.

This includes the Kuwait Investment Authority (KIA), which has an office in London and $803 billion in assets under management.

Johnson said the KIA was talking about “making continued significant and meaningful commitments to investing in the United Kingdom” during his visit.

“We are their absolute top destination. And the same applies to the conversations I had in the UAE.

“The opportunities are huge and some big activity is going to happen at the beginning of the autumn,” he said.