Banking & Finance

UAE froze $123m in assets linked to crime in 2022

February 8, 2024, 11:01 AM

The UAE’s Financial Intelligence Unit says it has made 'clear progress' in fighting financial crime

‘Freeze orders’ used in nine cases
Individuals and companies hit
Progress against UAE’s ‘key threats’

The UAE froze assets valued at AED 452.5 million ($123 million) in 2022 related to crimes such as money laundering and financing of terrorism, new data shows.

The UAE’s Financial Intelligence Unit (FIU), a special unit of the UAE Central Bank, released its annual report this week and revealed that it conducted “freeze orders” targeting 38 individuals and 41 corporate entities across nine separate cases.

The report did not disclose figures for 2023.

Khaled Mohamed Balama, chairman of the UAE’s National Anti Money Laundering and Combatting Financing of Terrorism and Financing of Illegal Organizations Committee, told the report that the UAE has made “clear progress” in the protection of global financial integrity, peace and security.

He said the Gulf state is “rapidly developing a proven track record of responding robustly to changing circumstances”.

Ali Faisal Ba’Alawi, chief of the FIU, added that the unit has made significant investment in its “technology, people and processes” to disrupt and deter money laundering, terrorist finance and associated crimes.

“This has led to an increasingly sophisticated understanding of the key threats the UAE faces, which has enhanced our ability to make informed decisions about those threats and, importantly, respond to them in an extensive and dynamic way.”

The Gulf state has intensified its efforts to clamp down on illicit financial flows, since it was put on the Financial Action Task Force’s (FATF) grey list in March 2022.

Paris-based FATF is an international watchdog that monitors compliance with rules on anti-money laundering and countering the financing of terrorism.

Being placed on the FATF’s grey list can have far-reaching consequences, including increased scrutiny from regulators and financial institutions worldwide, potentially affecting the country’s investment climate and economic growth.

AGBI previously reported that UK banks are shutting the accounts of some British expatriates in their home country on the grounds that the FATF listing means they are classed as living in a high-risk jurisdiction.

Mazen Boustany, partner and head of the UAE financial regulatory practice at Baker McKenzie UAE, said enforcement measures have been “stringent” against financial institutions, including banks and insurance companies, for violating money laundering systems and controls.

Entities involved in enforcing include the Central Bank, Securities and Commodities Authority, Dubai Financial Services Authority and Financial Services Regulatory Authority.

Boustany noted that the UAE has also rigorously scrutinised virtual asset service providers, categorising them as financial institutions or “designated non-financial businesses and professions”, as well as adopted strict measures against proliferation financing and dual-use items.

“This meticulous approach has significantly reduced the risk of money laundering and terrorist financing,” Boustany said.

“Notably the real estate sector faces heightened scrutiny, necessitating the submission of real estate activity reports to the FIU for transactions involving cash or crypto-currencies.”

Russia’s invasion of Ukraine created a new set of headaches for UAE-based financial institutions in light of the extensive global sanctions imposed on Moscow and the subsequent movement of capital into the Emirates.

The UAE has remained neutral in the Russia-Ukraine war, keeping open dialogue and business links with Moscow.

As of 2022, 700 Russian companies were established in the UAE while the number of real estate investors grew – as did the number of real estate agencies set up by Russians.

Russians purchased real estate in the UAE worth $500 million last year and tourist numbers surged 60 percent to 1.2 million visits.

Trade between Russia and the UAE, which stands at about $9 billion, increased by 63 percent between January and September last year.