UAE likely to escape FATF grey list this month

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• FATF Plenary meeting
• UAE measures ‘stringent’
• Lift to economy expected

The UAE has made “positive steps” to meet anti-money laundering and terrorism funding standards and is likely to be removed from an international grey list later this month.

Experts say this will provide a major boost to the Gulf state’s economy.

The country was placed under enhanced supervision – known as the grey list – in March 2022 after the Financial Action Task Force (FATF) cited “strategic deficiencies” in the systems it uses to counter financial crime.

• UAE froze $123m in assets linked to crime in 2022
• The Gulf’s battle to tackle the spread of ‘dirty’ money
• Once off the grey list, UAE can really work on its image

Being placed on the international watchdog’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.

A FATF spokesperson told AGBI this week that the UAE had “taken positive steps” to address the issues the watchdog had raised.

This included strengthening supervision of financial institutions and designated professions and businesses, increasing the transparency of “legal persons”, and investigating terrorist financing cases in line with its risk profile.

“An on-site assessment has already taken place so a team of experts could confirm and verify the progress the UAE has made so that the Plenary, the FATF’s decision-making body, can decide whether to remove the UAE from the grey list,” the spokesperson said.

They added that a decision will be taken by FATF during the upcoming Plenary meeting taking place on February 23.

Mazen Boustany, partner and head of the UAE financial regulatory practice at Baker McKenzie UAE, told AGBI the UAE is set to come off the FATF grey list.

He said enforcement measures by UAE entities like the Central Bank have been “stringent” against financial institutions for violating money laundering systems and controls.

Michael Kortbawi, a Dubai-based partner at BSA, said the expected grey-list removal could “greatly boost the UAE’s economy”, attracting more investments and promoting growth in various sectors. 

“This change is important for the UAE as it works to expand its economic activities and strengthen its role as a major global business centre,” he said.

The Emirates has also responded to international enforcement actions. In December a Dubai court ruled that British-Indian hedge fund trader Sanjay Shah can be extradited to Denmark for prosecution over an alleged $1.7 billion tax fraud.

The FATF move comes as the UAE announced it froze assets related to illegitimate activities such as money laundering and financing of terrorism valued at AED 452.5 million ($123 million) in 2022.

The Emirates’ Financial Intelligence Unit (UAEFIU), a special unit of the UAE Central Bank related to such crimes, 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 the Financing of Terrorism and Financing of Illegal Organizations Committee, said the UAE has made “clear progress” in the protection of global financial integrity, peace and security.