UAE Poised for Global Watchdog’s (FATF) ‘Gray List’ Over Dirty Money

FalconSlayers

धर्मो रक्षति रक्षितः
Senior Member
Joined
Oct 14, 2020
Messages
18,822
Likes
107,824
Country flag
UAE Poised for Global Watchdog’s ‘Gray List’ Over Dirty Money

Skyscrapers in Dubai,

Skyscrapers in Dubai,Photographer: Christopher Pike/Bloomberg
By
Ben Bartenstein
4 March 2022, 3:41 PM IST
The United Arab Emirates is set for inclusion on a global watchdog’s “gray list” after some of its members indicated that the Gulf nation hadn’t made enough progress in tackling illicit financial flows, according to people familiar with the matter.

At least three members of the Paris-based Financial Action Task Force have expressed the view that the UAE hasn’t done enough to exit the review process and therefore will likely get put on the group’s list of countries subject to more oversight, said the people, who requested anonymity as the matter is private.

The organization is currently holding its plenary, where members are discussing the UAE government’s efforts to combat dirty money, and a decision is expected to be announced as early as Friday.

EXPLAINER: The Global Task Force That’s Going After Dirty Money

To avoid the designation, a significant majority of the FATF’s 39 members must vote that a country has made sufficient progress since the evaluation period began. Just a few votes to the contrary can result in a jurisdiction getting added to the list of nations under increased monitoring, the people said.

A gray-list classification isn’t as punitive as the group’s highest-risk “black list,” and it suggests that UAE officials are taking steps to address the country’s current deficiencies, the people said.

Still, the decision is potentially the most significant step to be taken by the FATF in its three-decade history, given the UAE’s position as a regional financial center. FATF, set up by the Group of Seven major economies, has some two dozen nations -- including Turkey, Zimbabwe and Albania -- on its gray list, with Iran and North Korea on the black list.

The UAE government said it will release an official response once the decision is out. A spokesperson for FATF said its internal deliberations are confidential.


Read More: UAE Faces Risk of Inclusion on Global Watchlist Over Dirty Money

For the UAE, being gray-listed would be a setback at a time when it faces greater competition from neighboring Saudi Arabia, which is growing its financial markets and taking steps to lure more investment.


In practical terms, a gray-listing would force Wall Street banks, which use Dubai as their regional headquarters, to dedicate additional resources to compliance in order to avoid future penalties from international regulators. The decision could also have an impact on Abu Dhabi, the nation’s capital and home to sovereign wealth funds with more than $1 trillion of assets.

A report by the International Monetary Fund last year found that gray-listed countries experienced “a large and statistically significant reduction in capital inflows.”

The potential fallout in the UAE could be difficult to quantify, though, as financial firms may already approach the country as a higher-risk area, Katherine Bauer, a former Treasury Department official who led the U.S. delegation to FATF’s regional partner in the Middle East and North Africa, told Bloomberg in January.

Significant Steps
Since warnings by the FATF in 2020 as part of the group’s mutual-evaluation report, the UAE government has stepped up efforts to better align with global standards on anti-money laundering and countering terrorist financing.

Emirati officials set up an Executive Office led by Hamid Al Zaabi to combat illicit flows, working in partnership with other FATF members. Al Zaabi has said previously that the UAE is fully committed to upholding the integrity of the international financial system.

The country has introduced courts focused on financial crimes, established new beneficial ownership rules and even announced a 9% corporate tax starting in 2023. The central bank recently imposed penalties on some lenders for breaching anti-money laundering regulations and regulated new rules on hawalas, charities often alleged to enable terrorism-related money flows.

The UAE collected over $1 billion in anti-money laundering and terrorist financing penalties last year, state-run WAM news agency reported Thursday. “Several major legal amendments were recently adopted, including the anti-money laundering law that includes wider powers related to confiscations, as well as controlling virtual assets,” WAM reported, citing Al Zaabi.

Read More: UAE Readies National Crypto Licensing in Push to Embrace Fintech

The FATF’s mutual-evaluation report published in April 2020 also highlighted how the UAE has taken significant steps to tackle terrorist financing, yet requests for information on money laundering often got met with delays. Since then, the illicit flows into the country have attracted greater scrutiny.

As the evaluation period proceeded, it became clear that the UAE faced a challenging hurdle to avoid a gray-listing, the people said. Yet ongoing progress toward combating illicit financial flows could allow the Gulf state to get off the list in a shorter span than other jurisdictions, they added.

 

Covfefe

Senior Member
Joined
Aug 17, 2021
Messages
3,535
Likes
23,310
Country flag
We must remember that there is no democracy pluralism independent judiciary secularism religious tolerance in the uae.
Could be a punishment for some of the supposedly pro-China FU Murica moves that these two Arab countries have been making in the recent past. If they clear F35 orders, it'll be all good.
 

Swesh

Regular Member
Joined
Jan 12, 2020
Messages
888
Likes
2,478
Country flag
Since the start of the COVID-19 pandemic, the FATF has provided some flexibility to jurisdictions not facing immediate deadlines to report progress on a voluntary basis. The following countries had their progress reviewed by the FATF since October 2021: Albania, Barbados, Burkina Faso, Cambodia, Cayman Islands, Jamaica, Malta, Morocco, Myanmar, Nicaragua, Pakistan, Panama, Philippines, Senegal, South Sudan, Uganda, and Zimbabwe. For these countries, updated statements are provided below. Jordan, Mali, Haiti, and Turkey were given the opportunity and chose to defer reporting; thus, the statements issued in June and October 2021 for these jurisdictions are included below, but they may not necessarily reflect the most recent status of the jurisdiction’s AML/CFT regime. Following review, the FATF now also identifies the United Arab Emirates.


Source: https://www.fatf-gafi.org/publicati...ocuments/increased-monitoring-march-2022.html
 

Swesh

Regular Member
Joined
Jan 12, 2020
Messages
888
Likes
2,478
Country flag
The United Arab EmiratesIn February 2022, the United Arab Emirates (UAE) made a high-level political commitment to work with the FATF and MENAFATF to strengthen the effectiveness of its AML/CFT regime. Since the adoption of its MER in February 2020, the UAE has made significant progress across its MER’s recommended actions to improve its system, including by finalising a TF Risk Assessment, creating an AML/CFT coordination committee, establishing an effective system to implement targeted financial sanctions without delay, and significantly improving its ability to confiscate criminal proceeds and engage in international cooperation. Additionally, the UAE addressed or largely addressed more than half of the key recommended actions from the MER.
The UAE will work to implement its FATF action plan by: (1) demonstrating through case studies and statistics a sustained increase in outbound MLA requests to help facilitate investigation of TF, ML, and high-risk predicates; (2) identifying and maintaining a shared understanding of the ML/TF risks between the different DNFBP sectors and institutions; (3) showing an increase in the number and quality of STRs filed by FIs and DNFBPs; (4) achieving a more granular understanding of the risk of abuse of legal persons and, where applicable, legal arrangements, for ML/TF; (5) providing additional resources to the FIU to strengthen its analysis function and enhance the use of financial intelligence to pursue high-risk ML threats, such as proceeds of foreign predicate offenses, trade-based ML, and third-party laundering; (6) demonstrating a sustained increase in effective investigations and prosecutions of different types of ML cases consistent with UAE’s risk profile; and (7) proactively identifying and combating sanctions evasion, including by using detailed TFS guidance in sustained awareness-raising with the private sector and demonstrating a better understanding of sanctions evasion among the private sector.

Source: https://www.fatf-gafi.org/publicati...ocuments/increased-monitoring-march-2022.html
 

Tshering22

Sikkimese Saber
Senior Member
Joined
Aug 20, 2010
Messages
6,276
Likes
12,251
Country flag

Latest Replies

Global Defence

Articles

Top