Is UAE next to be on the FATF “Grey List”? And is the UAE a high risk country?

Even after a recent government push to eliminate illicit transactions, the United Arab Emirates appears to still be at risk of being added to a FATF watchlist of countries subject to oversight for failing to combat money laundering and terrorist financing.

FATF questioned the UAE’s system last year’s report even though it claimed that “significant steps” have been taken to strengthen regulations, including new legislation in 2018 and 2019. 

Despite submitting a report to the FATF in November, Bloomberg reports the UAE did not achieve many of the thresholds needed to stay off the grey list.

Bloomberg Journalists reported that unnamed sources told them that the Financial Action Task Force (FATF) is leaning towards listing the UAE on its “grey-list.” The group is expected to decide at its next meeting in late February.

When FATF decides to grey-listing a country, it means that there are “strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing.”

Several steps have been taken by the UAE government and the AML authority since that warning to align with global financial standards, among them issuing new guidelines, creating new institutions, investing heavily in Tech Startups and Digital Transformation, creating dedicated courts for dealing with financial crimes, and establishing the UAE’s Office for Anti-Money Laundering and Counter-Terrorist Financing. 

When the AML/CFT office was established, the Ministry of Foreign Affairs and International Cooperation declared the main responsibilities of this Office would support the vision UAE has in terms of diminishing financial crimes.

 The UAE is an oil-rich, diversified economy that should not be grey-listed, and it is also not necessary given the recent improvements. A grey-list designation for the UAE would be a major setback for all the people working and dedicated to fighting against financial crime and believing in their mission to maintain the country status as a global hub for financial 

According to last year’s report by the International Monetary Fund, FATF grey-listings could adversely affect a country’s short-term capital inflows significantly, however since the UAE’s economy is well-diversified and not so reliant on oil or gas, a greylist wouldn’t help much in terms of Reputation.

UAE’s status as a major financial hub in the Middle East and beyond is also significant in light of this decision.

While a planned FATF Paris meeting might give clarity on the latest achievements it also will show how collaborative and dedicated the UAE has been.