On 4 March 2022, the UAE was placed on the Financial Action Task Force’s (“FATF”) ‘grey list’ due to concerns over the effectiveness of its anti-money laundering (“AML”) and counter-terrorism financing (“CTF”) regimes. As a result, the UAE has been subject to greater monitoring from the FATF and required to take steps to strengthen the effectiveness of its AML and CTF regimes in order to bring them in line with FATF recommendations.
UAE’s response has been robust
The UAE’s response has been determined and consistent, showing a continued and effective commitment to improving the robustness of its AML and CTF measures. For example, the FATF’s June 2023 report found that of its 40 recommendations, the UAE was rated “Compliant” in 15, “Largely Compliant” in 24 and “Partially Compliant” in 1. This demonstrated a significant improvement from the UAE’s April 2020 Mutual Evaluation Report, in which the UAE achieved only 5 “Compliant” ratings and was found to be “Non-Compliant” with 11 recommendations.
In an update on 27 October 2023, the FATF acknowledged the “significant progress” made by the UAE. It cited examples of the UAE imposing sanctions on non-compliant financial institutions, increasing prosecutions and facilitating money-laundering investigations. The FATF also noted that the UAE had “substantially completed its action plan” and that on-site assessments would be conducted to confirm that the enhanced AML and CFT reforms were being sustained.
The future
Whilst the UAE remains on the FATF’s ‘grey list’ for now, a positive inspection may lead to its removal at the FATF’s next plenary session in February 2024. If so, the UAE would follow in the footsteps of jurisdictions such as Albania, the Cayman Islands, Jordan and Panama which were removed from the FATF’s ‘grey list’ in its October update after successful implementation of their action plans.
The upshot is that the UAE continues with its efforts to enhance its profile as a safe investment destination, and is taking proactive steps to prevent, detect and prosecute financial crime. It is all the more important for companies in the UAE to ensure that they have proper and effective AML and CFT policies and procedures in place, and that they take timely action in the event of any concerns.
Hogan Lovells’ Global Investigations Guide
To assist clients, we have recently published the UAE chapter of the Hogan Lovells’ Global Investigations Guide, and will be publishing further chapters for other GCC countries shortly. To find out more, including the position in other jurisdictions, please see our Global Investigations Guide: https://guide.hoganlovellsabc.com/country?one=AE
Authored by Randall Walker and Jessica Quinlan.
