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The United Arab Emirates' recent initiatives to prevent economic crime appear to have failed, with the global standards body placing the country on its notorious grey list.
The UAE has been added to the 23-strong list of countries that the Financial Action Task Force (FATF) subjects to heightened scrutiny.
The country is an international financial hub in the Middle Eastern region, with the city of Dubai having gained a reputation around the world for its luxury living.
Among the financial institutions that offer personal banking services in the UAE are HSBC, Citibank, Standard Chartered, Royal Bank of Canada and Credit Suisse.
UAE officials have said they would take robust action to meet a list of requirements laid down by the task force, including increasing prosecutions and identifying sanctions evasion.
"The UAE takes its role in protecting the integrity of the global financial system extremely seriously," the UAE's Executive Office of Anti-Money Laundering and Countering the Financing of Terrorism said in a statement.
In its assessment of the country, FATF pointed out that although the UAE had addressed several of the actions it had directed the country to take in its 2020 mutual evaluation report, which FATF is responsible for carrying out on its members, it still had work to do in improving its prevention of economic crime.
Now it is on the list, UAE will work to implement its FATF action plan by improving international cooperation, identifying and improving understanding of the risks in different sectors that are exposed to economic crime, and showing an increase in the number and quality of suspicious transaction reports by financial institutions.
The UAE has also been told to achieve “a more granular understanding” of the risk of abuse of legal persons, and where applicable, legal arrangements as well as providing more resources to the financial intelligence unit.
It must also demonstrate a “sustained increase” in effective investigations and prosecutions of different money laundering cases that are consistent with the UAE’s risk profile.
Recently, UAE officials have made plenty of noise about their improving approach to money laundering prevention. For example, last month the UAE said that it was to impose a federal levy on corporate earnings for the first time, in an attempt to shift away from its reputation as a tax haven.
The country’s justice ministry also confirmed in February that it would be stepping up AML work through tighter border controls, asset freezing and fast-track money-laundering controls.
More than 145 international fugitives were brought to justice in the Emirates in 2021 and the total number of extradition requests set by the UAE increased by almost 380 percent between 2019 and 2021.
While UAE has found itself on the greylist, Zimbabwe has now been taken off.
“The FATF welcomes Zimbabwe’s significant progress in improving its AML/CFT regime,” the institution said in a statement. “Zimbabwe has strengthened the effectiveness of its AML/CFT regime and addressed related technical deficiencies to meet the commitments in its action plan regarding the strategic deficiencies that the FATF identified in October 2019.”
