In a significant development reported in October 2023, the United Arab Emirates (UAE) is on the cusp of being removed from the Financial Action Task Force’s (FATF) “grey list.”
This list, known formally as Jurisdictions under Increased Monitoring, includes countries that are actively collaborating with the FATF to address and rectify deficiencies in their anti-money laundering (AML), counter-terrorist financing (CTF), and anti-proliferation financing frameworks. Being on the grey list signifies a country’s dedication to resolving identified issues and its agreement to undergo intensified scrutiny.
Fenergo, which is helping to future-proof client lifecycle management, has delved into what the UAE’s exit from the grey list means.
The Implications of FATF Grey Listing
The FATF, an intergovernmental body established to fight money laundering and terrorist financing, employs a mutual evaluation process to scrutinize its member countries’ adherence to its recommendations. This process is critical for assessing and enhancing global AML/CTF efforts. It involves comprehensive reviews, including self-assessment reports by the countries under evaluation, followed by onsite visits from FATF evaluators. These assessments aim to identify strengths, weaknesses, and areas needing improvement in a country’s AML/CTF regime, with non-compliance potentially leading to increased monitoring or sanctions.
The UAE’s Grey List Status: A Closer Look
The UAE found itself on the FATF grey list in March 2022, following the Mutual Evaluation Report (MER) released in April 2020, which called for urgent action to address the criminal financial flows attracted by its status as a major financial and trading hub. Since its listing, the UAE has taken significant steps towards enhancing its AML/CFT compliance, with FATF’s Third Enhanced Follow-Up Report in July 2023 acknowledging the UAE as “compliant” or “largely compliant” with the majority of FATF Recommendations.
Key Reforms Spearheading the UAE’s Delisting Efforts
The FATF’s October 2023 Plenary highlighted several critical reforms undertaken by the UAE, including an enhanced understanding of ML/TF risks, improved risk-based measures to prevent the misuse of legal entities, increased financial intelligence capacity, and more effective enforcement of targeted financial sanctions. These efforts underline the UAE’s commitment to bolstering its AML/CFT framework and addressing FATF’s concerns comprehensively.
The Importance of Exiting the Grey List for the UAE
The potential removal from the FATF grey list marks a pivotal moment for the UAE, signifying not just compliance with international standards but also promising broader economic benefits. Greylisting can deter foreign investment, complicate international transactions, and impact credit accessibility, posing significant challenges to a jurisdiction’s economic health. The UAE’s anticipated delisting in February 2024 reflects its dedication to maintaining financial integrity and ensuring economic stability on the global stage, underscoring the critical nature of continuous reform and compliance efforts.
The European Commission unveiled on Monday a plan to better channel up to €10 trillion in bank deposits across the bloc into much-needed strategic investments. “Currently, too few European citizens
High adoption rate: 86% of hedge fund managers surveyed now grant their staff access to various Gen AI tools to bolster their work, representing a widespread embrace of this transformative technology.
Labour is refusing to tell us which taxes it will increase if it wins the general election, but one thing is sure – in its own words, it’s going to be “relentless”, says Harvey
The Bank of Ghana has indicated it is embarking on various anti-money laundering activities to avert another round of blacklisting from the European Union and the United Kingdom. Ghana in 2022 was removed