UAE: UAE nearing the end of FATF grey list journey

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.

13 March 2024

MALTA: One in four applicants for Maltese citizenship refused

Almost one in four applicants for Malta’s golden passport scheme are refused, official data seen by the Times of Malta shows. Around half the refused applications came from Russian nationals while

Read More
18 October 2024

CHINA: China targets ultra-rich with enforcement of offshore investment tax

China has begun enforcing a long-overlooked tax on overseas investment gains by the country’s ultra-rich as it seeks to expand revenue sources amid a slumping economy and declines in domestic land

Read More
12 March 2024

UK: New tax regime for UK non-doms

In his Spring Budget, delivered on 6 March 2024, the Chancellor announced sweeping reforms to replace the current tax regime for UK resident, non-UK domiciled individuals with a system based purely

Read More
25 October 2024

UK: New HMRC report identifies £400m of under-declared tax from individuals with offshore income

A new analysis by HMRC of undisclosed foreign income by UK residents published today has identified £400m of under-declared tax from offshore income, with 16% of individuals not reporting and paying

Read More