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UAE emerges from FATF Grey List

Reflecting Advancements in Financial Integrity and Expansion

The United Arab Emirates (UAE) achieved a significant milestone on February 23rd, 2024, by being removed from the Financial Action Task Force’s (FATF) “grey” watchlist. This delisting underscores the substantial progress the UAE has made in addressing anti-money laundering and counter-terrorist financing (AML/CFT) concerns raised by FATF.

The said delisting is poised to solidify UAE’s status as a financial hub, ensuring financial integrity, enhancing investors’ confidence and contributing to the overall expansion of the UAE’s economy by nurturing a secure and transparent business environment.

Key reform driving towards delisted status:

As per FATF’s October 2023 plenary meeting, the UAE’s journey towards delisting involved a series of comprehensive reforms, encompassing enactment of new legislations regarding beneficial ownership transparency, introduction of new guidelines for financial institutions and Designated Non-Financial Business or Professions (“DNFBPs”) and enhancement of bilateral legal assistance treaties, alongside an increase in suspicious transaction reports.

The report of Ministry of Economy released in March 2023, unveiled that the UAE imposed fines amounting to AED 22.6 million on 29 DNFBP companies for non-compliance, indicating heightened enforcement efforts by the authorities and showcasing the efficacy of its systems. Additionally, revisions were made not only to the Anti-Money Laundering and Counter-Terrorist Financing law (Federal Decree-Law No. 26 of 2021) and associated statutes but also to the Penal Code and the framework regulating virtual assets (Law No. 4 of 2022 Regulating Virtual Assets) ensured full alignment of the legislative framework with global standards. These measures led to fines surpassing AED 115 million in Q1 2023 and the seizure of assets valued at over AED 925 million between November 2022 and February 2023.

Positive implications for the UAE Market:

The delisting is expected to yield several favourable outcomes for the UAE’s financial landscape:

  1. Boosted Confidence: The UAE’s position as a secure and compliant investment hub, potentially attracting greater foreign direct investment (“FDI”) and portfolio inflows.
  2. Enhanced Access to Financing: Investors may enjoy easier access to financing options as financial institutions grow more comfortable conducting business in the UAE due to enhanced AML/CFT compliance.
  3. Reinforced Reputation: UAE-based family offices can capitalize on the delisting to fortify their image as responsible and compliant entities, potentially drawing high-net-worth individuals (“HNWIs”) seeking secure asset havens.
  4. Improved Access to Finance: Investors may benefit from easier access to financing options, as banks and other financial institutions become more comfortable conducting business in the UAE due to its improved AML/CFT compliance.
  5. Reduced costs of cross-border payments: Delisting can make it easier and cheaper for businesses and individuals to send and receive money across borders.
  6. Expanded Investment Horizons: With the improved perception of the UAE market, family offices may gain access to a broader spectrum of investment opportunities spanning various asset classes.
  7. Heightened Deal Flow: The delisting is anticipated to stimulate deal flow in the UAE, as investment banks feel more at ease facilitating transactions in a jurisdiction boasting a robust AML/CFT framework.
  8. Augmented Competitiveness: Investment banks operating in the UAE stand to gain a competitive advantage over regional counterparts owing to the country’s bolstered international reputation.

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