The United Arab Emirates is poised to leave the global watchdog's “grey list” as soon as this week, following efforts to crack down on illicit financial flows in and out of the oil-rich Gulf state.
Assessors from the Paris-based Financial Action Task Force conducted a site visit last month and have since provided feedback on the UAE Action Plan, saying the people asked not to be named because deliberations are private. was pointed out.
advertisement
Continue reading below
Sources said the UAE is expected to be removed from the list on February 23, the last day of the FATF general meeting in Paris. No final decision has been made.
Bloomberg reported in October that representatives of at least three FATF member states, which had previously supported the addition of the UAE to the list of further monitored countries, supported delisting the country by February 2024 at the earliest. Reported.
“It would be unprecedented to reach this final stage and not be removed from the list,” said David Lewis, a former FATF executive director and current managing director at Kroll. “Having said that, the FATF may still point to further work to be done.”
quick response
To be removed from the gray list, a significant majority of FATF members must vote that the country has made sufficient progress since the start of the assessment period. Just a few negative votes could keep a jurisdiction on the list, officials said. This group has just under 40 members, some of whom are more influential.
Late last year, UAE officials went on a tour of key FATF member states to drum up support, including visits to the United States, Switzerland and Singapore. According to a Bloomberg report, Russian sanctions avoidance and cryptocurrencies were at the center of talks with foreign partners.
“The UAE is committed to combating illicit finance and continuously improving the effectiveness of its domestic systems, in line with international best practices,” the official said.
A FATF spokesperson declined to comment.
This month's withdrawal marks a swift turnaround for the UAE, which was initially added to the list of jurisdictions to come under increased surveillance in March 2022. A Bloomberg study at the time documented Dubai's status as the world's richest exile destination.
After the invasion of Ukraine, the UAE became one of three Middle Eastern countries that emerged as a magnet for wealthy Russians. This has allowed Gulf countries to avoid the same economic impact as some gray-listed countries.
“The UAE is a fast-growing financial center,” said Ibtisem Rasoud, head of regional financial crime advisory at Dubai-based law firm Al Tamimi & Company. “Its importance to global financial markets was part of the rationale underpinning the FATF's decision” to be included in the gray list, but it also explains the UAE's relative resilience to the effects of its listed status. There are also things to do. ”
scrutiny
After the first wave of inflows, UAE banks began increasing scrutiny of various nationalities, including Russians, as the government urged them to leave the list.
Bloomberg reported in November that remittances, whether companies are sending funds to Russia or moving cash to third countries, have come under increased scrutiny. Some banks demanded more documentation and sometimes blocked funds, demanding legitimacy of the transfers or questioning the source of the funds.
The government announced that it had imposed approximately AED 250 million ($68 million) in AML/CFT fines from January to October 2023, representing an increase of more than three times the previous year.
advertisement
Continue reading below
Leaving the gray list will be particularly welcomed by Wall Street banks, many of which have significant operations in the UAE. Since the designation, companies have grappled with increased compliance costs, forcing some to outsource more work to India.
Transparency International warned the organization ahead of the FATF general meeting that delisting the country was “premature,” according to a letter seen by Bloomberg. The Berlin-based corruption watchdog cited continued concerns related to money laundering, international cooperation and Dubai's real estate market.
high-profile arrest
As part of efforts to get off the gray list, UAE authorities have made several high-profile arrests. Hedge fund trader Sanjay Shah, who was charged with defrauding the Danish state of $1.3 billion in the Cum-Ex trading fraud, was extradited to Denmark late last year.
Authorities also arrested Atul and Rajesh Gupta, who are wanted in South Africa on money laundering and fraud charges, but a local court rejected an African bid to have the brothers extradited. Meanwhile, Angolan authorities are seeking the extradition of another billionaire, Isabel dos Santos, who has found sanctuary in Dubai.
Shah, the Guptas and dos Santos deny any wrongdoing.
While some of the UAE's allies have praised the country's progress within the FATF, they have also raised ongoing concerns with the Gulf.
US authorities have sanctioned a UAE-based shipping company for violating a $60 per barrel price cap on Russian crude oil. Last year, Western officials also urged the UAE to end its role as a gateway for Russia to circumvent restrictions on sanctioned technology. Officials said at the time that the UAE continues to monitor exports of dual-use products.
Marcena Hunter, director of the Global Initiative Against Transnational Organized Crime, says despite recent reforms in the gold sector, vulnerabilities remain.
“It appears that this is not just some accounting manipulation by the UAE,” she said. “However, the actions of some domestic actors could undermine real efforts by some Emirati officials to strengthen compliance and due diligence practices.”
© 2024 Bloomberg