UAE added to FATF grey list for money laundering

DUBAI: The Financial Action Task Force (FATF) while retaining Pakistan on the ‘grey list’ adds UAE (United Arab Emirates) to the money laundering watch list.

According to Reuters, the FATF also known as Groupe d’action financière on Friday said that the Middle East business hub in the UAE has been included in the grey list and “subject to increased monitoring”. In response, the UAE government has vowed a “strong commitment” to the FATF, to ensure it meets the requirements to be removed from the grey list.

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It is pertinent to note that countries like UAE, Pakistan, and others that are included in the grey list are considered liable to reputational damage, especially with regards to global financial transactions. According to the foreign news agency, the UAE which is the financial capital in the region is working on an action plan that guarantees effectiveness in its anti-money laundering and counter-terrorism financing regimes.

According to reports, the UAE government has issued a statement following the FATF’s decision. In the statement, the UAE has pledged “robust actions and ongoing measures” to ensure stability in the “country’s financial system”. However, the decision comes as a blow for the UAE which is an oil and gas exporter, as it has boosted Saudi Arabia as the top oil exporter.

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In addition, former US Treasury official Katherine Bauer has said that the UAE “has inherent vulnerabilities to illicit finance due to its role as a regional commercial and financial hub”. Bauer added that considerable efforts have been made to maintain the UAE’s anti-money laundering regime, especially in the wake of the 2020 FATF assessment.

The United Arab Emirates has entered the FATF’s Jurisdictions under Increased Monitoring list, often referred to as the 'grey list', following the conclusion of the FATF Plenary. See the full update here➡️https://t.co/cuEK8iKyJY #FollowTheMoney pic.twitter.com/u6gVWHUKJo
— FATF (@FATFNews) March 4, 2022

In recent years, the UAE has attempted to curb its image as a “hotspot for illicit money”, however, following its inclusion in the grey list, UAE officials have said, “there’s still a fair amount to be done” as the results cannot be implemented overnight.

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The Financial Action Task Force (FATF), which is an intergovernmental organization, was founded in 1989 on the initiative of the G7 to develop policies to combat money laundering. In 2001, its mandate was expanded to include terrorism financing. According to FATF, the UAE must demonstrate progress in their international money laundering investigations, including the identification of “suspicious transactions” in the economy.