Ref: AD-3039
Summary: five MENA countries are on the Financial Action Task Force’s grey-list “for increased monitoring for strategic deficiencies in their anti-money laundering, counter-terrorist financing, and counter-proliferation financing frameworks”. Getting off the list may be down more to politics than process.
This content is locked
Login or Register To Unlock The Content!
Thanks for this really helpful brief on FATF. But it would be good to have details of what happened to the UAE which was grey listed and has now been removed from that list. I suspect there are some interesting insights on the rationale in both events.
The UAE was placed on the grey list in March 2022, and removed in Feb 2024 after implementing an action plan of over 30 remedial items and carrying out a legislative and institutional overhaul. Some of this was just improving the window dressing, so to speak, with a bolstered AML unit, and hiring more people – for instance, we were told the number of staff increased by 100% yet no mention of how many were employed prior to the overhaul.
The grey listing had been a bit of a surprise, particularly as due to the UAE’s strong relationship with the USA and the UK there was expectation they would not vote against the UAE. The UK had also signed an agreement with the UAE to tackle illicit financial flows in September 2021. The US and UK however had been frustrated for decades with the UAE’s inaction on AML and financial crime – from skirting Iran sanctions, being a major gold hub, the easy going financial sector etc – while the listing also came in the immediate wake of the Russian invasion of Ukraine, so there was a political sentiment at the time that the UAE was long overdue a slap on the wrist.
By 2024 there was a consensus at FATF that the UAE had done enough to get off the list, but many jurisdictions were not happy with that decision, such as South Africa, which was hoping that the UAE would extradite the Gupta brothers, who are wanted in South Africa in connection with fraud and money laundering during the presidency of Jacob Zuma.
The UAE case highlights what can be considered the ineffectiveness of the FATF regime as – while the Emirates ticks all the boxes in terms of technical compliance and legislation etc – dirty money is still flowing through while Dubai has been fingered numerous time for being a hub for conflict and illicit gold, particularly from Africa, and of course, of late, from Sudan, and amid the allegations the UAE is supporting the RSF and enabling financing through its banking system.
Indeed despite improving the facade, there are many ways that dodgy business is still afoot. Ask any financial crime specialist about major money laundering hubs and Dubai always comes up. As Lakshmi Kumar, the now former Policy Director at Global Financial Integrity, told me when discussing the grey listing: “The challenge with the UAE has always been it is a black hole of information, and is designed to be so. If you look at the biggest exports and imports, 50% is uncharacterised, and what really grabs the attention is the big figure dual-use items like oil, gold and diamonds,” she said. The country’s 39 free trade zone also pose risks, despite a new beneficial ownership law. “Instead of one beneficial ownership registry, you need to get information from 39 registries. It makes it easier for a criminal to conceal illicit assets,” said Kumar.