Paris-based Financial Action Task Force designated the UAE in its “grey list” following negligence towards financial transparency.
The UAE is just placed in a “gray list” compiled by an international watchdog. It occurs after some leaders in the community claimed that the Gulf country had not made satisfying amendments in combating illegal money flow
By far, three persons in the Financial Action Task Force, in France, have expressed similar sentiments. They believe the Abu Dhabi hasn’t pushed enough to be exempt from the assessment. As a result, the state will most likely faced inclusion to the group’s list of states that will be subject to greater scrutiny.
Countries on the ‘grey’ list face increased FATF monitoring as well as credit harm. Other effects might include changes in credit ratings, difficulty accessing global financing, and greater transaction fees.
In reaction to the move, the Abu Dhabi administration stated that it is “committed” to close collaboration with the FATF on areas where it can enhance its conduct. “Robust actions and ongoing measures taken by the UAE government and private sector are in place to secure the stability and integrity of the country’s financial system,” it explained in a statement.
United Arab Emirates is an oil and gas supplier with a reputation for being open to commerce and allowing glamorous expat lives. It claims to have strengthened restrictions in previous years to combat a reputation as a haven for illegal money.
The classification is a setback for the country, which is facing increasing economic rivalry from its neighbors in the region. Iran, Saudi Arabia, and Qatar are the main regional rivals who closely trace the developments in Abu Dhabi and its markets.
The designation has also security implications as it may work as evidence allegations about Emirati involvement in funding terrorism.
Grey List; Financial Transparency
The United Arab Emirates has secured its regional position as a main hub for financial transactions during the years. The country, nevertheless, has fallen short of meeting international requirements regarding its economic transparency.
The global concerns about UAE’s turning into an international haven for illicit money transactions seem relevant. As a senior expert in Washington Institute explains, “The UAE has inherent vulnerabilities to illicit finance due to its role as a regional commercial and financial hub.”
According to the watchdog’s report two years ago, the UAE has to make basic and important reforms. The watchdog enacted a money laundering act and counter-terrorism funding legislation 4 years ago. It followed the policy by establishing an Executive department for Anti-Money Laundering and Counter-Terrorism Funding in 2021.
Following the 2020 report, the Abu Dhabi has achieved some “improvement” on areas like as terrorism funding and money laundering. In terminating illicit proceeds and collaborative conducts, the county has also made some progress.
UAE now has to show that it is making progress in supporting international anti-money laundering probes. Risk management is also in requirements in specific businesses, such as real estate brokers and valuable stone and metal merchants. To demonstrate the validity of the process, the government must identify questionable financial activities in the economic system.
Utilizing financial intelligence to combat money laundering is another area where there is need for development. In addition, boosting money laundering prosecutions, as well as effectively detecting and combating sanctions evasion, would be in the requirements.
Located in a strategic geo-political center of the world, UAE is fertile for money laundering and dirty financial activities. Being in a Grey List might change the state conduct towards security and terrorism concerns. The middle East might need the moves to evade further supply of extremism.