The United Arab Emirates, known for the financial hub of Dubai, has been removed from a global watchdog’s list of countries at risk of illicit money flows, marking a significant achievement for the nation and potentially enhancing its international reputation.
The Financial Action Task Force (FATF), which comprises countries from the United States to China to combat financial crime, recently removed the UAE from its ‘grey list’ of approximately two-dozen nations considered high-risk.
In 2022, the Gulf country faced increased scrutiny when the FATF highlighted concerns about money laundering and terrorist financing, particularly in sectors such as banking, precious metals and stones, as well as real estate.
The delisting marks a notable achievement for the UAE, once a regional trading hub, now one of the wealthiest nations globally following the discovery of oil in Abu Dhabi in the late 1950s. The nation had prioritized efforts to be removed from the list, significantly enhancing its anti-money laundering initiatives, a move led by the minister of foreign affairs and brother of President Mohamed bin Zayed Al Nahyan.
John Kartonchik, a director at UAE think tank Re/think, believes that this decision could bolster confidence in the country, potentially attracting more foreign investments. He stated, “Investors … may feel more secure.”
Moreover, banks are likely to benefit from reduced costs associated with managing wealthy clients in the UAE, according to a senior banker who preferred to remain anonymous.
Despite being on the grey list, the UAE continued to be a popular destination for the global wealthy, attracting cryptocurrency firms and Russians, particularly in the aftermath of the war with Ukraine.
In 2022, Dubai’s luxury real estate market was ranked behind only New York, Los Angeles, and London, according to property consultant Knight Frank. Additionally, last year, the UAE surpassed Belgium to become the world’s leading trading hub for rough diamonds.
Jonny Bell, director of financial crime compliance and payments at LexisNexis Risk Solutions, expects the UAE to continue strengthening its anti-money laundering and counter-terrorism financing measures.
There is a growing competition among Gulf states to diversify their economies beyond oil, focusing on sectors like financial services, trade, logistics, and tourism. Attracting foreign investments is a key component of this strategy.
The UAE has implemented several measures, including increased financial investigations and prosecutions, enhanced international cooperation, and alignment of virtual asset regulation with global standards.