Despite being placed under scrutiny, the UAE did not face major repercussions during the two-year probation period.
Lower bank fees, smoother foreign currency transactions and increased trade and investment resulting in more employment opportunities, are among the benefits following UAE’s removal from Financial Action Task Force (FATF) ‘grey’ list.
FATF sets international standards to prevent the risk of illicit money flows. The UAE was removed on Friday from the global watchlist of countries that were placed since 2022 under enhanced due diligence because of
“vulnerability to money laundering and financing of terrorism.”
“The UAE's removal from FATF’s grey list reflects the country’s commitment to fighting financial crime and sanctions evasion, and will boost trust in its financial system. This could lead to smoother foreign currency transactions, lower inter-bank fees and increased trade and investment,”
noted Mohamed Daoud, Industry Practice Lead at Moody’s Analytics.
“It takes time for foreign institutions and banks to update their anti-money laundering and counter-terrorist financing (AML/CFT) measures, so the full benefits may lag behind the official announcement. Think of it as a gradual thawing, not an instant spring,”
Daoud added.
The Abu Dhabi Global Market (ADGM) pointed out:
“FATF’s decision stands as a testament to the remarkable progress the UAE has made over the past two years in addressing its AML and CTF measures.”
What is grey listing?
The UAE was placed under closer scrutiny in 2022, when FATF
“highlighted the risk of money laundering and terrorist financing involving banks, precious metals and real estate property.”
Barney Almazar, director at Gulf Law in the UAE, Philippines, UK and Portugal, explains:
“The grey list is a designation given to countries that are considered to have strategic deficiencies in their anti-money laundering and counter-terrorist financing regimes. Being on the grey list serves as a warning to these countries to improve their regulatory frameworks and practices to meet international standards set by the FATF."
"Failure to make sufficient progress in addressing these deficiencies can lead to further sanctions and potentially being moved to the FATF blacklist, which carries more severe consequences,"
he added.
“The UAE’s reinstatement is a big win,”
he underscored, noting:
“Being moved out of the FATF grey list is generally seen as a positive development, as it reflects progress in addressing weaknesses in AML and CTF measures.”
Almazar pointed out:
“We have recently witnessed bank accounts being closed due to suspicious transactions, stringent KYC (Know Your Customer) measures when registering a company and opening bank facilities."
“There have also been strict monitoring of ceiling caps in money transfer transactions and strict Central Bank reportorial requirements. These are just some of the measures enacted by UAE to combat financial crimes that led to its triumphant reinstatement – a big win not just for the UAE regulators but to its residents as well, giving positive signal to investors,”
he added.
Enhanced credibility and job opportunities
Despite being placed under FATF grey list, the UAE did not face major repercussions during the two-year probation period. This is due to the country’s resilient economy and attractiveness amongst businesses and investors across the world, underscored Mayank Sawhney, managing director at Dubai-based MaxGrowth Consulting.
He added:
“The removal of UAE from FATF grey list is a big boost for the country's leadership, economy and businesses, as it will significantly enhance the credibility of the country’s commercial and investment ecosystem in the global markets.”
“We had observed over the last two years that a number of large global conglomerates and global funds – due to their internal compliance policies – were not able to make big investments in the UAE market while it was under FATF grey list. Now, they all will be looking to flock to the UAE market with their big investment and business expansion plans,”
Sawhney underscord.
He added:
“As far as UAE residents are concerned, removal of UAE from FATF grey list will have a positive impact on them as well, because with more global capital flowing into the country and businesses expanding their operations in UAE, there will be increased opportunities for employment.”
Safe haven for businesses
Anurag Chaturvedi, CEO of Andersen in UAE, painted a clearer picture. He said:
“Countries removed from the grey list tend to see an 8 to 12 per cent increase in payments from the rest of the world. The UAE is expected to have increased cross-border trade credit in 2024 and beyond as part of its 2030 Vision. Compliant countries usually see a 5 to 7 per cent increase in capital inflows upon getting off the grey list, leading to better access to international financial markets and lower borrowing costs for the UAE government and businesses.”
“The immediate benefit of UAE’s FATF compliant status will enable global businesses to migrate their regional headquarters to the UAE, which has low tax regime and world class infrastructure facilities and connectivity,”
he added.
Chaturvedi reiterated the UAE will improve its reputation as a safe and secure place to do business. There will be more foreign investors and companies looking for stable and trustworthy partners that will stimulate economic activity, create jobs and drive overall prosperity in the country.
He also underscored:
“It is essential for the UAE to continue to comply with international regulations to maintain its status and continue to reap these benefits in the long term.”
‘We are always compliant’
Abdul Aziz Abdulla Al Ghurair, chairman of Dubai Chambers, said:
“We have always been complying with international requirements. Of course, people will look at you when you are growing so fast. But we have always complied with UN, EU, US, UK regulations.”
“The country has always enhanced its standards, far exceeding some of the international requirements. (Removal from FATF grey list) sends a strong message to the world that we are serious partners in combatting money laundering and terrorism,”
he added.
News Source: Khaleej Times
