The merit in taking the UAE off the ‘grey list’

▶ By meeting the requirements of the financial action task force, the country has scored a big win

Over the past several years, the UAE has been pushing to ensure financial transactions in the country are legitimate, transparent and that everyone’s money and savings are secure. Through monitoring and diligence, authorities have clamped down on illicit financial flows all the more stringently to align with global standards and best practices.

On Friday, the strength of UAE’s financial system was acknowledged when the Financial Action Task Force (FATF), a Paris-based international body, recognised the country’s progress in tackling financial vulnerabilities and removed it from a “grey list” that it was put on in March 2022, along with two dozen other countries. Welcoming the FATF move, Sheikh Abdullah bin Zayed, Minister of Foreign Affairs, said: “This success is the outcome of significant and distinguished efforts by relevant ministries, the federal government and local entities.”

The UAE took on a whole-of-government approach to achieve this. Some of the steps taken in this period include scrutinising financial investigations thoroughly, prosecuting where necessary, improving co-operation among international bodies and putting in place stringent measures where virtual asset regulation is concerned. Not only that, from March 2022 to July last year, the UAE confiscated assets worth more than Dh1.3 billion ($354 million) and issued fines that added up to Dh199 million in the first half of last year to combat money laundering.

Taking consistent action in fully securing its financial frameworks reflects on the efficiency with which the UAE has been able to achieve this goal. It also speaks of the political will to tackle global financial menaces such as money laundering and illicit financing.

The FATF’s clearance is likely to lead to even greater foreign capital inflows and investment. Usually, when a country is placed on the FATF’s grey list, capital flows decline. In the UAE’s case, however, the total value of foreign direct investment increased 10 per cent year on year to $22.7 billion in 2022. This can perhaps be attributed to the country’s position as a world-class financial hub and the reputation it has steadily built. Speaking to The National about the various benefits of being taken off the list, Jonny Bell, director of financial crime compliance and payments at LexisNexis Risk Solutions, said they included “heightened foreign investment into the UAE, expanded international trade facilitated by improved credit agreements, decreased dependence on foreign lending and reduced exposure to money laundering”.

As more people settle down in the UAE, authorities understand the responsibility of keeping the country’s financial frameworks robust. This has come as a result of constant vigilance that will need to be kept up at all times. As technologies evolve, groups with ulterior motives are able to exploit them for nefarious purposes. Vigilance involves continuing to apply international best practices – a process the UAE clearly takes seriously, as it remains focused on not just growing but also diversifying its economy to weather all potential threats in the future.