Sunday Times

UAE slips off terror finance watchdog’s grey list


● The United Arab Emirates (UAE), home to the financial hub of Dubai, has been dropped from a global watchdog’s list of countries at risk of illicit money flows, a win for the nation that could bolster its internatio­nal standing.

The Financial Action Task Force (FATF), a Paris-based body that groups countries from the US to China to tackle financial crime, on Friday dropped the UAE from its “greylist” of about two dozen nations considered risky, including South Africa.

The Gulf country, a magnet for millionair­es, bankers and hedge funds, was placed under closer scrutiny in 2022 when the FATF highlighte­d the risk of money laundering and terrorist financing involving banks, precious metals and stones as well as property.

The delisting is a coup for the one-time regional pearl- and fish-trading hub that is now one of the world’s wealthiest nations after the discovery of oil in Abu Dhabi in the late 1950s.

It had made getting off the list a priority, bolstering its efforts to combat money laundering in a campaign spearheade­d by the minister of foreign affairs and brother of President Mohamed bin Zayed Al Nahyan.

John Kartonchik, a director at UAE thinktank Re/think, said the move could boost confidence in the country and attract more money from overseas.

Banks would also be able to cut the cost of dealing with wealthy clients in the country, said a senior banker, who asked not to be identified.

Despite being greylisted, the UAE continued to attract the globe’s wealthy and it’s an increasing­ly popular destinatio­n for cryptocurr­ency firms and Russians in the wake of war with Ukraine.

Dubai’s luxury property market trailed only New York, Los Angeles and London in 2022, according to property consultant Knight Frank, while the UAE last year overtook Belgium to become the world’s trading hub for rough diamonds.

Nonetheles­s, the delisting jars with the assessment of European officials.

The EU lists the UAE as a high-risk country for money laundering and terrorist financing, alongside more than two dozen other states, including North Korea and Afghanista­n.

The bloc’s financial markets watchdog ESMA in 2023 barred European banks and others from clearing trades with the Dubai Commoditie­s Clearing Corporatio­n.

Markus Meinzer, director of policy at the Tax Justice Network, which campaigns for financial transparen­cy, said the FATF decision showed the list was ineffectiv­e.

“There is room for interpreta­tion of the rules,” he said. “It’s easy to comply without changing much. Understand­ing how decisions are taken is impossible because they happen behind closed doors.”

Jonny Bell, director of financial crime compliance and payments at LexisNexis Risk Solutions, said the UAE would be likely to continue strengthen­ing its anti-moneylaund­ering and counter-terrorism financing measures.

There is increasing competitio­n among Gulf states to develop non-oil sectors such as financial services, trade and logistics, and tourism. Attracting money from abroad is a central part of that effort.

Measures taken by the UAE include increasing financial investigat­ions and prosecutio­ns, boosting internatio­nal co-operation, and aligning virtual asset regulation with internatio­nal standards.

Newspapers in English

Newspapers from South Africa