Financial Crime World

UAE Urged to Enhance Cooperation Against Money Laundering and Terrorist Financing

The Financial Action Task Force (FATF) has recently published a report evaluating the United Arab Emirates’ (UAE) anti-money laundering (AML) and combating the financing of terrorism (CFT) regime. The report highlights several areas where the UAE needs to improve its efforts against money laundering and terrorist financing.

Key Areas of Concern

Effective Suspicious Transaction Reporting

The report notes that while the number of suspicious transaction reports (STRs) filed by financial institutions has increased significantly, the quality of these reports remains a major issue. Low-quality STRs divert already limited resources away from law enforcement investigations and are ineffective in driving outcomes.

To address this issue, the UAE is being urged to:

  • Provide enhanced guidance and training to financial institutions on how to improve their awareness and investigation skills
  • Establish a feedback loop between the Financial Intelligence Unit (FIU) and regulated entities to ensure that STRs are reviewed and acted upon in a timely manner

Transparency and Due Diligence in Free Zones

The report highlights the lack of transparency and due diligence in the UAE’s free zones. While some positive steps have been taken to standardize approaches, there remains a high risk of criminal activity being carried out through complex structures and informal nominees.

To address this issue, the UAE should:

  • Ensure that all registered entities are subject to effective monitoring and supervision
  • Make beneficial ownership information available to competent authorities without impediments

Improving the Effectiveness of the FIU

The report emphasizes the importance of improving the effectiveness of the Financial Intelligence Unit (FIU), including providing it with adequate resources and empowering it to use modern techniques and tools. The country should also consider adopting a data-led analytics approach, using machine learning and AI to increase the volume of intelligence and insights available.

Conclusion

While the UAE has made significant progress in its efforts against money laundering and terrorist financing, there are still several areas that need to be addressed to ensure compliance with international standards. By implementing these recommendations, the UAE can strengthen its AML/CFT regime and reduce the risk of financial crime.