UAE Urged to Strengthen Anti-Money Laundering Measures Amid Global Financial Hub Status
Introduction
A comprehensive review by international financial watchdogs has found that the United Arab Emirates (UAE) has made significant strides in strengthening its anti-money laundering and counter-terrorism financing (AML/CFT) framework, but still faces pressing challenges to effectively prevent illicit financial flows.
The Report: A Joint Effort by FATF and MENAFATF
The report, jointly issued by the Financial Action Task Force (FATF) and the Middle East and North Africa Financial Action Task Force (MENAFATF), assesses the UAE’s AML/CFT system and its compliance with international standards. While the country has taken steps to address risks emanating from designated terrorists or terrorist organizations, it must take urgent action to stop the flow of criminal financial activities that it attracts.
Key Findings
- The UAE is vulnerable to money laundering and terrorism financing due to its extensive economic, corporate, and trade activities.
- The country’s strategic location between continents, proximity to conflict zones, and complex jurisdictional landscape further increase its risk exposure.
- Recent national risk assessments have highlighted the UAE’s emerging understanding of its vulnerabilities, but significant risks remain.
Areas for Improvement
To address these challenges, the report identifies several areas that require improvement:
- Supervision Issues: Supervision issues persist in some high-risk sectors, including banks, the Dubai property market, gold and precious metals dealers, and hawaladars.
- Limited Number of Prosecutions and Convictions: The UAE must improve its number of money laundering prosecutions and convictions.
- Role and Capacity of the Financial Intelligence Unit: Improvements to the Financial Intelligence Unit’s role and capacity are seen as positive steps, but their effectiveness is yet to be demonstrated.
Conclusion
As a major international financial centre and trading hub, the UAE has a critical role in preventing illicit financial flows that can facilitate terrorism, money laundering, and proliferation financing. The country’s ability to demonstrate effective results will be crucial in maintaining its global reputation and ensuring the integrity of its financial system.