The UAE is an important international and regional financial hub which increases the scope of financial crimes. Some of the primary threats to the UAE come from terrorist financing, professional third-party money laundering (ML), cash-based ML, trade-based ML, tax offences and organized crime. To assess the country’s vulnerability to these threats, the Financial Action Task Force (FATF) recently published a detailed report describing its 2019 evaluation of the UAE’s anti-money laundering (AML) and counter-terrorist financing (CFT) measures. Here are some of the highlights of this report:
The FATF recognized that the UAE has significantly enhanced its AML/CFT regime. Some major changes include creating the National Risk Assessment, resolving regulatory issues and empowering the Financial Intelligence Unit (FIU). However, since many of these improvements are recent, their complete effect on the AML/CFT system is not yet clear. The general opinion of the FATF was that the UAE still needs key AML/CFT improvements.
To address this situation, the FATF has made several recommendations. Firstly, there is a need to gain a deeper understanding of ML/TF risks at both a national and Emirate-level. Further, it is important to note that despite the steps taken to strengthen the FIU, the UAE is not yet utilizing the full potential of its financial intelligence beyond investigations of TF and fraud. Thus, the use of financial intelligence must be extended to identifying and fighting ML risks. It is also crucial to gather financial intelligence about cross-border movements of cash and precious metals and stones.
Another recommendation is that the UAE must effectuate its AML Law and AML By-Law promptly across all company registries. The implementation should be consistent across all 39 registries. Additionally, the UAE needs to better utilize international legal assistance processes (such as MLA, extradition and asset freezing and confiscation). All these measures will put the country on the right track to ward off ML/TF.
