The Financial Action Task Force (FATF) had put the UAE on its so-called grey list for increased AML monitoring, an obvious blow to the region's financial hub after making such significant strides in recent years to build its status in the world. 

The announcement came in a statement on 4 March after four days of meeting of the sixth Plenary of the FATF under the German Presidency of Marcus Pleyer.

Delegates representing the 206 members of organisations such as the IMF, the United Nations and the World Bank added no other jurisdictions to the grey list but they did remove Zimbabwe from increased monitoring, congratulating it for "the significant progress it has made".

The hit to the UAE has not come as too much of a surprise. In January this year, International Investment reported that the UAE was at risk of joining Malta on the AML grey list.  

In November last year, International Investment also reported that Deputy US secretary of the Treasury Wally Adeyemo had called on UAE banking leaders have "open communication" as it was "critically important" for the financial sector to counter illicit activities such as terrorist and proliferation financing.

Jurisdictions under increased monitoring are actively working with the FATF to address strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing. 

When the FATF places a jurisdiction under increased monitoring, it means the country has committed to resolve swiftly the identified strategic deficiencies within agreed timeframes and is subject to extra checks.

It further said in February 2022, the UAE had "made a high-level political commitment to work with the FATF and MENAFATF to strengthen the effectiveness of its AML/CFT regime. 

"Since the adoption of its MER in February 2020, the UAE has made significant progress across its MER's recommended actions to improve its system, including by finalising a TF Risk Assessment, creating an AML/CFT coordination committee, establishing an effective system to implement targeted financial sanctions without delay, and significantly improving its ability to confiscate criminal proceeds and engage in international cooperation. 

"Additionally, the UAE addressed or largely addressed more than half of the key recommended actions from the MER."

FATF said the UAE will work to implement its FATF action plan by: 

(1) demonstrating through case studies and statistics a sustained increase in outbound MLA requests to help facilitate investigation of TF, ML, and high-risk predicates.

(2) identifying and maintaining a shared understanding of the ML/TF risks between the different DNFBP sectors and institutions

(3) showing an increase in the number and quality of STRs filed by FIs and DNFBPs 

(4) achieving a more granular understanding of the risk of abuse of legal persons and, where applicable, legal arrangements, for ML/TF.

(5) providing additional resources to the FIU to strengthen its analysis function and enhance the use of financial intelligence to pursue high-risk ML threats, such as proceeds of foreign predicate offenses, trade-based ML, and third-party laundering

(6) demonstrating a sustained increase in effective investigations and prosecutions of different types of ML cases consistent with UAE's risk profile.

(7) proactively identifying and combating sanctions evasion, including by using detailed TFS guidance in sustained awareness-raising with the private sector and demonstrating a better understanding of sanctions evasion among the private sector.

Following the announcement, the UAE government said it had a "strong commitment" to working closely with FATF on areas for improvement.