Three Dubai clearing houses banned from EU amid AML blacklist concerns

The European Securities and Markets Authority (ESMA) has banned three Dubai-based clearinghouses from clearing trades for EU citizens amid its concerns that anti-money laundering checks in the United Arab Emirates could be inadequate.

In a statement on 25 July ESMA, the EU's financial markets regulator and supervisor, said: "Inclusion of the United Arab Emirates on AML blacklist requires ESMA to withdraw the recognition decisions of three CCPs."

The regulator  specifically said it had "withdrawn as required by EMIR the recognition decisions of the following three central counterparties (CCPs) established in the UAE, (including the Dubai International Financial Centre)": 

Dubai Commodities Clearing Corporation; 
Dubai Clear LLC; 
Nasdaq Dubai Ltd. 

This move followed the addition of the UAE, by the European Commission, to the list of high-risk third countries presenting strategic deficiencies in their national anti-money laundering and counter financing of terrorism (AML/CFT) regime, on 16 March 2023, ESMA said. 

In order to minimise potential market disruption, ESMA further said it had provided for an adaptation period of three months: "The withdrawal of recognition decisions will therefore enter into effect on 25 October 2023. From that date, the three CCPs concerned will no longer be permitted to provide clearing services to clearing members or trading venues established in the EU." 

ESMA also updated its list of recognised third-country central counterparties (TC CCPs). 

In order for a third-country CCP to be recognised by ESMA, all cumulative conditions set out under Article 25(2) of EMIR must be met. Where any of those conditions is no longer met, ESMA must withdraw the recognition decision of that TC-CCP.  

One of such conditions is that the TC-CCP is established or authorised in a third country that is not included in AML blacklist under AML Directive. 

It concluded that the above-mentioned recognition condition, while outside the scope of action of the CCPs concerned, is no longer fulfilled in respect of the three CCPs established in the United Arab Emirates (including the Dubai International Financial Centre).