FATF reports UAE’s compliance on nearly all recommendations

Monday, 10 July 2023
A follow-up report from the Financial Action Task Force (FATF) has rated the United Arab Emirates (UAE) as compliant with 15 of its 40 recommendations and largely compliant with a further 24.
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FATF issued a mutual evaluation report on the UAE in February 2020, which resulted in the jurisdiction being placed on the list of countries subject to FATF's enhanced follow-up process. Such countries have to undertake to remedy the deficiencies in their anti-money laundering (AML) regimes within three years. FATF regularly follows up to check their progress.

To address the shortcomings outlined by FATF, the UAE developed a national strategy for the period from 2020 to 2023. It submitted its first enhanced follow-up report in June 2021, which resulted in some upgrading of its compliance ratings.

However, at the same time it was downgraded to partially compliant on Recommendation 15 regarding the regulation of virtual asset service providers. This occurred largely because FATF had in the meantime rewritten this recommendation to take account of the increasing use and complexity of virtual assets. This downgrading happened to many jurisdictions and a recent FATF report found that countries generally continue to struggle with Recommendation 15's requirements, with 75 per cent only partially or not compliant with it.

The UAE's second follow-up was submitted in May 2022, and the third in June 2023. The resulting FATF report notes progress in strengthened AML measures.

It gives the jurisdiction no 'non-compliant' ratings and upgrades three of its 'partially compliant' ratings to ‘compliant’ or ‘largely compliant’. These are Recommendation 1, regarding risk assessment and implementing a risk-based approach; Recommendation 19, regarding high-risk countries; and Recommendation 29, regarding the country’s Financial Intelligence Unit procedures and operations.

The UAE will continue to be on FATF's list of jurisdictions in enhanced follow-up, where it will remain until it submits its fourth enhanced follow-up report to FATF. This is expected to be in April or May 2024.

Sources

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