Back on March 4th, AML Intelligence was the first news organisation to break the news that the UAE were to be placed on the Financial Action Task Force’s (FATF) ‘Grey List’ because of deficiencies in their anti-money laundering efforts.
The news was a significant blow to Dubai’s standing as financial hub of the Middle East. FATF effectively said the country had not made enough progress in tackling anti-money laundering concerns.
Earlier that week, H.E. Hamid Al Zaabi, Director of the UAE’s Executive Office of AML/CFT spoke to AML Intelligence, and said the country was “firmly committed to combatting financial crime and the global AML/CFT agenda”.
Although H.E. Al Zaabi declined to comment on the FATF grey list at the time, he said that financial crime was a “global and evolving problem”. He admitted that this was why “AML/CFT efforts in the UAE are an ongoing process”, adding that the UAE’s approach was “comprehensive, integrated and consistently evolving.”
So the UAE does take this very seriously and its no wonder, as our expert columnist, former FATF executive secretary David Lewis wrote for us recently “that’s no surprise, given the IMF recently estimated the impact for countries on the list include a reduction of capital inflows of 7%-8% of GDP.
However, it has been widely reported both here and most recently in Forbes this weekend that Russian Oligarchs are fleeing sanctions and are flocking to the UAE as EU, UK and US toughen sanctions because of the Ukrainian invasion.
Russian oligarchs and officials are shifting assets from Europe to Dubai to shield them from Western sanctions over the invasion of Ukraine.
Forbes reports “that at least three Russian billionaires already own properties in Dubai. Fertilizer tycoon Dmitry Rybolovlev owns a $29.5 million property on Palm Jumeirah -and Albert Molchanov owns a $26.5 million home”
Forbes also report that “In recent weeks several yachts owned by Russian oligarchs have made their way to Dubai’s harbour”
In the UAE, relations with Russia are reportedly deepening and so far they have refused to back Western Sanctions and it is no wonder as the UAE’s sovereign investment fund has invested almost $4 billion in Russian companies, some of who are associated with sanctioned Russian oligarchs.
All of this will make it extremely difficult for the UAE to remove itself from the FATF ‘Grey List’ and they are coming under increasing pressure and scrutiny from the US and the EU as evidenced by a recent remark by US Under Secretary of state for political affairs, Victoria Nuland, who stated that, “you don’t want to become the last haven for dirty money that’s fueling Putin’s wars”.
That should be sufficient warning to the UAE authorities to reconsider their stance on sanctions as they certainly don’t want to be listed as a country which FATF judges to be non-cooperative in the global fight against money laundering and terrorist financing.
The implications of being added to the FATF blacklist alongside North Korea and Iran would be unthinkable for one of the worlds financial hubs as FATF members are required to exercise enhanced due diligence and counter-measures against blacklisted states.
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