Author: Nicola Sharp 11 May 2020
Nicola Sharp of financial crime solicitors Rahman Ravelli considers the challenge facing the UAE.
The United Arab Emirates is not doing enough to prevent money laundering, according to the Financial Action Task Force.
The Paris-based watchdog said that despite recent progress the UAE needs to make significant improvements. The FATF has placed the UAE under a year-long observation after deciding that it is not making full use of financial intelligence to identify money laundering or trace the proceeds of crime.
In a statement, FATF said: "The United Arab Emirates recently strengthened its legal framework to fight money laundering and terrorist financing but, as a major global financial centre and trading hub, it must take urgent action to effectively stop the criminal financial flows that it attracts.
"The UAE has achieved positive results in investigating and prosecuting the financing of terrorism but its limited number of money laundering prosecutions and convictions, particularly in Dubai, is a concern given the country’s risk profile."
If the UAE does not improve its efforts to tackle money laundering it could be ranked alongside Syria, Yemen and Pakistan, which the FATF classes as having strategic deficiencies.
The UAE passed an anti-money laundering and terrorist financing law in 2018 and has applied sanctions to armed groups with the help of the US. But the FATF highlighted an absence of prosecutions for money laundering cases related to high-risk crimes.
The findings of the FATF are likely to come as a blow to the UAE authorities, who have worked hard to improve its legal framework in recent times. The UAE’s struggles are not unique - successful money laundering convictions are proving difficult to secure internationally.
The unprecedented global challenges and economic disruption caused by Covid-19 have increased the money laundering risk. Previous crises have shown that illicit finance will continue to grow even when the economy as a whole is experiencing a downturn. This, in turn, provides an opportunity for regulators, companies and individuals in the UAE and elsewhere to refocus on getting compliance right so that the legitimacy of any transactions can be questioned.
Nicola is known for her fraud, civil recovery and business crime expertise, her experience of leading the largest financial disputes and multinational investigations and her skills in devising preventative measures and conducting internal investigations for corporates.