The UAE reclassification to the FATF white-list

The UAE reclassification to the FATF white-list

- Ankit Anand

The United Arab Emirates (UAE) has recently been reclassified by the Financial Action Task Force (FATF), and upgraded onto the white list on the 23rd February 2024. 

This significant achievement is a crucial milestone for the UAE and solidifies its status as a prominent financial hub through the protecting of financial integrity and providing a safe and open place to do business.

The FATF elevating a country onto the white-list signifies they have been deemed to have taken remedial action as necessitated to improve their classification. This is expected to result in a level of international business confidence, enabling the UAE to attract further international business.

The financial and business sectors in the UAE have been anticipating this change, with the knowledge that the FATFs reclassification will enhance the outlook from international markets and show recognition of regulatory standards in the country.

This upgrade could entail a further regulatory shift for the UAE as it continues to heighten its reputation as a global hub for business.

What is the FATF watchlist?

The FATF is an intergovernmental organisation that was established in order to counter money laundering and the financing of terrorism, acting as an observer for international business. The FATF has classified countries based on whether or not they meet their anti-money laundering (AML) and countering the financing of terrorism (CFT) requirements. The classifications are labelled as the white, grey, and black lists:

  • White: this signifies that they are compliant with FATFs AML and CFT requirements, and have sufficient regulations in place to satisfy the FATF.
  • Grey: countries that have deficiencies in their AML and CFT systems, and have been given notice that they need to take the remedial action necessary in order to improve their classification.
  • Black: high-risk countries that do not meet the FATF AML and CFT requirements, and acts as a warning for international businesses considering engagement with these countries that they may not have protective regulation in place.

What lead to the UAE being upgraded to the white-list?

The developments that lead to the UAE being reclassified were driven by the country’s commitment to improving its regulatory landscape and becoming recognised as a global hub for business. 

The FATFs UAE assessments recognised the progress made in compliance levels based on their recommendations and highlighted the enhanced frameworks for AML and CFT which achieve ‘largely compliant’ or ‘compliant’ status in almost all 40 recommendations. 

The FATF also acknowledged the UAEs additional regulatory measures taken for safeguarding businesses such as deploying appropriate risk assessments, especially with regards to high-risk countries, and utilising the Finance Intelligence Unit (FIU) to analyse those sectors that are more susceptible to risk.

The Designated Non-Financial Business or Professions (DNFBPs) in the UAE, are specific businesses or professions that may be at an elevated risk of money laundering, as a result of their business type. 

The Dubai Financial Services Authority (DFSA) required that al DNFBPs register with them, and The Ministry of Economy required, back in 2021, that all DNFBP companies register on the governments GoAML platform as a part of continuing to operate in the UAE.

Introducing stricter UBO requirements, the UAE mandated that businesses are required to register on the government authorities GoAML system. 

This required all companies to register their UBO when they setup a new licence, meaning that the UBO must be registered with the relevant government authority to successfully establish the company.

In addition to this there is a requirement that annually, or each time there is a UBO change, they must also update their profile in the GoAML system to confirm who the new UBO is and of any changes, or if there are no changes. 

These requirements were seen to result in fines for those companies who did not submit UBO information or failed to register with the GoAML platform, and now it is not possible to get a licence in the UAE without submitting appropriate UBO information.

These initiatives have not only strengthened the regulatory framework but also instil trust in the business environment, attracting international businesses seeking transparency and compliance. Consequently, the reclassification to the white-list heralds a new era of stability and credibility for the UAE's banking and financial sectors, positioning it as a more desirable destination for global financial activities.

Since the implementation of these new regulations the DNFBP sector has achieved a 266% increase in suspicious transaction activity reports (STR), the real estate sector increased its STRs by 106%, and the corporate service providers (CSP) and trust funds sector achieved a 49% increase in STRs. And as of February 23, 2024, UAE is no longer subject to increased monitoring by the FATF.

How can PRO Partner Group help?

At PRO Partner Group, we have decades of experience with providing corporate services in the UAE and the wider GCC, with dedicated company formation and compliance teams who have a great understanding of the regulations in the region.

Navigating business setup and the regulatory landscape in the UAE can require careful consideration and adherence to the regulatory requirements. PRO Partner Group can assist you in following these requirements to ensure your organisation is best equipped for success.

If you need assistance with company formation, regulations, or any other related compliance, PRO support matter, onshore or offshore company setup, restructuring, or local partner in the UAE, Abu Dhabi, Dubai, the wider UAE, Oman, Qatar, or Saudi Arabia then please do get in touch with us on +971 (0)4 456 1761 for Dubai or +971 (0)2 448 5120 for Abu Dhabi, email us at info@propartnergroup.com or complete the contact form below and we will be delighted to assist you.Top of Form

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