Over the past year, the United Arab Emirates has been the focus of sustained public criticism for failure to adopt and implement effective anti-money laundering (AML) measures. For example, in April 2020, the Financial Action Task Force (FATF) issued a Mutual Evaluation Report that acknowledged “significant improvements” that the UAE had made to its AML/Counter Terrorist Financing (CFT) system in recent years, but also noted that “[t]he risk of criminals being able to misuse legal persons in the UAE for ML/TF remains high” and deemed it “a major concern that the UAE authorities do not recognise the importance of using the full range of sanctions (particularly fines and barring orders) to create a dissuasive environment.”
More recently, the United Kingdom’s Treasury and Home Office issued a national risk assessment on money laundering and terrorist financing that described the UAE as “an attractive location for those who also wish to launder the proceeds of crime from abroad – overwhelmingly foreign nationals using UAE systems, rather than Emirati nationals themselves.” It credited the UAE with “continu[ing] to enact its programme of reforms to improve its AML/CTF regime in line with FATF’s recommended actions.” At the same time, it stated that the deficiencies that FATF identified “expose the UAE, and other countries, to abuse by international controller networks which continue to launder the proceeds of crime to and from countries including the UK.”
In the face of these criticisms, in the last four months the UAE has taken additional steps to improve its AML/CFT regime. First, on September 25, 2020 the UAE central bank stated that “[t]o mitigate the risk of financial crimes . . . banks are urged to put more efforts toward combating money laundering and financing of terrorism.”
Second, on November 24, the UAE Ministry of Economy announced the development of a strategic plan to support efforts to combat money laundering practices within the UAE, as well as the establishment of an Anti-Money Laundering Department within the Ministry.
Third, the UAE Minister of Justice issued a series of ministerial resolutions to set up special federal courts in four emirates to handle money laundering cases. Each court reportedly will have minor, major, and appeals circuits to hear money laundering crimes.
Fourth, the Minister of Justice also announced that 200 law firms in the UAE had failed to comply with AML procedures and were suspended from practicing for one month. Those suspensions were to be lifted once those firms fulfilled their obligations. Seven other law firms were also fined AED 100,000 (US $27,229) each for AML violations.
These measures indicate that the UAE appears to be making genuine efforts to improve its AML/CFT system. The UAE will need to sustain that commitment in the coming year to continue to bring that system to maturity.