On February 23, 2024, the Financial Action Task Force (FATF) announced the removal of the United Arab Emirates from its list of “Jurisdictions under Increased Monitoring” (often referred to as the ‘grey list’).
A triumphant win. It comes as no surprise. This achievement is not just about regulatory compliance, it elevates the UAE’s global financial standing.
Collective measures
The nation’s commitment to tackle money laundering, terrorist and proliferation financing, sanctions evasion and related crime has led to a consistent ramp-up and implementation of extensively robust legislation and an effective framework dealing with anti-money laundering; combatting and countering terrorism, the financing of terrorism, illegal organisations, and the proliferation of weapons of mass destruction and its financing; and targeted financial sanctions (AML/CTF/Sanctions measures).
Legislative and regulatory structures continue to be effectively implemented, supervised and enforced by the relevant regulatory authorities.
Recognising that the private sector also plays a pivotal role for cohesive implementation of AML/CTF/Sanctions measures, the regulatory authorities have taken a ‘together we can make a difference approach’ through training, outreach and awareness initiatives for the public on the implementation and enforcement of these measures, thereby fostering a public–private partnership and embedding a strong culture of compliance by businesses.
As the nation continues its trajectory of growth, so too will the AML/CTF/Sanctions landscape evolve and change and therefore, the necessity of maintaining a cohesive approach for the refinement to and implementation of AML/CTF/Sanctions measures.
Global hub for business
With the UAE being a leading global hub for business in the financial and non-financial services sectors, the AML/CTF/Sanctions measures and infrastructure put in place have enabled the country to safe guard and protect not just its national boundaries and all within it in the fight against financial and other crimes, but also to contribute to the protection of the global financial system.
All indicators prior to UAE’s exit from the grey list pointed towards the economy growing, with foreign investment and business activity rising. Post-exit, an exponential growth in the UAE’s economy beyond that already forecasted for 2024 and onwards may be expected.
The DIFC has recently announced record-breaking results for 2023, including (i) unprecedented growth in 2023 ahead of target to double its GDP contribution by 2030; (ii) the highest ever annual number of new registrations, 1,451 new companies, up 34 percent year-on-year; (iii) FinTech and Innovation remaining the fastest growing sector, growing to 902 companies, up 31 percent year-on-year; (iv) with the introduction of family wealth initiatives – 443 Foundations in place, a 53 percent increase year-on-year; (v) 791 regulated firms licensed and registered by the DFSA, an increase of 117 from the previous year, the largest cluster of financial firms in the MEASA region and includes 50 firms with Hedge Fund activities, 350 plus Wealth and Asset Managers, 200 plus Banks, 100 plus insurance companies.
Surging forward, May 2024 will also see the regions first exclusive Hedge Fund event in Dubai, which will be held in the DIFC.
What’s ahead
The forecasted indicators for 2024 will now likely be fast outdated and if statistics such as those above published by the DIFC for 2023 saw unprecedented growth, the remaining part of 2024 and onwards for the UAE may well be a blockbuster.
Economic vibrancy across the country is palpable, and this can be seen from the increase in the population for a range of reasons, including entrepreneurship and business opportunities, employment opportunities and life-style choices. This is attributable to several factors.
The UAE has a well-developed ecosystem in diverse economic sectors, providing excellent infrastructure for manufacturing, trading, financial services, technology, travel, hospitality, retail, and arts and culture. No less was the country’s efficient handling of the Covid-19 pandemic which gave it a leading global edge for stability, security, well-being and transparency from business and personal lifestyle standpoints.
The UAE’s ESG initiatives for businesses have been evolving over the last several years. By their very nature, the “S” and “G” components envisage the inclusion of AML/CTF/Sanctions measures. As these measures along with ESG initiatives develop further, a confluence of the two could provide for a further entrenchment of AML/CTF/Sanctions measures into the policies, practices and operations of businesses.
The UAE Centennial 2071 pillars aiming to make the UAE one of the best countries in the world is well on track and the successful measures which have been taken in tackling financial and related crime are part of the country’s pathway towards achieving that objective.
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