FATF placed UAE on the gray list in March 2022, citing serious deficiencies in the Gulf state’s measures against sanctions evasion, terror financing and other crimes. The county has been a key conduit for Iran to undertake trade and circumvent sanctions, according to officials in both the U.S. and Europe.
The designation, which put the country just one step away from FATF’s dreaded “blacklist,” was a significant reputational blow to the Middle East’s largest financial center and also threatened to impair the country’s long-term credit ratings. Officials from UAE lobbied hard to get off the list.
Transparency International, the corruption watchdog, wrote to FATF President Raja Kumar last week urging the agency not to remove UAE from the gray list, arguing that there is little sign the reforms the country has announced to combat money laundering and other financial crimes have been implemented. The group said it has evidence that UAE has not taken action on a number of known cases involving individuals facing sanctions in other jurisdictions.
“Transparency International was able to determine that at least three individuals who have been collectively designated by Australia, France, Switzerland and New Zealand in connection to Russia’s invasion in Ukraine still own properties in Dubai,” the group wrote. “There are likely many more.”
Maíra Martini, the head of policy and advocacy at Transparency International, said FATF’s decision sends a clear message to other jurisdictions with lax money laundering controls that, with the right allies, it’s possible to manipulate the system. Europe and the U.S., which counts UAE as key partner in the Middle East, have “a clear interest in having them as an ally,” she said.
For UAE, the long-term benefits of using its influence are clear.
“Historically they’ve made a good profit off of these activities,” she said.
