What does the UAE's removal from the FATF grey list mean for businesses?

The United Arab Emirates (UAE) was recently removed from the Financial Action Task Force’s (FATF) grey list. This development is a positive indication of the country’s efforts to prevent financial crimes; but what does this mean from a business perspective? This article explores just some of these opportunities. 

How the FATF works

Established in 1989, the FATF is an intergovernmental body that tackles money laundering, terrorism financing, and proliferation financing. The organisation puts forward the FATF Recommendations to guide countries on the measures to combat financial crime.  

Countries are then assessed based on their adherence to the recommendations. If found to have deficiencies in managing risks relating to money laundering, terrorism financing, and proliferation financing, the country would be added to the FATF grey list. Being on this list suggests a need for the country to improve in certain areas over an agreed timeline.

Two years following its inclusion on the grey list, the UAE has made progress in strengthening its Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) framework. Examples of measures taken include the creation of an executive office to fight money laundering and terrorist financing and the establishment of a special court for financial crime prosecution.

As of February 2024, the UAE has successfully met a sufficient number of FATF Recommendations and is no longer on the list. This presents a range of possibilities for businesses. 

Increased confidence across businesses

As a whole, the UAE’s adherence to international standards and its efforts to mitigate financial crimes can contribute to a stable and trustworthy market environment. This boosts confidence among investors and partners, often resulting in more sustainable business relationships and investments in the region.  

The real estate sector, in particular, can also stand to gain from the FATF's decision. Even when UAE was on the grey list, locations such as Dubai performed particularly well in the property sector. The city recorded a rapid growth in its property prices, increasing by more than 20% annually in 2023 and ranking as the world’s second-fastest growing real estate market.  

It’s anticipated that Dubai and the rest of UAE’s property market will grow even more after exiting from the FATF grey list as the country’s reputation improves further. 

Facilitation of smoother financial transactions

With a stronger regulatory reputation, the UAE has the potential to increase its appeal as a leading jurisdiction for international banks and financial institutions. Consequently, the UAE may see a reduction in the enhanced due diligence required by parties overseas.

This improved confidence can minimise delays and lead to smoother foreign currency transactions for businesses. With the reduced perceived risk, borrowing costs for UAE-based businesses may also decline, making it more affordable to secure financing.

This streamlined process not only fosters a more efficient business environment but enhances the attractiveness of the UAE as a respected financial hub.

Moving forward

The UAE's removal from the FATF grey list is a significant step for entrepreneurs waiting to explore business opportunities in the region. It is an indication of UAE's progress in addressing its AML and CFT measures.

Going forward, the UAE must uphold the integrity of their financial system according to the FATF Recommendations. In doing so, it will continue to attract more investors and businesses across the globe. If you are keen to expand your business into the UAE and need expert advice, please reach out to us to find out more today.



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