UAE continues to make progress in combatting ML/TF

UAE Progress Update

As FATF week starts in Paris, a topic of interest is the grey listing status of the UAE. Financial Crime News published a post which also included a detailed 28 page progress report in October, 2023 and a 2 page summary Country Financial Crime Dashboard, and has now today published updates to both. For the 2024 Dashboard see HERE: FCN UAE Dash Feb2024 and for the Progress Report see HERE: UAE Update 18 Feb 2024

Whilst improving technical compliance is the first task for a country  it’s how these elements translate into effectiveness the key and from the data, the UAE has been able to demonstrate both, so lifting it from the grey list I expect. Improvements – ML/TF/PF Risk understanding is much better for both public and private, sophisticated and not so sophisticated, national and international co operation is much improved not just for TF but also ML and other crimes, with some big names still to be delivered/extradited (Kinahan/Gupta), supervision is more effective and clearer on what is expected and the private sector is expected to deliver to expectations or face sanctions, even licenses are at stake, the FIU has been completely revamped from its under resourced, bureaucratic, reactive state body into a much more proactive active and PPP supporting institution reaching out domestically and internationally, and law enforcement now prioritising ML and related investigations prosecutions & convictions & asset confiscations with judicial time understanding & support. This is one of the futures for fighting financial crime more effectively and a path for others to follow. The UAE isn’t risk free by any means, and faces challenges that shouldn’t be underestimated but it has the capacity understanding and institutions to be effective. What comes next will be interesting.

The UAE has continued its progress in strengthening its AML/CTF response. Since October 2023, when this progress report was published. The following additional supplemental material information has also been reported, for example:

  • the UAE has gained a place raising from 27th to 26th best in TI’s corruption perception index for 2023, improving its score from 67 to 68.
  • the UAE FIU Annual Report 2022, was released in January 2024 and included updated 2022 key figures, in particular 33,459 STR’s filed (96% increase) and 5,453 SARs filed (55% increase) and in total amounting to 38,912 (up from 20,707 an increase of approx 90% on 2021). According to reports, “the Financial Intelligence Unit received nearly 7,000 suspicious transaction reports (STRs) and suspicious activity reports (SARs) from relevant entities across financial institutions and Designated Non-Financial Businesses and Professions (DNFBP) in the first two months of 2023, an increase of 81% from the previous year. STR/SAR submissions from DNFBPs, including exchange houses, cash service providers, precious metals and stones dealers, real estate, and virtual asset service providers, increased by 91%”. Further reports suggest, “a 48% increase in Suspicious Transaction Reports (STRs) during the first half of 2023, “reflecting the increased understanding of the private sector due to the awareness efforts carried out by relevant authorities in the UAE,”
  • Based on the FIU’s Annual Report 2022, the UAE risk rates STR/SAR’s it receives indicating country higher priorities for the FIU and LEA which include: terrorism finance, proliferation finance, TBML, ML of International proceeds or international ML, professional money laundering, fraud and fraud related money laundering, funds available in the UAE that can be frozen.  Additional indicators of priorities, through FIU work on typologies to generate cases to disseminate to LEAs include the above as well as drug human/trafficking, hawala (unlicensed banking), sanctions and dual use and complex ML including in higher risk sectors for example cash, PMS smuggling and dealers in PMS.
  • The FIU was instrumental in disseminating 212 cases to law enforcement involving 2,543 STR/SAR/Other reports in 2022 (46% increase on 2021), with a conversion rate of STR/SAR reports of 6.5% in 2022 up from 5.8% in 2021.
  • Collective fines and penalties levied by supervisors of FIs and DNFBPs amounted to AED199 million for H1 2023 (USD54M), & AED249 million for the period January to October 2023 (USD68 million). This exceeds the totals from years 2022 (AED76 million/USD21 million), 2020 (AED8.4 million/USD2.3M) and 2019 (AED800,000/USD216,000) combined.
  • in January 2024, the UAE EO AML/CTF updated figures reporting 583 ML related cases opened in the period, January – October 2023, relating to 1,501 natural persons and 397 legal persons, confiscating AED5.4 billion (US$1.47 billion), representing 8.3% of estimated proceeds of crime.
  • as at August 2023, “since 2020, the UAE has been asked 3,061 times to assist in either the extradition of criminals or thwarting criminal activities in relation to money laundering and terrorism financing. UAE authorities have extradited 899 criminals since 2020, of which 43 were involved in money-laundering crimes. Ten of those were terrorists or were financing terrorist activities”.
  • One of the leading pending extradition requests of Danish fugitive Sanjay Shah was finally extradited to Denmark in December 2023. Whilst not a case relating to financial crime, nevertheless, the extradition of Gergely Franc, an Albanian national, charged with murder, was carried out at the end of December, 2023.

The FATF has already recognised the progress the UAE has made at its October 2023 meeting, and is expected to make a decision this week. Fianncial crime News expects UAE to be removed from the Greylist this week.

Financial crime News has been particularly interested in the progress the UAE has made, because it proves countries can improve and improve quickly and become more effective, though the lessons learned from the UAE experience should be a valuable one that may not apply to all but should still be understood. I hope and expect those in the UAE responsible for the turnaround will share their thoughts on this important topic in the months and years to come, as not just grey listed countries have much still to learn and to do.

if and when the UAE is free from the FATF grey-list, it doesn’t mean the UAE is not without its challenges, not that the fight to combat ML/TF is finished or that mission is accomplished, though those that have been tasked with achieving this first important milestone should be  rightly congratulated.

FCN Country Financial Crime Dashboard – February 2024

Key Performance Indicators.

These materials are owned and copyriigted by FCN/Metriqa ltd and should not be used for commercial purposes without consent of the editor.

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