The UAE is the only new jurisdiction to have been put on the Financial Action Task Force (FATF) ‘grey list’ of countries at the global financial watchdog’s plenary meetings last week. The emirates are now actively working with the task force to address strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing
Pakistan, which has been on the grey list since June 2018 and had hoped to be removed from it during last week’s meetings, has taken swift steps towards improving its anti-money laundering and counter financing of terrorism (AML/CFT) regime and completed all but one of the action items required. But it remains for now on the grey list.
UAE grey listed
Since the adoption of its mutual evaluation review (MER) in February 2020, the UAE has “made significant progress” across its recommended actions to improve its systems according to FATF.
These include finalising a terrorist financing risk assessment, creating an AML/CFT coordination committee, establishing an effective system to implement targeted financial sanctions, and significantly improving its ability to confiscate criminal proceeds and engage in international cooperation.
Half completed
Additionally, the UAE addressed or largely addressed more than half of the key recommended actions in the MER.
Amongst those aspects that the UAE needs to improve to be struck off the grey list, the authorities need to better understand money laundering and terrorist financing risks between the different designated non-financial businesses and professions (DNFBP) sectors and institutions. It also needs to show an increase in the number and quality of suspicious transaction reports filed by financial institutions and DNFBPs.
International cooperation
The FATF wants the UAE to demonstrate a sustained increase in outbound mutual legal assistance (MLA) requests to help facilitate cross-border investigations and provide additional resources for its financial intelligence unit.
The emirates should also demonstrate a sustained increase in effective investigations and prosecutions of different types of money laundering cases consistent with the country’s risk profile and proactively identify and combat sanctions evasion.
Pakistan: more investigations and prosecutions
The FATF says that since June 2021, Pakistan has taken swift steps towards improving its AML/CFT regime and completed six of the seven action items, including by demonstrating that it is enhancing the impact of sanctions by nominating individuals and entities for UN designation and restraining and confiscating proceeds of crime in line with Pakistan’s risk profile.
Pakistan should continue to work to address the one remaining item in its 2021 action plan by demonstrating a positive and sustained trend of pursuing complex money laundering investigations and prosecutions.
Further details can be found at Outcomes FATF Plenary, 2-4 March 2022 which is available here.
Categories: Trade Based Financial crimes News
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