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Rachna Uppal, written by Hadeel Al Sayegh
DUBAI/PARIS (Reuters) – The United Arab Emirates (UAE), home to financial capital Dubai, has been removed from a global watchdog’s list of people at risk of illicit financial flows, a victory for the country. and has the potential to enhance its international standing.
The Financial Action Task Force (FATF), an organization tasked with tackling financial crime from the United States to China, on Friday removed the UAE from its “grey list” of about 20 countries deemed dangerous.
The Gulf state, which attracts billionaires, bankers and hedge funds, will come under increased scrutiny in 2022 as the FATF highlights money laundering and terrorist financing risks involving banks, precious metals, jewelry and property. Became.
The delisting is a coup for the country, which was once a regional pearl and fish trading center and is now one of the world’s wealthiest countries since the discovery of oil in Abu Dhabi in the late 1950s. It is one.
John Kartonczyk, director of Re/think, a think tank in the United Arab Emirates (UAE), is seeking to be delisted in an effort led by Foreign Minister and brother of President Mohamed bin Zayed Al Nahyan. The company has made this a priority, and has strengthened its anti-money laundering efforts. He said the measure would increase confidence in the country and could attract more funds from abroad.
“Investors…may feel more secure,” he said.
Banks will also be able to reduce the cost of doing business with wealthy domestic customers, said one bank executive, speaking on condition of anonymity.
Despite being placed on the gray list, the UAE continues to attract wealthy people from around the world, and has become an increasingly popular destination for crypto companies and Russians in the wake of the war with Ukraine. There is.
Dubai’s luxury property market will overtake New York, Los Angeles and London in 2022, while the UAE overtook Belgium last year to become the world’s trading hub for rough diamonds, according to real estate consultant Knight Frank.
Nevertheless, the delisting is inconsistent with the assessment of European officials.
The European Union has listed the UAE as a high-risk country for money laundering and terrorist financing, along with more than 20 other countries including South Africa, North Korea and Afghanistan.
Last year, the bloc’s financial markets watchdog ESMA banned European banks and others from clearing transactions with Dubai Commodity Clearing Corporation.
Markus Mainzer, policy director at the Tax Justice Network for Fiscal Transparency, said the UAE’s exclusion shows the FATF list is ineffective.
“The rules are open to interpretation,” he said. “It’s easy to follow without changing too much. It’s impossible to understand how decisions are made because decisions are made behind closed doors.”
Johnny Bell, director of financial crime compliance and payments at LexisNexis Risk Solutions, said the UAE is likely to continue strengthening its anti-money laundering and anti-terrorism financing measures.
Competition to develop non-oil sectors such as financial services, trade and logistics, and tourism is intensifying among Gulf countries. Attracting funds from overseas will be central to this effort.
Measures taken by the UAE include strengthening financial investigations and prosecutions, increasing international cooperation, and aligning virtual asset regulations with international standards.
(Additional reporting by Sudip Kar-Gupta in Paris and Lisa Barrington in Seoul; Editing by John O’Donnell and Kirsten Donovan)
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