UAE strengthens financial crime regulations with new anti-money laundering strategy

The UAE, previously removed from the “gray list” of money-laundering havens, has introduced new laws aimed at boosting investor confidence. These changes are part of the government’s 2024-2027 National Strategy for Anti-Money Laundering (AML), Countering the Financing of Terrorism (CFT), and Proliferation Financing.

The strategy, approved by the cabinet and overseen by Sheikh Abdullah bin Zayed, deputy prime minister and minister of foreign affairs, outlines an 11-point plan to strengthen compliance mechanisms. It also emphasizes enhanced international coordination with the Financial Action Task Force (FATF) and vigilance against emerging threats like cybercrime and the misuse of virtual assets.

Strengthening Compliance Mechanisms and International Coordination

The new legislation establishes two major committees: the National Committee for Anti- Money Laundering and Combating the Financing of Terrorism, and the Supreme Committee for overseeing the national AML strategy. These committees aim to streamline compliance and enforcement processes related to AML and CFT, reducing bureaucracy and improving communication between businesses and regulatory authorities.

“The new laws in the UAE will not only enhance transparency but also strengthen international regulatory relations. This brings more confidence to investors, trust in regulators, and, most importantly, reduces the financial crime risk,” Rukhsar Bano, AML officer for ABH Tax and Accounting Services, told The Media Line.

The law’s emphasis on transparency, efficiency, and accountability ensures that AML and CFT strategies are applied consistently across all sectors, including financial institutions and designated nonfinancial businesses and professions.

“This approach reduces bureaucracy and strengthens communication between businesses and regulatory authorities. By centralizing oversight, the framework promotes faster decision-making, clearer regulatory guidelines, and more consistent compliance across sectors, including financial institutions and designated nonfinancial businesses and professions,” Lily Eid, money laundering reporting officer at BSA Law, told The Media Line.

By aligning with international standards, particularly those outlined by FATF, analysts say the UAE enhances its credibility within the global financial community.

UAE’s Recent Actions to Combat Financial Crimes

The UAE had to implement proper legal frameworks and controls, leading to its removal from FATF’s gray list earlier this year, a serious burden that was resolved in record time.

In an interview with The National, Hamid Al Zaabi, director general of the Executive Office of Anti-Money Laundering and Counter-Terrorism Financing, said the UAE confiscated over Dh5.4 billion ($1.4 billion) from December 2021 to June 2023, mainly from cases of professional and trade-based money laundering. FATF had identified risks of money laundering and terrorist financing in banking, the diamond and gold trade, and real estate.

The UAE has intensified efforts to combat money laundering in its gold sector, which has been under scrutiny for links to illicit activities. In August, the government suspended 32 gold refineries after the Ministry of Economy inspections revealed 256 AML violations. These refineries represent about 5% of the country’s gold sector.

This crackdown is part of a broader initiative by the UAE to comply with international financial regulations and address concerns, particularly regarding the unregulated flow of precious metals. The UAE has been working to improve its AML framework, with recent amendments to federal decree laws aimed at combating financial crimes.

Experts believe the UAE is determined to address financial crimes and improve its global standing as a major trading hub, especially in the gold sector. The refineries are expected to remain closed until at least October 2024, as investigations continue and stricter regulatory measures are implemented.

Ensuring Compliance and Education Initiatives

The recent amendments are part of a process that began with laws issued in 2018, with an increasing focus on AML and CFT. Businesses have already implemented governance and checks, recognizing the value of compliance, particularly concerning money laundering and terrorism financing.

“Businesses understand the importance of being compliant with regulations, especially regarding money laundering and terrorism financing. Pressure on these issues will rise, and businesses must review their internal processes, policies, and procedures, and carefully assess the level of resources that they will need to allocate so as to keep their business fully compliant.” Roberto d’Ambrosio, CEO of the multi-asset broker Axiory Global, told TheMedia Line.

He added that while the growth trajectory of the UAE, attracting new investors worldwide at an unprecedented level, is positive for the UAE, it increases the risk of the country being targeted for the placement, layering, and integration of illicit funds into the economy, potentially to finance criminal activities.

“This is a point of no return: Businesses need to embed a compliance culture in all aspects of their operations to align with international practices and support the UAE’s efforts in AML and CFT,” d’Ambrosio added.

These developments are expected to attract more international investment, foster new partnerships, and solidify the UAE’s position as a key player in the global financial ecosystem. “This commitment strengthens the country’s defenses against financial crimes and enhances its credibility within the global financial community. The UAE’s legal evolution is a critical step toward greater international cooperation,” explained Eid.

Eid said that the Supreme Committee will oversee the implementation of these strategies by issuing decisions and guidelines. It will ensure that financial institutions and designated nonfinancial businesses and professions comply with the regulations.

The General Secretariat will provide operational support to the committees, ensuring consistency in the application of AML and CFT laws. This structured approach aims to maintain high regulatory compliance across the UAE, reinforcing the country’s position as a leader in financial crime prevention.

“We will see a boost to the financial environment with increased compliance and reduced risk, as regulators gain powers to conduct ongoing inspections and impose hefty fines for noncompliance,” added Bano.

To ensure compliance, the government offers regular free online training via webinars, delivered by subject matter experts. Additionally, free guidance materials are available on the government website.

“Inspections check compliance, provide feedback on gaps, and require businesses to address these gaps. Failure to comply results in significant fines,” Jasbir Bindra, managing director of Alpha Omega Management Consultancy, told The Media Line.

“These changes have supported the UAE’s position as a leading international business center, with regulations that meet international standards. The country ensures that its business-friendly environment is not exploited by criminals, while protecting genuine investors from reputational risks,” added Bindra. He noted that this is why more international investors view the UAE as a favorable destination for investment.