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The United Arab Emirates is poised to be removed from the global financial crime watchdog’s “grey list” after making progress on compliance measures to combat money laundering while Panama has gone one step further and been dropped from the index.
The Paris-based Financial Action Task Force said on Friday that the UAE, the Gulf’s leading financial hub, had “substantially” introduced compliance measures needed for its removal from the multilateral body’s list of countries under enhanced monitoring.
Faft said the UAE had made progress in areas such as facilitating money-laundering investigations, imposing sanctions on non-compliance at financial institutions, and increasing prosecutions. The task force said it would therefore conduct on-site visits to verify that these changes would be sustained.
A successful inspection would provide a signal that the UAE, along with other jurisdictions such as Barbados, Gibraltar and Uganda, could be removed from the list at an upcoming plenary session in February.
On Friday Panama became one of several jurisdictions, including Albania, Jordan and the Cayman Islands, a British Overseas Territory, to be removed from the grey list altogether after their on-site visits proved successful.
This was good news for Panama’s beleaguered government, which has been trying to change its reputation as a haven for shady money by touting its green credentials similar to neighbouring Costa Rica.
Panama hit global headlines in 2016 when a local law firm’s documents were leaked detailing how the country facilitated the offshore tax strategies of the global elite.
Being placed on the grey list last year also tarnished the reputation of the UAE, the leading choice for global financial firms seeking a base in the oil-rich region.
Its inclusion coincided with the war in Ukraine, which triggered an influx of Russian money seeking to avoid western sanctions and intensified scrutiny of the country’s financial compliance regime.
Many Russians have faced difficulties in setting up bank accounts, given the increasing reluctance of compliance teams to deal with clients linked to the country. The UAE earlier this year removed a newly granted license from Russian lender MTS after the US and UK sanctioned the bank.
Many Russians have been forced to rely on informal exchange or cryptocurrencies to move money into the UAE, helping to stoke sky-high demand and driving up real estate valuations.
Some richer Russians have found it easier to open accounts because lenders are willing to engage in the extra due diligence required to take on riskier clients. Sanctioned oligarchs have also moved high-profile assets into the UAE, such as yachts and private jets.
But the Gulf state, which has taken a neutral stance in the Ukraine war, has said it prevents money flows from sanctioned individuals and does not discriminate against non-sanctioned Russians.
Additional reporting by Marton Dunai
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