UAE Takes Significant Steps to Exit FATF’s Grey List
After almost 2 years, the UAE has been removed from the FATF Grey List, thanks to the concerted efforts of multiple regulators and governmental authorities, led by the UAE Central Bank.
At its October 2023 plenary meeting, the FATF recognised that the UAE had taken various actions to improve its overall AML/CFT compliance. On a regulatory level, the UAE has implemented several key reforms since its inclusion on the grey list, including:
- establishment of the Executive Office to Combat Money Laundering and Terrorist Financing;
- establishment of a specialist court to combat money laundering and financial crime;
- adoption of new AML/CTF guidelines for financial institutions and designated non-financial businesses and professions; and
- adoption of a new Penal Code which bolstered the country’s existing anti-money laundering, bribery, and corruption regulations.
UAE’s exit from FATF grey list to boost FPI flows, investment into Indian NBFCs
India has seen an increase in investment from the UAE in the recent past, including private equity and sovereign wealth funds. The country’s removal from the grey list will only help bolster such investment, especially into regulated sectors such as NBFCs.
Post the UAE-India agreement, trade between the two jurisdictions have increased. Friday’s announcement has the potential of doubling the number of FPI registrations and bringing in larger ticket size inflows.
India and the UAE recently signed eight pacts, including a bilateral investment treaty and a framework deal to foster regional connectivity.
Whats is FTAF?: The Financial Action Task Force (FATF) is an intergovernmental organization established in 1989 by the ministers of its member jurisdictions. Its primary purpose is to develop and promote international policies to combat money laundering and terrorist financing. Over the years, its mission has expanded to include efforts against the financing of the proliferation of weapons of mass destruction.
Membership in the FATF comprises 39 members: 37 countries and two regional organizations (the European Commission and the Gulf Cooperation Council).
Challenges of FATF-Listed Countries: For crypto founders in FATF-listed countries, the challenges are significant. They face heightened scrutiny from international financial partners, leading to potential increases in compliance costs, difficulties in securing investments, and operational challenges due to stringent regulatory measures aimed at combating financial crimes.
Benefits of UAE’s Exit: With the UAE off the FATF grey list, crypto founders stand to benefit from an enhanced reputation of the UAE, a regulatory environment that boosts investor confidence, facilitates easier access to global markets, and supports innovation and growth within the crypto ecosystem.
Congratulations to everyone in the UAE and India! Let’s keep building!
