The UAE is officially off the global financial ‘grey list’ two years after its inclusion among the jurisdictions under increased monitoring by Paris-based watchdog Financial Action Task Force. The country has cruised through this period relatively unscathed, and levels of inbound investment remained very strong throughout.  

“The UAE is an attractive destination for many businesses and, unlike other countries included on the grey list, its appeal remained strong throughout the term of its inclusion,” says Ibtissem Lassoued, partner and co-head of white collar crime and investigations at Dubai-based law firm Al Tamimi. 

“In the context of the UAE’s continued pursuit of regional and international predominance, delisting was an important step to re-establish the credibility of its commercial ecosystem. In practical terms, this change will not result in the UAE lowering its defences; measures introduced during the listing term were intended to demonstrate effectiveness, and so are inherently designed to be sustainable over time.” 

The FATF published a mutual evaluation report on the UAE in April 2020, pointing out that for its role as a major global financial centre and trading hub, the country “must take urgent action to effectively stop the criminal financial flows that it attracts”. In March 2022, the FATF took further action by adding the country to its list of jurisdictions under increased monitoring, the so-called ‘grey list’. 

As a result, UAE authorities took action to strengthen their anti-money laundering and combating the financing of terrorism (AML/CFT) set-up, but some parties remained cautious. 

“Following this designation, the UAE has undertaken several anti-money laundering reforms. This is welcome. However, it is too early to assess the impact,” Berlin-based corruption watchdog Transparency International pointed out on X on February 22. “In fact, meaningful implementation and political will have been historically lacking in the UAE.” 

Nevertheless, the FATF’s plenary sessions decided on February 23 to get the country off the grey list. 

“The UAE has done tremendous progress since its greylisting,” FATF president T. Raja Kumar said in a press briefing on February 23. “The country improved compliance of high-risks reporting entities within anti-money laundering and combating the financing of terrorism. They also enhanced measures to ensure the transparency of beneficial ownership of legal persons and to prevent their misuses. They also improved the quality and use of financial intelligence to support the investigation of money-laundering cases. Besides, they showed high-level political commitment to continue the pace and progress of these improvements.” 

The FDI impact

All in all, the UAE’s appeal as an investment destination has been left largely unscathed by the whole experience. A paper by the IMF published in 2021 estimated that a grey listing by the FATF may cost a country a decline in its capital inflows of as much as 7.6% of its GDP, of which foreign direct investment accounts for 3%. That has not been the case for the UAE, however. 

Foreign investors announced a record high number of investment projects in the country in both 2022 and 2023, with capital pledges also holding up very strongly, according to figures from foreign investment monitor fDi Markets. Even western investors in the main business services activities — financial services, business support services (legal, consultancy, and so on) and real estate services — which would have appeared more vulnerable to the UAE’s greylisting have not been shy either. In fact, their investment activity levels in the country had never been higher than in 2022 and 2023.

In the same session of the FATF, Uganda was also removed from the list of countries under increased monitoring, while Namibia was added to it due to anti-money laundering concerns.

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