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United Arab Emirates Country Summary

57.18 Country Rating /100
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Sanctions

No

FATF AML Deficient List

Yes

Terrorism
Corruption
US State ML Assessment
Criminal Markets (GI Index)
EU Tax Blacklist
Offshore Finance Center

Background Information


Anti Money Laundering

FATF Status

The United Arab Emirates is no longer on the FATF List of Countries that have been identified as having strategic AML deficiencies.

Latest FATF Statement  -  23 February 2024

The FATF welcomes the UAE’s significant progress in improving its AML/CFT regime. The UAE strengthened the effectiveness of its AML/CFT regime to meet the commitments in its action plan regarding the strategic deficiencies that the FATF identified in February 2022 including by: (1) increasing outbound MLA requests to facilitate ML/TF investigations; (2) improving understanding of ML/TF risks of DNFBP supervisors, applying effective and proportionate sanctions for AML/CFT noncompliance involving FIs and DNFBPs, and increasing STR filing for those sectors; (3) developing a better understanding of risk of abuse of legal persons and implementing risk-based mitigating measures to prevent their abuse; (4) providing additional resources to the FIU to increase its capacity to provide financial intelligence to LEA and making greater use of financial intelligence, including from foreign counterparts, to pursue high-risk ML threats; (5) increasing investigations and prosecution of ML; (6) ensuring effective implementation of TFS through sanctioning noncompliance among reporting entities and demonstrating a better understanding of UN sanctions evasion among the private sector. The UAE is therefore no longer subject to the FATF’s increased monitoring process.

The UAE should continue to work with MENAFATF to sustain its improvements in its AML/CFT system.

Compliance with FATF Recommendations

The last follow-up Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in the United Arab Emirates was undertaken in 2023. According to that Evaluation, the United Arab Emirates was deemed Compliant for 15 and Largely Compliant for 24 of the FATF 40 Recommendations. It remains Highly Effective for 0 and Substantially Effective for 1 with regard to the 11 areas of Effectiveness of its AML/CFT Regime.

US Department of State Money Laundering assessment (INCSR)

United Arab Emirates is categorised by the US State Department as a Country/Jurisdiction of Primary Concern in respect of Money Laundering and Financial Crimes

Overview  

The United Arab Emirates (UAE) is an international hub for trade and financial activities. 

Additionally, the overlapping yet distinct jurisdictional regimes for supervision and enforcement across the seven emirates and disparate commercial and financial free zone systems within the UAE create exposure to regulatory arbitrage.

In recent years, the government has taken steps to enhance its anti-money laundering/combating the financing of terrorism (AML/CFT) program.  Relevant authorities are focusing on streamlining internal mechanisms to improve the interagency decision-making process, enhancing investigative efforts, and proactively implementing and enforcing related laws. 

EU Tax Commission Blacklist

On 10 October 2019, the EU Council agreed to remove the UAE from the EU's list of non-cooperative jurisdictions for tax purposes as it had passed the necessary reforms to implement the commitments they had made to improve by the end of 2018 their tax policy framework by introducing economic substance requirements.

Consequently, the UAE is now compliant with all commitments on tax cooperation and can be delisted.

Sanctions

There are no international sanctions currently in force against this country

The Arab League (comprising 22 Arab member states), of which this country is a member, has approved imposing sanctions on Syria. These include: -

  • Cutting off transactions with the Syrian central bank
  • Halting funding by Arab governments for projects in Syria
  • A ban on senior Syrian officials travelling to other Arab countries
  • A freeze on assets related to President Bashar al-Assad's government

The declaration also calls on Arab central banks to monitor transfers to Syria, with the exception of remittances from Syrians abroad.

The Arab League has also boycotted Israel in a systematic effort to isolate Israel economically in support of the Palestinians, however, the implementation of the boycott has varied over time among member states. There are three tiers to the boycott. The primary boycott prohibits the importation of Israeli-origin goods and services into boycotting countries. The secondary boycott prohibits individuals, as well as private and public sector firms and organizations, in member countries from engaging in business with any entity that does business in Israel. The Arab League maintains a blacklist of such firms. The tertiary boycott prohibits any entity in a member country from doing business with a company or individual that has business dealings with U.S. or other firms on the Arab League blacklist.

Bribery & Corruption

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                          68

World Governance Indicator – Control of Corruption             83

Corruption is a low risk for companies in the United Arab Emirates, the least corrupt country in the Arab world. The UAE offers a business-friendly environment, with an effective and efficient public administration. However, foreign companies must rely on local sponsorship if they want to succeed, and ruling families' involvement in the economy creates an uneven playing field. The UAE Penal Code criminalizes active and passive bribery, embezzlement and abuse of functions. Anti-corruption and anti-fraud legislation is enforced, and practices of bribery and petty corruption are uncommon. Gifts and hospitality are regulated under the UAE's anti-corruption framework. Facilitation payments are treated as bribes and are thereby illegal. It should be noted that information on business and political corruption in the United Arab Emirates is scarce due to severe censorship in the country, making it difficult to estimate the extent of corruption. For further information - GAN Integrity Business Anti-Corruption Portal

Economy

The Government of the United Arab Emirates (UAE) is pursuing economic diversification and regulatory reforms to promote private sector development; reduce dependence on hydrocarbon revenues; and build a knowledge economy buttressed by advanced technology and clean energy.

The UAE serves as a major trade and investment hub for the Middle East and North Africa, as well as increasingly for South Asia, Central Asia, and Sub-Saharan Africa. Multinational companies cite the UAE’s political and economic stability, excellent infrastructure, developed capital markets, and a perceived absence of systemic corruption as factors contributing to the UAE’s attractiveness to foreign investors. The UAE seeks to attract foreign direct investment (FDI) by i) not charging taxes or making restrictions on the repatriation of capital; ii) allowing relatively free movement into the country of labor and low barriers to entry (effective tariffs are five percent for most goods); and iii) offering FDI incentives.

In January 2023, the UAE Federal Cabinet set out the five priorities of the UAE for 2023, focusing on strengthening national identity, advocating for the environment and sustainability, strengthening the education sector, boosting Emiratization policies, and expanding economic partnerships across the globe.

The UAE has emerged as an attractive destination for both Russians and Ukrainians following Russia’s further invasion of Ukraine. Russians in particular have been a key customer segment supporting higher sales and rental prices in Dubai’s property market. Russian and Ukrainian firms have also moved to the UAE since the invasion. The UAE prohibited exports of Indian-origin wheat for several months in 2022 to protect against domestic food shortages, but otherwise has not suffered notable adverse economic impacts from Russia’s war on Ukraine. UAE inflation rates have been consistent, if not lower than, global inflation rates.

The UAE and the country’s seven constituent emirates have passed numerous initiatives, laws, and regulations to attract more foreign investment. Recent measures include visa reforms to attract and retain expatriate professionals, a drive to create new international economic partnerships, major investments in critical industries, and policies to encourage Emirati entrepreneurship and labor force participation. These economic development projects offer both challenges and opportunities for foreign investors in the coming years. In January 2022, the UAE changed its work week for government bodies from Sunday to Thursday to Monday to Thursday with a half day on Friday in order to more closely align with world markets. To reinforce the UAE’s position as an attractive destination for expatriate workers, the UAE updated the personal status laws for all non-Muslim foreigners in December 2022 to align regulations relating to civil marriage, divorce, and child custody with Western legal frameworks.

Additionally, the UAE approved a comprehensive reform of the national legal system which, among other aims, developed the legal frameworks around data privacy, investment, regulation and legal protection of industrial property, copyrights, trademarks, and residency. The first-ever federal data protection law regulates how personal data are processed across the UAE, with separate laws on government, financial, and healthcare data to follow. The 2020 Commercial Companies law removes restrictions to facilitate further mergers and acquisition activity. The federal trademark law further expands the scope of legal protection for companies’ trademarks, products, innovations, and trade names by protecting non-traditional patterns of trademarks. The UAE introduced Federal Law No (3) of 2022, on regulating commercial agencies, which reforms a pillar of the UAE economic model by permitting international companies to operate in many sectors without the requirement for a local UAE partner. U.S. companies broadly consider these legal reforms to be positive, but investors will need to carefully consider how these changes might specifically affect their operations.

The UAE issued in December 2022 the Corporate Tax Law on business profits starting from June 1, 2023, as part of its membership in the OECD Inclusive Framework on Base Erosion and Profit Shifting. The new tax regime will impose a standard rate of nine percent on taxable profits exceeding $102,000. The law represents a complete change to the UAE tax landscape, affecting all businesses, including free zone entities. The law will include targeted exemptions for state-owned companies, extractive industries, pension funds, and investment funds. A zero rate will apply to qualifying income made in free trade zones and to tax withholding. Qualifying income has not been defined by the UAE, as of April 12, 2023.

The UAE announced in October 2021 that it would pursue net zero greenhouse gas emissions by 2050, to include an investment of $163 billion in renewable energy.

 

Country Links

Anti-Money Laundering and Suspicious Cases Unit (AMLSCU)

Insurance Authority - (IA)

Securities and Commodities Authority - (SCA)

United Arab Emirates (Dubai) - Dubai Financial Services Authority - (DFSA)

Central Bank of the United Arab Emirates

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