United Arab Emirates

Sanctions

No

FATF AML Deficient List

No

Higher Risk

US Dept of State Money Laundering assessment 
Not on EU White list equivalent jurisdictions
Compliance of OECD Global Forum’s information exchange standard
Offshore Finance Centre

Medium Risk

Compliance with FATF 40 + 9 Recommendations
Weakness in Government Legislation to combat Money Laundering
Corruption Index (Transparency International & W.G.I.)
World Governance Indicators (Average Score)
Failed States Index (Political Issues)(Average Score)

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ANTI-MONEY LAUNDERING

FATF Status

The United Arab Emirates is not on the FATF List of Countries that have been identified as having strategic AML deficiencies

Compliance with FATF Recommendations

The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in The United Arab Emirates was undertaken by the Financial Action Task Force (FATF) in 2008. According to that Evaluation, The United Arab Emirates was deemed Compliant for 5 and Largely Compliant for 15 of the FATF 40 + 9 Recommendations. It was Partially Compliant or Non-Compliant for 4 of the 6 Core Recommendations.

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 a stable regional hub for transportation, trade, and financial activity and has aggressively expanded its financial services business and FTZs.  Illicit actors exploit the UAE’s relatively open business environment, multitude of global banks, exchange houses, and global transportation links to undertake illicit financial activity. 

 

The UAE government is enhancing its AML/CFT system and has demonstrated the capability to take action against illicit financial actors.  However, the UAE needs to continue increasing the resources it devotes to investigating money laundering.

 

 

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                           70

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 UAE has an open economy with a high per capita income and a sizable annual trade surplus. Successful efforts at economic diversification have reduced the portion of GDP based on oil and gas output to 25%.

Since the discovery of oil in the UAE more than 30 years ago, the country has undergone a profound transformation from an impoverished region of small desert principalities to a modern state with a high standard of living. The government has increased spending on job creation and infrastructure expansion and is opening up utilities to greater private sector involvement. The country's free trade zones - offering 100% foreign ownership and zero taxes - are helping to attract foreign investors.

 

The global financial crisis of 2008-09, tight international credit, and deflated asset prices constricted the economy in 2009. UAE authorities tried to blunt the crisis by increasing spending and boosting liquidity in the banking sector. The crisis hit Dubai hardest, as it was heavily exposed to depressed real estate prices. Dubai lacked sufficient cash to meet its debt obligations, prompting global concern about its solvency and ultimately a $20 billion bailout from the UAE Central Bank and Abu Dhabi Government that was refinanced in March 2014.

 

Dependence on oil, a large expatriate workforce, and growing inflation pressures are significant long-term challenges. Low oil prices have prompted the UAE to take steps to reduce its social spending, including eliminating fuel subsidies in August 2015, but the UAE has sufficient assets to cover its deficits with money from its sovereign investment funds. The UAE's strategic plan for the next few years focuses on economic diversification and creating more job opportunities for nationals through improved education and increased private sector employment.

 

Agriculture - products:

dates, vegetables, watermelons; poultry, eggs, dairy products; fish

 

Industries:

petroleum and petrochemicals; fishing, aluminium, cement, fertilizers, commercial ship repair, construction materials, handicrafts, textiles

 

Exports - commodities:

crude oil 45%, natural gas, reexports, dried fish, dates (2012 est.)

 

Exports - partners:

Iran 14.5%, Japan 9.8%, India 9.2%, China 4.7%, Oman 4.3% (2015)

 

Imports - commodities:

machinery and transport equipment, chemicals, food

 

Imports - partners:

China 15.7%, India 12.8%, US 9.7%, Germany 6.8%, UK 4.4% (2015)

 

Investment Climate  -  US State Department

The Government of the United Arab Emirates (UAE) is pursuing an economic agenda that focuses on diversification and seeks to promote the development of the private sector as a complement to the historical economic dominance of the state. There have been numerous initiatives, laws and regulations throughout the seven emirates of the UAE that aim to develop a more conducive environment for foreign investment.

 

The UAE maintains a position as the major trade and investment hub for a large geographic region, which includes not only the Middle East and North Africa, but also South Asia, Central Asia, and Sub-Saharan Africa. The country ranked 17th of 143 economies in the World Economic Forum’s 2015-2016 overall Global Competitiveness Index, and 31st of 189 on the World Bank’s 2016 Ease of Doing Business report. Multinational companies cite the UAE’s political and economic stability, rapid population and Gross Domestic Product (GDP) growth, fast growing capital markets, an absence of corporate and personal taxes, and the absence of evidence of systematic corruption, as positive factors contributing to the UAE’s attractiveness to foreign investors.

 

The UAE continued to attract foreign direct investment (FDI), with inflows of FDI reaching USD 15 billion in 2014, largely focused on construction, finance, and wholesale and retail trade. FDI outflows from the UAE reached USD 2.7 billion in 2014 (the most recent information available). The FDI recovery coincided with economic growth driven by both oil and non-oil activities (including manufacturing), led by aluminum and petrochemicals; tourism and transportation; and real estate.

 

While foreign investment continued to grow, the regulatory and legal framework in the UAE favors local over foreign investors. There is no national treatment for investors in the UAE and foreign ownership of land and stocks remains restricted. The UAE maintains non-tariff barriers to investment in the form of restrictive agency, sponsorship, and distributorship requirements. In order to do business in the UAE outside one of the free zones, a foreign business in most cases must have a UAE national sponsor, agent or distributor, with at least a 51 percent ownership interest of the business. Foreign investors also expressed concern over weak dispute resolution mechanisms and insolvency laws, spotty intellectual property rights protection, and a lack of regulatory transparency. Labor rights and conditions, although improving, continue to be an area of concern as the UAE prohibits both labor unions and worker strikes.

 

The UAE is home to a large number of free zones, and U.S. and multinational companies report that these zones tend to have stronger and more equitable frameworks. For example, in the free zones, foreigners may own up to 100 percent of the equity in an enterprise; have 100 percent import and export tax exemption; have 100 percent exemption from commercial levies; and repatriate 100 percent of capital and profits. These free zones form a vital component of the local economy, and serve as major re-export centers to the Gulf region.

 

 

 

 

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
Other Useful Links
FATF
US State Department
Transparency International
World Bank
CIA World Factbook

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