Millions in fines, tough laws: How UAE fought out of EU watch list

The European Union (EU) on Tuesday removed the UAE from its list of “high-risk” countries for money laundering, enhancing the country’s status as a global financial hub.

This move follows the UAE’s removal from the grey list of the global watchdog for money laundering and terrorist financing – Financial Action Task Force (FATF) last year.

In recent years, the UAE has implemented a series of stringent measures to combat financial crimes, introducing tougher legislation and stricter enforcement of Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) laws.

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Last month, the Central Bank of the UAE imposed a substantial fine of Dh200 million on an exchange house for serious non-compliance with the AML/CFT and related regulations. In a separate action, the regulator also fined the branches of two foreign banks a combined Dh18 million for similar violations.

On Tuesday, the Central Bank announced a penalty of Dh12.3 million against six money exchange houses for breaches of the country’s money-laundering laws. Altogether, the UAE has levied hundreds of millions of dirhams in financial penalties to ensure compliance with its regulatory framework.

Importantly, the EU’s decision comes at a pivotal time as the UAE and the European Union have formally begun negotiations for a bilateral free trade agreement. If successful, this would mark the first comprehensive EU trade deal in the Gulf region.

The UAE is already the EU’s leading export destination and foreign direct investment partner in the Gulf. EU exports to the Emirates have increased by 15 per cent over the past year and by more than 48 per cent since 2019. Meanwhile, EU investments in the UAE have reached €186 billion (Dh780 billion).

The removal of the UAE from the EU’s high-risk list is expected to accelerate the progress of the trade talks and deepen economic ties between the two regions.

In addition to the UAE, Barbados, Gibraltar, Jamaica, Panama, the Philippines, Senegal, and Uganda were also removed from “high-risk” countries list. At the same time, Algeria, Angola, Ivory Coast, Kenya, Laos, Lebanon, Namibia, Nepal, and Venezuela were added to the list.