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The UAE is keen on regaining a good reputation by clearing its name from FATF’s gray list while there is a flood of crypto firms coming into the country.
The presence of the UAE on the FATF’s gray list means that it is closely monitored for anti-money laundering (AML) compliance. Despite being monitored, the country has been attracting numerous new cryptocurrency firms.
At the beginning of March this year, the global financial watchdog FATF moved the UAE to its ‘gray’ list of nations to be closely monitored for AML compliance. According to reports, the Middle Eastern financial hub had inadequate measures to ensure anti-money laundering compliance.
Even though the UAE’s gray list status means that it is being heavily scrutinized, some say that Dubai is attracting crypto firms for easy money laundering.
Industry insiders are saying that the increased scrutiny has the effect of attracting even more crypto firms to Dubai.
However, the UAE faces challenging situations on various fronts. Among the effects of appearing on the gray list includes rating revisions. Besides, the country faces increased controls in getting global funding and it will also have to handle higher transaction costs as long as it remains on the gray list.
Therefore, the UAE is making the necessary efforts to get clearance, for which it must show that it is making progress in aiding AML investigations. Also, it has to prove that it can manage risks in specific industries and spot questionable transactions in the economy.
The UAE will also have to increase the use of financial intelligence in the fight against money laundering while increasing the number of investigations and prosecutions of money laundering cases. Moreover, it must identify and combat sanctions evasion more aggressively.
It is worth noting that most crypto enterprises built a foothold in Dubai after the country passed the Virtual Assets Law (VAL) in mid-February. The Virtual Asset Regulatory Authority (VARA) came up due to this regulation.