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BRIEFING NOTE

FATF : UAE : MUTUAL EVALUATION REPORT


‘[The UAE] must take urgent action to effectively stop the criminal financial flows that it attracts’


FATF Paris 30 April 2020

‘Kleptocrats, criminals and sanctioned individuals from around the world own Dubai property … In practice, these buyers can stash or launder cash in the UAE property market, no questions asked’ - Matthew Page, a scholar with the Carnegie Endowment for International Peace Financial Times 30 April 2020.


There is concern over the low number of ML prosecutions in Dubai given its ‘acknowledged risk profile’.


There is considerable abuse of legal personality

Principal threats are –

Fraud, professional third-party ML, drug trafficking and counterfeiting.


High risk sectors are –

Banking, MVTS (including Hawaladars) and dealing in precious stones and metals.


Colleagues need not read the lengthy FATF report which runs to 288pp – the summary is 14 pages – as it reaches its blinding obvious conclusions in painfully diplomatic language after following a laborious over engineered FATF evaluation process that took place nearly a year ago.


Criminals are more agile than that – organisation is the enemy of improvisation – for organisation read ‘bureaucracy’


It is notable that the US Department of Justice and the UK HMRC took part in the evaluation as well as TRACFIN, the serious players – the report was reviewed by the Russian Federation and the IMF – and Italy.


Recent anecdotal evidence of wrongdoing borders on the hilarious with claims that EY helped to cover up five tons of gold painted silver imported from Morocco, USD5 bn of cash transfers not reported to the Dubai authorities and 57 tons of gold imported from Sudan – 27 people were jailed in France.


On 17 April 2020 the High Court in London awarded the whistle-blower involved USD11 mm to be paid by EY.


Gold’s importance is underscored with the financial crisis arising from the pandemic – money commentators see the crisis ending the role of ‘fiat’ currency and gold becoming literally ‘priceless’.


The gold trade is reputed to be worth USD70 bn a year to the UAE.


The facts speak for themselves –


Effectiveness and technical compliance ratings

Detailed Table at the end of this Note

Effectiveness ratings

  • Highly 0%

  • Substantially 9%

  • Moderately 55%

  • Low 36%

Technical compliance ratings

For each of the 40 FATF recommendations

  • Not compliant 0%

  • Partially compliant 15%

  • Largely compliant 58%

  • Compliant 27%

Facts

2013-2018


Money Laundering

  • Cases identified by LE 282

  • Cases further investigated 224

  • Prosecutions 50

  • Convictions 33 [66%]


Terrorist Financing

  • Prosecutions 92

  • Convictions 75 [82%]

2019

  • GDP USD 746bn [PPP]

  • GDP ranking 33 [PPP]


  • Emirates 7

  • Financial Free Zones 2

  • Commercial Free Zones 29

  • Company Registries 39

Ruler’s Funds account for 18% of NPOs and is not properly investigated and is identified as having ‘greater vulnerability’ to TF


Mutual Evaluation Review Assessment Team [1-18 July 2019]

  • Lebanon Special Investigation Commission

  • France TRACFIN

  • Turkey Banking Regulation and Supervision Agency

  • UK HMR&C

  • USA Dept of Treasury

Reviewed by

  • Russian Federation

  • IMF

  • Italy

FATF Executive Summary


FATF UAE Mutual Evaluation Review Executive Summary 29 April 2020


https://www.fatf-gafi.org/media/fatf/documents/reports/mer4/Executive-Summary-Mutual-Evaluation-Report-UAE-2020.pdf

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