Middle East

FATF Lifts Increased Monitoring on UAE, Catalyzing Further Growth for Middle East Wealth Management

The Financial Action Task Force (FATF), a leading global organization fighting money laundering, has announced that the United Arab Emirates (UAE) is no longer under its intensified scrutiny.

This decision comes after the UAE demonstrated substantial progress in enhancing its anti-money laundering and counter-terrorism financing (AML/CFT) measures, verified through a successful inspection on-site.

This development is a boon for the wealth management sector in the Middle East, removing a significant barrier to its growth. The conclusion of the FATF's three-day plenary session last Friday marked the end of the UAE's period of increased monitoring.

The FATF acknowledged the UAE's efforts in rectifying previously identified shortcomings in its AML/CFT framework. This improvement allows wealth managers to adjust their internal IT systems, enabling a shift away from automatically assigning medium and high-risk ratings to clients based solely on their geographical location.

Furthermore, this change facilitates the operation and management of booking centers by reducing the number of clients subject to stringent know-your-client (KYC) procedures during onboarding and compulsory annual reviews, particularly for those previously categorized as high-risk.

Operationally, this development simplifies interactions with other entities in the financial sector and regulatory compliance, especially in managing cross-booked client accounts. It significantly reduces the regulatory scrutiny required, lowering operational costs and allowing firms to concentrate more on revenue generation and client acquisition.

In the long run, this positive shift is expected to accelerate and sustain the ongoing expansion of the wealth management industry in the Middle East.