The United Arab Emirates (UAE) and China have announced an intelligence-sharing deal to bolster the countries’ fight against money laundering and terrorist financing. The UAE’s Financial Intelligence Unit (FIU) will partner with the China Anti-Money Laundering Monitoring and Analysis Centre (CAMLMAC), exchanging information regarding ongoing investigations and the persons or entities involved.
The move reflects both Dubai’s position as a critical financial hub in the Middle East and the close trading relationship between the UAE and China. CAMLMAC’s Director-General noted that: “The UAE has become China’s largest export market and second-largest trade partner in the Arab World. The bilateral cooperation between both countries has made great progress.” In 2019, China was Dubai’s largest trading partner, contributing $29bn to the economy.
The announcement is the latest in a number of measures the UAE has enacted following its last mutual evaluation by the Financial Action Task Force (FATF) in April 2020. In its report, FATF scored the UAE as ‘low’ on its use of international cooperation to deliver ‘appropriate information, financial intelligence, and evidence’ as a means of facilitating ‘action against criminals and their assets.’ More broadly, FATF said that Dubai’s position ‘attracts’ criminal financial flows to the country, with its understanding of the money laundering and terrorist financing risks it faces ‘still emerging.’
In a further sign of the UAE’s desire to boost its international cooperation, Arab News reported that UAE law enforcement has assisted in the apprehension of six individuals acquitted by the United States of fraud and money laundering. Hamid Al-Zaabi, director-general of the AML and CFT unit in the UAE commented specifically on the country’s willingness to cooperate: “This case will act as a landmark for the effectiveness of multinational collaboration.”
In February, the UAE’s central bank fined 11 banks a total of $12.5m for AML failings, a move that was seen at the time as an attempt to dent the state’s reputation as a hotspot for financial crime. This was followed up in April with new guidelines on AML and CFT measures aimed at raising awareness of the rules, and improving compliance.
Firms operating in the UAE must navigate a patchwork of measures, including federal laws and separate regulations in the Dubai International Finance Center, which is administered by a separate local body. The FATF stated that the UAE’s jurisdictional complexity, including 7 Emirates, 2 financial-free zones, and 29 commercial-free zones further increases its vulnerability to illicit funds.
Businesses should ensure they’re following all relevant federal and local regulatory requirements, including appropriate customer due diligence, transaction monitoring, and screening measures. In line with FATF guidance, AML programs should also be overseen by a compliance officer or Money Laundering Reporting Officer (MLRO).
To learn more about AML initiatives in the UAE, read our article here.