The United Arab Emirates has experienced a profound regulatory transformation over the past several years, shifting its international reputation from a jurisdiction under financial crime scrutiny to one widely recognized for its compliance with global Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) standards. The country’s successful removal from the European Union’s list of “high-risk” third countries in June 2025 marked a pivotal achievement in the UAE’s journey to becoming a trusted global financial center.

This turnaround was neither accidental nor cosmetic. The UAE faced mounting pressure after being placed on the Financial Action Task Force (FATF) grey list in March 2022, which identified weaknesses in its AML/CFT frameworks and elevated the country’s risk perception among international banks and counterparties. Rather than dispute the designation, the UAE authorities responded with a sweeping set of legislative reforms, increased enforcement actions, and industry-wide regulatory upgrades. The result: a multi-billion-dollar improvement in trade prospects, renewed investor confidence, and a significant shift in the region’s compliance landscape.

Tough Laws and Regulatory Milestones Accelerating UAE AML Progress

The UAE government’s approach to exiting the FATF grey list and the EU’s high-risk register centered on comprehensive legal and institutional reforms. Authorities rapidly adopted new and amended legislation aligned with global AML/CFT requirements, most notably the Federal Decree Law No. 20 of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism, which established robust obligations for financial institutions, designated non-financial businesses, and professions (DNFBPs).

Subsequent cabinet decisions and regulatory circulars expanded the scope of reporting and risk management for a broad range of sectors, including banking, insurance, real estate, gold trading, and virtual assets. Key milestones in the UAE’s regulatory evolution included:

• Enhanced beneficial ownership reporting, as mandated by Cabinet Resolution No. 58 of 2020, requiring entities to declare and regularly update their real beneficial owners.
• Stricter customer due diligence rules and transaction monitoring, with technology-driven solutions deployed across financial institutions.
• Expanded suspicious transaction reporting frameworks, increasing the volume and quality of reports submitted to the UAE Financial Intelligence Unit (FIU).
• Implementation of targeted financial sanctions in line with United Nations Security Council Resolutions, enforced by the Executive Office for Control and Non-Proliferation.

Central to these efforts was the creation of the UAE’s Executive Office for AML/CFT in 2021, tasked with coordinating national policies, facilitating interagency cooperation, and monitoring sectoral compliance. The Central Bank of the UAE and the Securities and Commodities Authority issued detailed regulatory guidance, conducted thematic reviews, and invested in staff training and digital compliance infrastructure. The adoption of these measures was closely monitored by FATF and the European Commission, both of which emphasized ongoing implementation and tangible enforcement.

Aggressive Enforcement and Deterrence: Financial Penalties and Public Actions

The UAE’s commitment to meaningful AML/CFT compliance has been demonstrated by unprecedented levels of enforcement, with authorities imposing significant financial penalties on non-compliant entities. In 2024 and 2025 alone, the Central Bank of the UAE levied hundreds of millions of dirhams in fines on both domestic and foreign institutions operating within the Emirates.

Recent examples include:

• A record fine of AED 200 million (approximately USD 54.5 million) against a major exchange house for systemic failures in AML/CFT controls.
• Aggregate fines exceeding AED 18 million imposed on branches of two international banks for breaches related to customer due diligence and transaction monitoring.
• Penalties totaling AED 12.3 million against six money exchange businesses for deficiencies in internal controls, suspicious transaction reporting, and staff training.

These actions sent a clear message across the region: regulatory expectations are not limited to local banks but extend to all licensed institutions, regardless of origin or size. Supervisory authorities conducted regular on-site inspections, mandated remediation plans, and published enforcement outcomes to promote transparency and market discipline. By publicly naming and penalizing offenders, UAE regulators provided strong incentives for compliance and made clear that AML/CFT obligations were non-negotiable.

Furthermore, the UAE upgraded its asset recovery and mutual legal assistance capabilities, actively cooperating with foreign law enforcement on high-profile cases involving cross-border money laundering, fraud, and terror finance. The country’s FIU played an increasingly prominent role in international intelligence-sharing networks, contributing to global efforts to detect and disrupt illicit finance.

EU Watch List Exit and the Economic Payoff for the UAE

The decision by the European Union in June 2025 to remove the UAE from its “high-risk” third-country list represented a major economic milestone, unlocking significant opportunities for international trade, investment, and cross-border business. The EU’s high-risk list, established under Directive (EU) 2015/849 (the Fourth and Fifth AML Directives), requires financial institutions to apply enhanced due diligence to transactions and business relationships involving listed countries. Removal from the list not only reduces compliance burdens for EU banks but also improves market access for UAE-based firms.

As the EU’s leading export destination and investment partner in the Gulf region, the UAE stands to benefit enormously from its improved standing. Official statistics indicate that EU exports to the Emirates have increased by over 15 percent in the last year and by nearly 50 percent since 2019. Foreign direct investment from the EU now exceeds €186 billion, reinforcing the Emirates’ position as a gateway for international finance and trade.

The timing of the EU’s decision is also significant in the context of ongoing negotiations for a bilateral free trade agreement—the first of its kind between the EU and a Gulf Cooperation Council country. With regulatory concerns alleviated, both sides anticipate accelerated progress in the talks, greater flows of goods and services, and deeper financial integration.

Moreover, the removal of the UAE from the FATF grey list in February 2024—confirmed by official FATF documents—signaled to global banks and multinational corporates that the UAE is no longer subject to the highest levels of regulatory scrutiny. This shift has already resulted in improved correspondent banking relationships, lower transaction costs, and a surge in cross-border business involving the Emirates.

Regional and Global Implications of the UAE’s AML Success

The UAE’s elevation out of international high-risk lists has reverberated beyond its own borders, setting new benchmarks for regulatory reform and enforcement in the Gulf and wider Middle East. Neighboring financial centers, keen to attract foreign capital and avoid regulatory censure, are studying the UAE’s policy mix and seeking to replicate elements of its compliance strategy.

At the same time, the European Commission and FATF continue to refine their approach to high-risk jurisdictions. The June 2025 revision of the EU’s list removed not only the UAE but also Barbados, Gibraltar, Jamaica, Panama, the Philippines, Senegal, and Uganda, while adding Algeria, Angola, Ivory Coast, Kenya, Laos, Lebanon, Namibia, Nepal, and Venezuela. These changes reflect the evolving nature of global money laundering risks and the need for countries to sustain momentum in AML/CFT compliance.

The UAE’s experience underscores the importance of sustained political will, strong interagency coordination, and a willingness to invest in both legislative and operational improvements. By aligning its AML/CFT framework with FATF standards and EU requirements, the UAE has secured a more favorable international risk rating and reaped substantial economic dividends.

Conclusion: The UAE’s AML Journey and the Future of Compliance

The UAE’s removal from the EU’s high-risk list stands as a testament to the country’s rapid and determined approach to tackling money laundering and terrorist financing risks. Through sweeping legislative reforms, robust enforcement, and public accountability, the Emirates has achieved a level of regulatory maturity recognized by global standard-setters.

While the path to sustained compliance is ongoing, the UAE’s progress serves as a model for other jurisdictions seeking to enhance their financial crime defenses, build investor confidence, and unlock new opportunities for growth. The continued vigilance of UAE authorities, combined with active international cooperation, will remain essential as the global fight against financial crime evolves.

For financial institutions and multinational firms, the Emirates now offers a more predictable and transparent business environment—one where robust compliance is not just a regulatory expectation but a driver of long-term value.

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Related Links

• EU List of High-Risk Third Countries
• FATF Statement on UAE Grey List Removal
• UAE Federal Decree Law No. 20 of 2018 (AML/CFT)
• Cabinet Resolution No. 58 of 2020 on Beneficial Ownership
• Central Bank of the UAE AML/CFT Supervision

Other FinCrime central Articles About the UAE’s Determinist Actions

• UAE AML Crackdown: More Fines Signal Aggressive Push to Secure Financial Sector
• New Fines Drive Change as UAE Central Bank Targets Foreign Banks AML Failures
• UAE’s Landmark USD 54M AML Enforcement Delivers Unmistakable Regulatory Impact
• UAE Expands Terrorist List with 19 New Entities and Individuals

Source: Khaleej Times, by Waheed Abbas

Some of FinCrime Central’s articles may have been enriched or edited with the help of AI tools. It may contain unintentional errors.

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