What is FATF and How Does It Affect Businesses in the UAE

What is FATF?

The Financial Action Task Force (FATF) is an international intergovernmental body founded in 1989 by the G7 nations.
Its main purpose is to set global standards for combating:

• Money laundering (AML)
• Terrorism financing (CFT)
• Financing of weapons proliferation (PF)

FATF issues 40 Recommendations — internationally recognized guidelines that help countries build strong systems to protect their financial sectors from abuse by criminals or terrorist groups.

The FATF also monitors countries’ compliance through regular reviews known as mutual evaluations. Based on these reviews, countries can be:

• Compliant / Regular Status
• Grey List (under increased monitoring)
• Black List (high-risk jurisdictions)

UAE’s Experience with FATF

In March 2022, the United Arab Emirates was placed on the FATF Grey List, meaning FATF recognized progress but required further improvement in specific areas, including:

• Monitoring real estate transactions,
• Ensuring beneficial ownership transparency of companies, and
• Strengthening law enforcement and prosecution of financial crimes.

After two years of reform, FATF announced in February 2024 that the UAE had been removed from the Grey List, acknowledging the country’s strong and sustainable progress.

How Does FATF Affect Businesses in the UAE?

Enhanced Due Diligence

Businesses must perform stronger background checks on clients, partners, and transactions — especially in banking, real estate, and corporate services.

Increased Compliance Requirements

Companies must maintain accurate records, disclose ultimate beneficial owners (UBOs), and report suspicious transactions through licensed compliance officers.

Reputation and Investor Confidence

Being removed from the Grey List boosts the UAE’s image as a secure and transparent financial hub, attracting more international investors and reducing perceived risk.

Legal Accountability

Companies failing to comply with AML/CTF laws can face heavy fines, license suspension, or criminal liability under Federal Decree-Law No. (20) of 2018 on Anti-Money Laundering and Counter-Terrorism Financing.

Ease of Global Transactions

Banks and international partners are more willing to engage with UAE entities, reducing transaction delays and compliance friction.

In Summary

The FATF framework ensures that financial and corporate activities in the UAE are transparent, traceable, and compliant with global standards.
For businesses, it means more responsibility, but also more trust from global markets.