The United Arab Emirates (UAE) is struggling to shade itself from (Financial Action Task Force) FATF’s grey list nations. The grey list means UAE is closely monitored for anti-money laundering compliance. Despite being under watch, the country has been a top destination for most cryptocurrency firms.
The FATF moved the UAE to its ‘grey’ list of nations to be closely monitored for anti-money laundering compliance at the beginning of March. The country was likewise slack in executing its anti-money laundering laws, according to reports. Some people argue that Dubai is attracting Crypto firms for easy money laundering. Yet, the UAE’s inclusion on the FATF grey list implies that it will be intensely scrutinized.
According to most industry insiders, the increased compliance will only add to the industry’s attraction to Dubai. Inclusion on the grey list means close supervision. Thus, the UAE faces challenging situations on various fronts. Among the effects of appearing on the grey link includes rating revisions. Besides, the country faces increased controls in getting global funding. Plus, it will endure more significant transaction costs as long as it remains on the grey list.
The burden of appearing on the watchlist is too much. Therefore, the UAE is making the necessary efforts to get clearance. For the UAE to get clearance, it must show that it is making progress in aiding anti-money laundering investigations. Also, it has to prove that it can manage risks in specific industries and spot questionable transactions in the economy.
It will also have to increase the use of financial intelligence in the fight against money laundering. Besides, increase the number of investigations and prosecutions of money laundering cases. Moreover, it must identify and combat sanctions evasion more aggressively.
What UAE offers
It is worth noting that most crypto enterprises built a foothold in Dubai after the country passed the Virtual Assets Law (VAL) in mid – February. The Virtual Asset Regulatory Authority (VARA) came up due to this regulation. Moreover, Binance was one of the first companies to receive a license under the new legislation.
Analysts think the recently enacted law is the most vital element that lures crypto firms. Moreover, such rules and restrictions are critical if bitcoin usage gets considerable traction. Yet, it is not simply the VAL that has produced a flood of businesses but also Dubai’s open attitude toward financial innovation and growth. When it comes to automation and new technology, Dubai is amongst the most forward-thinking countries. They have always been a step ahead of the trend.
Binance and FTX recognized this and preyed on it. Again, many other appealing aspects of moving to Dubai include lifestyle, stability, and favorable tax rates.
Dubai is also twitchy on innovation. One can see this in the multiple business incubators established over the years. What is eye-catching about the incubators is that state and private agencies are keen to develop them.
The new VAL also offers a framework for NFTs and other types of crypto. Thus, demonstrating that Dubai — and the UAE in general — are more receptive to new ideas than different regimes. Meanwhile, in early April, the Dubai Police Department went so far as to give away 150 free NFTs. The gesture demonstrated the city’s pro-crypto position.
Clear regulations attract crypto businesses in UAE.
Binance was among the first trading platforms to settle in Dubai after the regulation’s adoption. When Binance left Malta, most people believed that the strict anti-money laundering policy sent them away. Binance later established offices in France and Germany. These countries have more strict financial rules than Malta.
After joining Dubai, it is more apparent that most crypto trading platforms are looking to establish bases in places with clear rules. Otherwise, Binance would be in Dubai earlier when there were no regulations on the coins. Besides, if Binance and other platforms wanted to dodge laws and monitoring, they would not have set a foothold in Dubai. Dubai has implemented new guidelines for virtual asset legislation and is beefing up its AML adherence.