The UAE’s free zones, like Dubai’s Jebel Ali Free Zone Authority (JAFZA), offer enticing incentives for offshore companies: 100% foreign ownership, no taxes, and full confidentiality for owners. This environment has led to the proliferation of shell companies, which hold assets without engaging in real business. These shells create intricate webs of ownership, making it hard to trace assets and hold accountable those who benefit. Due to the strong bank secrecy regulations in the UAE, it can be challenging to learn who the real owners are of the assets that corporations and bank accounts hold. JAFZA boasts over 7,000 incorporated companies, constituting a significant and expanding segment of the United Arab Emirates (UAE) economy. It represents close to a quarter of Dubai’s foreign direct investment and contributes substantially to its GDP. Additionally, within JAFZA, there exist hundreds, if not thousands, of shell companies, many of which have minimal physical presence beyond a mere post office box.

It can be challenging to locate the genuine beneficial owners of the assets housed by the shell companies and follow the flow of money because they lacked access to information from the UAE authorities. Governments and law enforcement organizations frequently demand increased openness in international financial transactions, including the disclosure of offshore accounts and the flow of money between them, in order to prevent illegal crimes. In order to properly investigate and punish people who participate in unlawful operations involving offshore accounts and the movement of cash, law enforcement authorities must cooperate internationally. Due to the strong bank secrecy regulations in the UAE, it can be challenging to learn who the real owners are of the assets that corporations and bank accounts there hold. It can be challenging to locate the genuine beneficial owners of the assets housed by the shell companies and follow the flow of money because they lacked access to information from the UAE authorities. Dubai’s rise as a global financial center raises concerns about accountability. Its model is being exported worldwide, facilitated by entities like DP World. Yet, the lack of transparency in such zones poses risks for countries with weaker regulatory frameworks.

The United Arab Emirates (UAE) has been actively involved with the Financial Action Task Force (FATF). It has made significant efforts to align its laws and regulations with FATF recommendations to combat money laundering and terrorist financing. The UAE has taken steps to strengthen its anti-money laundering (AML) and counter-terrorist financing (CTF) framework, including implementing laws and regulations, enhancing supervision and enforcement, and cooperating with international counterparts.

The FATF designated the UAE for closer monitoring in 2022 due to concerns over money laundering and terrorist financing activities involving various sectors such as banking, precious metals, and real estate, among others. Countries placed on the FATF watchlist are subject to increased scrutiny and pressure to improve their AML/CFT frameworks. Being on the watchlist can have significant implications for a country’s financial reputation and can affect its ability to engage in international financial transactions.

On February 23, 2024, the United Arab Emirates (UAE) was removed from the Financial Action Task Force (FATF) “grey list“. The country has been working diligently over the last two years to strengthen its Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) legal and regulatory framework to address deficiencies identified by the FATF and implement recommended additional measures.

Despite being dropped from the “FATF Grey List”, UAE remains on the European Union’s High Risk Third Countries Watchlist. The European Commission proposed, on March 14, 2024, the removal of Barbados, Gibraltar, Panama, Uganda and the United Arab Emirates (UAE) from the EU’s list of high-risk third countries with strategic deficiencies in their Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) regimes. The EU MEPs voted not to remove the UAE and Gibraltar from Europe’s watchlist.

ZIGRAM’s Country Watchlist Library offers a tailored solution for banks seeking to manage compliance effectively. This curated collection of country-specific lists enables banks to screen individuals, organizations, and entities against watchlists, blacklists, and alerts compiled by regulatory bodies and investigative agencies of specific regions or countries. By leveraging this resource, banks can proactively identify and address potential risks associated with entities listed in these watchlists.

Key features of the Country Watchlist Library include its compilation based on extensive domain research, exclusively sourcing data from government and official sources. Regular updates ensure the relevance and accuracy of the lists, which cover various compliance areas such as reputational, regulatory, operational, and emerging risks. Additionally, language-specific inputs are incorporated where applicable to enhance effectiveness.

The applicability of these country watchlists extends across various banking functions, including customer onboarding, third-party risk management (TPRM), pre-deal and post-deal assessments, KYC checks, supply chain risk management, and ultimate beneficial owner (UBO) reputation management. When integrated into a screening platform like PreScreening.io, these watchlists complement global AML and risk checks, providing a comprehensive compliance management solution.

Moreover, ZIGRAM’s India Watchlists offer a comprehensive compilation of India-specific lists maintained by major regulatory bodies and agencies such as the Reserve Bank of India (RBI), National Investigation Agency (NIA), Central Bureau of Investigation (CBI), Securities and Exchange Board of India (SEBI), and others. These lists cover various compliance areas and include designations such as Most Wanted individuals, Proclaimed Offenders, Strike Off Companies, and Suspected Shell Companies, among others.

In total, ZIGRAM’s India Watchlists encompass over 200 lists contributed by more than 50 prominent regulators and agencies, along with 20+ Public Sector Undertakings (PSUs) and 10+ stock exchanges. With a vast coverage spanning millions of individuals and organizations, these watchlist solutions empower banks to strengthen their compliance frameworks and ensure adherence to regulatory requirements.

In conclusion, watchlist screening is vital for Indian banks to meet RBI regulations and combat financial crimes. It ensures compliance, safeguards reputation, and fosters trust. Adherence to RBI guidelines on AML, sanction screening, and managing PEP accounts is essential. ZIGRAM’s Country Watchlist Library offers tailored solutions, providing comprehensive lists sourced from official channels. Integrating these watchlists helps banks streamline compliance and mitigate risks effectively. In essence, watchlist screening, coupled with RBI guidelines, equips banks to uphold integrity, regulatory compliance, and trust in the financial system.

The Table focuses solely on Recommendation 15 of the FATF Recommendations, which pertains to virtual assets and virtual asset service providers (VASPs). VASPs encompass businesses offering services related to virtual assets, such as exchanges and wallet providers. It assesses whether a jurisdiction has implemented key requirements of Recommendation 15, including conducting a risk assessment of money laundering and terrorist financing (ML/TF) risks associated with virtual assets, licensing or registering VASPs, and supervising VASPs to ensure compliance with anti-money laundering and counter-terrorist financing (AML/CFT) regulations. Each jurisdiction self-reports their progress on these aspects, reflected in three possible responses: “Yes” indicating implementation, “No” indicating non-implementation, and “In Progress” indicating ongoing efforts toward implementation. However, it’s crucial to note that the Table does not evaluate a jurisdiction’s overall AML/CFT effectiveness beyond Recommendation 15.