EU removes UAE from High-Risk AML List following FATF Grey List exit

On 9 July 2025, the European Parliament voted not to oppose the European Commission's decision to remove the United Arab Emirates (UAE) and seven other countries from its list of high risk third countries with strategic deficiencies in their anti-money-laundering (AML) and counter terrorism-financing (CTF) frameworks. The move follows the UAE's removal from the Financial Action Task Force's (FATF) "grey list" in February 2024, prompting the EU to align its own list with the FATF's.

Whilst the EU's identification of high-risk third countries must be based on a clear and objective assessment which focuses on a jurisdiction's compliance with the criteria in EU Directive (EU) 2015/849, and is independent from that of the FATF, the European Commission fully acknowledges the work already undertaken at an international level, including by the FATF. As such, it aims to closely align its list with lists agreed internationally to ensure the integrity of the global financial system. Until this decision, EU "obliged entities" – including banks, auditors, legal professionals – were required to apply enhanced customer due diligence measures dealing with UAE based clients, often delaying transactions and making it more challenging for EU parties to deal with UAE entities.

The European Commission's decision faced some opposition from the European Parliament which called for a motion for a resolution on the basis that it was premature to remove the UAE, citing a number of reasons, including that the "European Commission has not provided concrete evidence that the recent UAE reforms have been effectively implemented and translated into major progress in the fight against money laundering and terrorist financing activities"  and that "major loopholes remain…in financial free zones" (Motion for a Resolution, B-10-0315/2025). However, the motion was unsuccessful.  Although the European Parliament had opposed the delisting in April 2024, its recent approval reflects growing confidence in the UAE’s commitment to combating financial crime.

The UAE has welcomed the EU's decision. In an article published recently in The National, the UAE's leading English language daily newspaper, H.E. Ahmed Ali Al Sayegh, UAE Minister of State said the decision is "independent recognition" of the UAE's commitment to the highest international standards in combating global financial crime. H.E. Mohamed bin Hadi Al Hussaini, Minister of State for Financial Affairs added that the move would "enhance investor and institutional confidence in the UAE’s financial landscape, support the continued flow of investment, and further solidify the country’s reputation as a leading global destination for finance and investment".

Looking ahead, the UAE remains focused on strengthening its AML/CTF framework, especially in preparation for the FATF’s fifth round of mutual evaluations, scheduled to begin in June 2026.

Over the past year, the UAE has taken several key steps to reinforce its AML regime:

• launched a national strategy for AML, CTF and proliferation financing for the period from 2024 to 2027. The national strategy was developed based on the findings of the UAE's third National Risk Assessment Report (the 2024 edition, published in April 2025) which provides a comprehensive analysis of the UAE's money laundering threats and vulnerability; and
• amended core AML legislation which led to the creation of new oversight committees for AML and CTF.

In addition, the UAE Central Bank has ramped up its enforcement efforts against non-compliant financial institutions, issuing nearly AED 350 million in fines in recent months for breaches of AML and CTF regulations. Free zone regulators have also followed suit. In its 2025 – 2026 business plan, the Dubai Financial Services Authority (DFSA), the financial services regulator in the Dubai International Financial Centre emphasised collaboration with other regulators to prepare for the upcoming FATF evaluation. It also announced targeted inspections of firms, including those dealing in digital assets. Meanwhile, the Financial Services Regulatory Authority (FSRA), the financial services regulator of the Abu Dhabi Global Market, has demonstrated its commitment to AML compliance by fining a regulated firm USD 500,000 for failing to maintain adequate AML systems between 2017 and 2023 — a clear signal to the industry of the consequences of weak controls.

The UAE is expected to continue enhancing its AML/CTF policies and procedures to ensure they remain robust, future-ready, and capable of addressing evolving global threats.

In parallel, the EU’s decision is likely to boost investor confidence and support further economic growth in the UAE.