The Mirror and the Glass:
The Legacy and Future of the UAE’s Fight Against Money Laundering, Terror Financing and Proliferation of Weapons

The cuckoo is a fascinating bird—not simply because Wordsworth called it the “darling of the Spring,”¹ but for something far more intriguing and, dare I say, sinister!

The cuckoo is a brood parasite.² It doesn’t build its own nest. Instead, the female cuckoo lays her egg in the nests of other birds, known as hosts, and then flies away, leaving the burden of care entirely on the foster parents. As cuckoos have evolved to mimic³ the appearance of the host’s eggs, the unsuspecting hosts, unable to tell the difference between their own eggs and the cuckoo’s, incubate the foreign egg alongside their own.

The story goes quite a bit dark after that.

When the cuckoo chick hatches—often earlier than the host’s own eggs—it instinctively pushes the other eggs out of the nest. The cuckoo chick does this so that it receives all the care and resources of its foster parents.⁴ While this strategy might be a natural adaptation for survival and ascribing human ethics to such a natural phenomenon isn’t the right thing to do, the sneaky nature of the cuckoo’s tactics has inspired the term “cuckoo smurfing,” a method used in money laundering.

Just as the cuckoo’s egg is slipped into the nest of unsuspecting hosts, cuckoo smurfing involves the transfer of illicit funds through the “bank accounts of innocent third parties.”⁵ These unsuspecting account holders, much like the host birds, unwittingly facilitate the movement of money without recognising its true nature. While cuckoo smurfing is a specific money laundering typology, financial institutions and other organisations, too, often act as the hosts, unwittingly helping to integrate illegitimate funds into the financial system.

The task of the governments around the world is to identify and disrupt such deceptive practises. This blog explores how the UAE has risen to this challenge, and with concerted efforts through bringing laws and regulations and rigorous enforcement actions, evolved as a leader in fighting financial crimes.

funds to be laundered, but it has far-reaching socio-economic repercussions. It poses a significant threat to the global economy and financial systems by distorting financial markets and introducing illicit funds into legitimate sectors. This artificial influx of laundered money inflates asset prices and causes a misallocation of resources. Legitimate businesses find themselves competing with entities supported by laundered funds, creating an uneven playing field. Over time, this inequity might force honest enterprises out of the market, leading to job losses and slowed economic growth.

Recognising the dangers posed by money laundering, efforts worldwide have been intensified to combat this menace. At the forefront of this fight is the Financial Action Task Force (FATF)⁶, an intergovernmental organisation established in 1989. The FATF sets international standards to prevent money laundering and terrorist financing. It monitors countries’ progress in implementing these measures and promotes effective regulatory and operational frameworks.

One of the FATF’s important tools in this effort is the “grey list,” officially referred to as the list of Jurisdictions Under Increased Monitoring. Countries placed on this list are identified as having strategic deficiencies in their Anti-Money Laundering and Combatting the Financing of Terrorism (AML/CFT) systems but are actively working to address them. The UAE, recognising its pivotal role as a global financial and trade hub, responded proactively and decisively when greylisted. Through an ambitious series of reforms and regulatory actions, the UAE significantly strengthened its AML/CFT regime, and in less than two years, achieved the remarkable milestone of being removed from the FATF’s grey list.⁷

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The early 2000s marked a period of rapid global interconnectedness, bringing with it an urgent need for countries to safeguard their financial systems from the growing threats of money laundering and terrorist financing. The UAE also responded to the challenge. In 2002, the country restructured its special fraud and suspicious transaction investigation unit into the Anti-Money Laundering and Suspicious Cases Unit (AMLSCU).⁸ This transformation began with the introduction of Federal Law No. (4) of 2002, the UAE’s first penal law specifically criminalising money laundering, which set the foundation for its future efforts.

In 2004,⁹ it became a founding member¹⁰ of the Middle East and North Africa Financial Action Task Force (MENAFATF), a FATF-Style Regional Body (FSRB). This regional collaboration signalled the UAE’s commitment to not only strengthening its domestic capabilities but also contributing to the international fight against money laundering and terrorist financing. In the same year, Online Suspicious Transaction Report System was launched.

A Mutual Evaluation Report¹¹ published in 2008 assessed the UAE’s AML/CFT framework, identifying areas where improvements were needed. As global awareness of AML/CFT standards grew with the years, so did the UAE’s resolve to align itself with these benchmarks. By 2017, AMLSCU was renamed the Financial Intelligence Department and was further renamed the UAE Financial Intelligence Unit (UAEFIU) in 2018.

One of the most important moments in the UAE’s journey came in 2018 when it conducted a National Risk Assessment (NRA)¹² on money laundering and terrorist financing. This comprehensive study brought together public and private sector stakeholders to evaluate the nation’s vulnerabilities and risks. The findings of the NRA became the foundation for Federal Decree-Law No. (20) of 2018¹³ on Anti-Money Laundering and Combatting the Financing of Terrorism and Illegal Organisations, published on September 23, 2018.

This legislation represented a significant overhaul of the UAE’s AML/CFT framework, introducing stricter measures to close regulatory gaps and strengthen enforcement mechanisms. To ensure the effective implementation of this new law, the UAE Cabinet issued Cabinet Decision No. (10) of 2019¹⁴ on January 28, 2019. It also published Cabinet Resolution No. (74) of 2020¹⁵ to implement UNSCRs on the suppression and combatting of terrorism, terrorist financing, and countering the financing of the proliferation of weapons of mass destruction, including the application of targeted financial sanctions (TFS) regimes. In June 2019, the goAML platform, UAEFIU’s reporting platform, was launched.

The UAE’s progress gained momentum following the FATF’s 2020 Mutual Evaluation Report. However, since the AML/CFT laws and regulations were implemented shortly before the on-site visits from July 1 to July 18, 2019, the Mutual Evaluation Report noted that even though “the elements of an effective AML/CFT system are in place,” the framework was “relatively new,” and demonstrating “the overall effectiveness of the system” was not yet possible.¹⁶ Subsequently, the UAE introduced amendments to the AML/CFT Law and its Executive Regulations through Federal Decree-Law No. 26 of 2021¹⁷  and Cabinet Resolution No. 24 of 2022¹⁸ respectively.

The UAE’s removal from the Financial Action Task Force (FATF) grey list on the 23^rd of February 2024 was a significant milestone in the country’s battle against money laundering and terrorist financing. But what has been more inspiring is that this achievement did not mark the end of its efforts. Instead of pausing to celebrate, the UAE used its delisting as a springboard to further strengthen its AML/CFT regime. What followed was a demonstration of leadership and determination, underscoring the UAE’s commitment to setting a global example in combatting financial crimes.

One of the UAE’s first actions post-delisting was addressing the vulnerabilities in the gold industry, a sector historically prone to exploitation for money laundering.

Building on the Ministry of Economy’s Due Diligence Regulations for Responsible Sourcing of Gold¹⁹, published in August 2022 and based on the OECD’s five-step Due Diligence Guidance, the UAE issued Ministerial Decree No. (68) of 2024 in March 2024.²⁰ This decree, in addition to mandating that entities engaged in refining gold and recycling gold products follow all five OECD Due Diligence steps, extends the first three steps to other relevant entities in the supply chain, including traders and precious metal dealers. Violators now face administrative penalties under Federal Decree-Law No. (20) of 2018.

In July 2024, the UAE Cabinet reinforced this commitment by introducing administrative penalties specifically targeting Designated Non-Financial Businesses and Professions (DNFBPs)²¹ for violating AML/CFT regulations. These targeted actions were accompanied by significant structural reforms through Federal Decree-Law No. (7) of 2024²², which enhanced institutional oversight and coordination. Among the key reforms were the establishment of the National Committee for AML/CFT/CPF, the Supreme Committee for Oversight of the National Strategy, and the General Secretariat for the National Committee.²³ The Supreme Committee will be responsible for studying, overseeing, and assessing the effectiveness of AML/CFT strategies implemented by the National Committee.

The UAE’s approach has not only been limited to making legislative changes; enforcement has been equally robust. And such enforcement measures began much before the UAE was delisted from the FATF grey list. In 2023 alone, the UAE imposed over AED 254 million²⁴ in fines related to money laundering and seized assets worth AED 2.348 billion ($639 million).

In the same year, the Central Bank of the UAE (CBUAE) conducted 119 field inspections and imposed fines totalling AED 113 million. The Ministry of Economy’s 3,371 inspections in the same year uncovered further violations, leading to fines amounting to AED 101 million. Perhaps the most striking indicator of the UAE’s progress is the dramatic rise in suspicious activity reports within the gold sector. In 2021, there were just 223 reports related to the gold sector, but by 2023, this number had surged to 6,432 as reported by the Emirates News Agency (WAM). Inspections also increased by over twenty times with fines imposed amounting to AED 78.65 million.

These enforcement actions continued post-delisting as well. In August 2024, the CBUAE imposed a fine of AED 5.8 million (approximately $1.6 million)²⁵ on a bank operating in the UAE for deficiencies in AML/CFT policies and procedures. The Ministry of Economy also suspended the licences of 32 gold refineries for three months due to non-compliance with AML regulations. The Ministry identified 256 AML compliance violations during inspections, averaging eight violations in each of the refineries. In November 2024, the Central Bank took further action by suspending an exchange house for three years²⁶ and closing two of its branches in Dubai for failing to meet its AML/CFT obligations.

Beyond distorting financial markets and undermining legitimate businesses, about which we have talked earlier, money laundering severely impacts government revenues through tax evasion. When public funds are drained away from schools and hospitals, essential infrastructures are impacted. This directly affects Sustainable Development Goal (SDG) 3, which focuses on ensuring healthy lives and promoting well-being for all, as well as SDG 4, which aims to ensure inclusive and equitable quality education. Financial crimes undermine the ability to fund these very important sectors, leaving schools under-resourced and healthcare systems unable to meet the needs of the population.

A study published in March 2020, cited by the International Monetary Fund (IMF)²⁷, estimated that illicit financial flows from sub-Saharan Africa since 1980 amounted to $1.3 trillion. These resources could have significantly contributed to the region’s development but instead had a negative effect on private investment and curtailed Africa’s savings rate. In fact, the negative effects weren’t just restricted to Africa but cascaded over to countries transiting or receiving the illicit proceeds.

The UAE understands the debilitating nature of these crimes. In a significant move to counter these crimes, the Executive Office of the Anti-Money Laundering and Countering the Financing of Terrorism was replaced with the National Anti-Money Laundering and Combatting Financing of Terrorism and Financing of Illegal Organisations Committee (NAMLCFTC).²⁸

The UAE Cabinet also approved the 2024-2027 National Strategy for AML/CFT/CPF—a forward-thinking plan designed to tackle financial crime and cement the UAE’s position as a global leader in compliance. The strategy outlines 11 goals²⁹ such as:³⁰

• Deepen and harmonise the understanding of risks, prioritising those related to new technologies and emerging typologies.
• Sustain and enhance international cooperation and strategic partnerships.
• Sustain and enhance supervisory and enforcement efforts for FIs, VASPs, and DNFBPs, prioritising higher-risk sectors.
• Unify and harmonise the UAE’s Company Registration and Beneficial Ownership (BO) framework.
• Sustain and enhance the production and use of financial intelligence to investigate, prosecute, convict, and confiscate assets.
• Update the legal and regulatory framework to ensure compliance with global standards.
• Strengthen domestic coordination and cooperation and enhance mechanisms for public-private engagement.
• Establish and maintain a comprehensive, centralised AML/CFT data and statistics system to support analysis and monitoring of the UAE’s effectiveness.
• Ensure the UAE’s competent authorities are adequately staffed, trained, equipped, and funded.
• Protect and promote the UAE’s positioning and reputation as an AML/CFT global leader.

Oversight of these strategic goals will be led by the General Secretariat of the National Committee.

To bring these plans into effect, the UAE is heavily investing in training, resources, and funding to ensure authorities remain ahead of financial criminals. Collaboration with the private sector remains a priority as it encourages a shared sense of responsibility and compliance across industries. AKW Consultants, an award-winning leader in the UAE’s AML/CFT compliance landscape, has partnered with the UAE regulators as one of the accredited UAE Good Delivery Auditors³¹ to enhance compliance in the precious metals sector. AKW Consultants has also contributed to the creation of robust AML/CFT policies and served as a trusted compliance function ranging from businesses in precious metals sector to real estate firms to cryptocurrency trading companies. Similar partnerships with private sector stakeholders remain an important strategic focus as the UAE prepares for the FATF/MENAFATF Mutual Evaluation process, with an onsite visit scheduled for June 2026.³²

The UAE’s fight against financial crimes is rooted in both a reflection on its legacy—what it has achieved—and a vision for the future—what it aims to accomplish in the years ahead. Like a mirror and a glass, this dual perspective helps the UAE to honour its exemplary progress while charting a clear path forward. A brief timeline below highlights this inspiring and transformative journey:

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References:

1. https://www.poetryfoundation.org/poems/45562/to-the-cuckoo
2. https://www.nwf.org/Magazines/National-Wildlife/1997/Bullies-of-the-Bird-World
3. https://www.nature.com/scitable/knowledge/library/the-ecology-of-avian-brood-parasitism-14724491
4. https://www.snexplores.org/article/bird-fish-insect-parenting-cuckoo-brood-parasite
5. https://www.fatf-gafi.org/content/dam/fatf-gafi/reports/FATF-Egmont-Concealment-beneficial-ownership.pdf
6. https://www.fatf-gafi.org/en/the-fatf/history-of-the-fatf.html#:~:text=The%20Financial%20Action%20Task%20Force,G7%20Summit%20in%20July%201989
7. https://www.fatf-gafi.org/en/publications/High-risk-and-other-monitored-jurisdictions/Increased-monitoring-february-2024.html
8. https://www.uaefiu.gov.ae/en/about-us/history
9. https://www.menafatf.org/about
10. https://www.menafatf.org/sites/default/files/Newsletter/FirstAnnualReport04-05_1.pdf
11. https://www.uaefiu.gov.ae/media/5yzfqknu/uae-mutual-evaluation-report-2008.pdf
12. https://www.namlcftc.gov.ae/media/00aeyqio/uae-nra-outreach-program.pdf
13. https://www.centralbank.ae/media/05mli3jt/federal-decree-law-no-20-of-2018.pdf
14. https://uaelegislation.gov.ae/en/legislations/1015/download
15. https://www.uaeiec.gov.ae/en-us/laws-regulations-listing/cabinet-resolution-no-74-of-2020
16. https://www.fatf-gafi.org/content/dam/fatf-gafi/mer/Mutual-Evaluation-Report-United-Arab-Emirates-2020.pdf
17. https://www.uaefiu.gov.ae/media/qh3kh12e/federal-decree-law-26-of-2021-amending-federal-decree-law-20-of-2018-amlcft-en.pdf
18. https://www.uaefiu.gov.ae/media/gexouqe1/uae-federal-cabinet-resolution-no-24-of-2022.pdf
19. https://www.moec.gov.ae/en/diligence-regulations-for-responsible-sourcing-of-gold
20. https://www.moec.gov.ae/documents/20121/376320/Ministerial+Decree+No.+%2868%29+of+2024.pdf/b349cc52-534c-cffc-8c71-ad55d5c9c334?t=1717189374321
21. https://uaelegislation.gov.ae/en/legislations/2546
22. https://uaelegislation.gov.ae/ar/legislations/1016/modifications
23. https://www.wam.ae/en/article/b4mcus6-uae-government-amends-some-provisions-law
24. https://www.wam.ae/article/144ushy-uae-committed-combating-financial-crimes
25. https://www.centralbank.ae/media/fktnjr15/cbuae-imposes-a-financial-sanction-on-a-bank-operating-in-the-uae-en.pdf
26. https://www.centralbank.ae/media/xljjdbsu/cbuae-suspends-the-money-exchange-business-of-al-razouki-exchange-and-closes-two-of-its-branches_en.pdf
27. https://www.imf.org/en/Blogs/Articles/2023/12/07/financial-crimes-hurt-economies-and-must-be-better-understood-and-curbed
28. https://centralbank.ae/media/ladowun3/uae-cabinet-the-namlcftc-replaces-the-executive-office-of-the-anti-money-laundering-en.pdf
29. https://www.mofa.gov.ae/en/mediahub/news/2024/9/5/5-9-2024-uae-uae
30. https://www.linkedin.com/posts/national-anti-money-laundering-and-combatting-financing-of-terrorism-and-illegal-organizations_nationalcommittee-governance-internationalcooperation-activity-7249336702916300800-Yn2p
31. https://ugd.gov.ae/wp-content/uploads/2024/12/Approved-Auditors-Updated-Version-20-12-2024.pdf
32. https://www.fatf-gafi.org/en/calendars/assessments.html