Efforts by the United Arab Emirates (UAE) to be removed from the Financial Action Task Force's (FATF) 'gray list' are gaining momentum. Delegates from at least three nations have expressed the view that the UAE could be removed from the list as early as February 2024. The UAE has been actively working towards overhauling anti-money laundering and counter-terrorist financing regulations, boosting its mutual legal assistance treaties, and identifying, disrupting, and punishing criminals and illicit financial networks [6b44cb5a]. Similarly, the Cayman Islands has been removed from the FATF gray list, which may lead to increased private equity investment in Indian non-banking financial companies (NBFCs). The removal of Cayman Islands from the gray list is expected to bring relief to NBFCs, payment system operators, and alternative investment funds. Cayman is among the top 15 jurisdictions for foreign portfolio investments into India and was the fifth-largest contributor of foreign direct investment in FY22 [c885fe1a].
The UAE's efforts to exit the 'gray list' and the removal of the Cayman Islands from the list highlight the importance of complying with international anti-money laundering and counter-terrorist financing regulations. These efforts not only enhance the reputation of these countries but also contribute to strengthening the global financial system. Additionally, the UAE's focus on diversifying traded commodities and expanding economic cooperation with India through initiatives like the India-Middle East-Europe Economic Corridor (IMEC) and the UAE-India Comprehensive Economic Partnership Agreement (CEPA) demonstrates the commitment to fostering strong trade ties and promoting mutual investment flows [6b44cb5a]. The removal of Cayman Islands from the FATF gray list further bolsters global private equity investment into Indian NBFCs, providing a boost to the financial sector and facilitating economic growth [c885fe1a].
In Oman, efforts are underway to avoid being placed on the FATF gray list. Following the demotion of the neighboring UAE, Oman is preparing for a review by the FATF. The FATF delegation is set to visit Muscat in late January, with the review expected to take place later in 2024. Oman's smaller and more conservative economy, along with recent oversight measures, may help it avoid the gray-list designation. However, concerns remain over Oman's ties to Iran, as the country faces significant US sanctions. The Central Bank of Oman has licensed two Iranian banks and has seen some inflows of Russian money. Oman's geopolitical neutrality and its relationship with Iran will be scrutinized during the review [ea82143e].
The Financial Action Task Force (FATF) has announced that Iran, North Korea, and Myanmar will remain on its blacklist due to their significant deficiencies in combating money laundering, terrorist financing, and the financing of weapons of mass destruction [01fb216e]. The FATF highlighted Iran's refusal to ratify the United Nations Convention against Transnational Organized Crime and the Convention against the Financing of Terrorism. Iran will remain on the blacklist until it completes its action plan. This news comes as Iran has installed new centrifuge cascades at Fordow, according to the International Atomic Energy Agency (IAEA). The low voter turnout and significant boycott during Iran's presidential election have raised concerns about the regime's legitimacy. The US has imposed new sanctions on Iran's regime over nuclear tensions, and Israeli officials have expressed concerns about Tehran potentially acquiring a nuclear weapon [01fb216e].
The common theme of these inputs is the importance of compliance with international financial regulations, the efforts to exit the FATF gray list, and the strengthening of economic ties between countries. These actions contribute to a more robust and secure global financial system, promote trade and investment, and facilitate economic growth and development.