UAE needs 'stronger measures' against money laundering, terrorism financing
The report has prompted the watchdog to place the Gulf state under observation for a year due to concerns about illicit financing.
In a report that included a visit to the UAE in July, the Paris-based FATF found that the country has made improvements to combat illicit financing.
Yet it also needs make bigger strides given its status as a major financial hub.
The UAE's fragmented economy structure, as well as its proximity to war zones and unstable countries, puts it at an even higher risk of illicit financing.
The inter-governmental body has identified room for improvement such as pursuing professional launderers, closing loopholes in gold and property markets, and making company structures more transparent.
Although UAE authorities have access to a wide range of financial information in their investigation, they do not seem to fully exploit it.
The FATF expressed concern at the limited number of money laundering prosecutions and convictions carried out in the UAE - particularly in business hub, Dubai.
The watchdog also noted a "noticeable absence" of investigations and prosecutions for money laundering crimes in relation to high-risk crimes - such as drug trafficking - and high-risk sectors, such as the trade in precious metals and stones.
The FATF noted the UAE prosecuted 92 people and convicted 75 for terrorism financing between 2013 and 2019, in addition to 50 money laundering-related prosecutions and 33 convictions between 2013 and 2018.
Dubai saw only 17 money laundering prosecutions over a five-year period.
The UAE needs to ramp up its efforts to pursue international money laundering networks, the watchdog added.
If the UAE does not improve, it may join the likes of Syria, Yemen and Pakistan, which are deemed to have "strategic deficiencies" by the FATF.
The UAE has previously raised suspicions regarding the circulation of dirty money.
A 2018 report by the Washington-based Center for Advanced Defense Studies alleged that war profiteers, terror financiers and drug traffickers sanctioned by the US have used Dubai's real-estate market as a haven for their assets.
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