The European Commission announced that the United Arab Emirates (UAE) would be removed from the European Union’s list of “high-risk third countries” for anti-money laundering (AML) and counter-terrorist financing (CFT) oversight. This decision, still subject to final approval by the European Parliament and Council, follows more than a year of lobbying, regulatory reforms, and technical evaluations since the Financial Action Task Force (FATF) removed the UAE from its “grey list” in February 2024.
Along with the UAE, seven other jurisdictions will be delisted, while Monaco and nine other countries will now join the EU’s growing list of high-risk regions. The implications are vast, for banks, businesses, compliance departments, and international trade relations.
The Journey from Grey List to Green Light
The UAE was placed on the FATF’s “grey list” in March 2022, citing strategic loopholes in its AML/CFT regime. This status resulted in:
- Enhanced scrutiny from international financial institutions.
- Slower cross-border transactions involving UAE-based clientele.
- A reputational hit that impacted investment flows, especially in banking, crypto, and real estate.
Over the next two years, the UAE has been working aggressively to fix the gaps. The initiatives included:
- Creating a dedicated AML/CFT task force under the Ministry of Economy.
- Introducing robust beneficial ownership rules.
- Launching PPPs (public-private partnerships) for suspicious transaction reporting.
- Enacting record-breaking financial penalties on banks and exchange houses
These efforts resulted in FATF delisting the UAE in February 2024, acknowledging significant progress.
EU’s Take: Reasons for the Delay
While FATF delisting held global importance, the EU retained the UAE on its high-risk list well into 2025. EU regulators explained that delisting from FATF does not translate into delisting from the EU list automatically.
Key EU concerns included:
- Judicial collaboration gaps, especially regarding extradition and asset recovery.
- Need for evidence of sustained enforcement, not just legislative reforms.
- Lack of structured engagement with Europol, Eurojust, and EPPO.
As a result, even after FATF’s ruling, the EU held multiple technical dialogues and on-site visits with UAE authorities, leading to written guarantees and fresh data-sharing mechanisms.
The June 2025 Update: What’s Changing?
The European Commission’s latest Delegated Regulation proposes removing eight countries, including:
- UAE
- Barbados
- Panama
- Jamaica
- Senegal
- Uganda
- Philippines
- Gibraltar
Meanwhile, 10 new countries have been added, including:
- Monaco
- Algeria
- Angola
- Côte d’Ivoire
- Kenya
- Laos
- Lebanon
- Namibia
- Nepal
- Venezuela
Changes
For the UAE
- Regulatory validation
- Trade facilitation
- Reputational upgrade
For EU Banks & Financial Institutions
- Removal of enhanced due diligence (EDD) obligations when dealing with UAE-based clients.
- Lower KYC overheads, faster transactions, and improved onboarding efficiency.
- Stronger trust in the UAE’s regulatory and judicial framework.
For Global Regulatory Governance
- Reinforces the mandate of sustained enforcement, not just paper reforms.
- Shows that FATF decisions influence but don’t overpower regional actions.
- Signals that, countries like Saudi Arabia and Turkey, still under scrutiny, must have stricter reforms.
Recent UAE Actions That Shaped the Decision
The UAE took a host of steps in the past year that likely helped change EU perception:
- Major penalties against foreign exchange firms, real estate agents, and gold traders.
- Several high-profile doubtful transaction investigations involving foreign banks.
- Strengthening of the Executive Office for AML/CFT.
- Hiring of new compliance officers and prosecutors.
- Based on international partnerships, agreement to share data with Europol and Interpol.
- Signed mutual legal assistancepacts with several EU nations.
- Participated in joint training programs with European financial watchdogs.
These actions helped convince the EU that the UAE was not just complying but committed.
Economic and Political Fallout
Trade Talks
The delisting comes as the UAE and EU are in early stages of FTA negotiations, launched in May 2025. AML/CFT alignment was considered a non-negotiable precondition. This opens the door to more seamless bilateral agreements on:
- Digital trade
- Energy cooperation
- Green finance and carbon markets
Real Estate and Fintech Impact
Dubai, Abu Dhabi, and Sharjah-based property developers and crypto firms had previously faced barriers with EU investors and banks. Delisting removes the “reputational red flag,” motivating new capital inflows and partnerships.
The Inclusion of Monaco
Among the 10 countries added, Monaco stands out. As a wealthy microstate known for confidentiality, its inclusion is symbolic. It shows the EU’s intent to tackle ambiguity, even in high-income jurisdictions.
Banks and businesses dealing with the new high-risk countries will now face:
- More stringent KYC policies
- More expensive regulatory costs
- Potential loss of correspondent banking services
What’s Next?
Parliamentary Approval
While most observers believe the Commission’s decision will be ratified, green and left-aligned MEPs may seek further guarantees—especially on extradition cooperation.
Sustained UAE Monitoring
Delisting doesn’t mean disengagement. The EU will continue to monitor the UAE for:
- Trends in prosecutions and asset forfeitures
- New typologies of financial crime
- Cryptocurrency and digital asset oversight
Pressure on other nations
Other Gulf and African nations still on the EU’s radar now have a benchmark, that is UAE’s reform journey, that has been long, expensive, but ultimately fruitful.
The European Commission’s proposal to delist the UAE from its AML high-risk list marks a landmark victory for UAE diplomacy and reform,but also sets a new bar for global AML standards. It puts forth how regional regulatory blocs like the EU can independently assess global threats and respond based on curated political, judicial, and financial criteria.
For the UAE, this is a reputational promotion, potentially unlocking billions in trade and investment. However, it also comes with responsibilities to maintain the integrity of its system, avoid complacency, and serve as a model for other emerging financial hubs.
