Keeping in mind the growing global threats, the UAE initiated a National Risk Assessment (NRA) to combat financing related to arms proliferation. This proactive move aligns with the UAE’s commitment to international security and its responsibility as a major trade hub. Since 2022, UAE regulatory bodies, led by the Executive Office of the Committee for Goods and Materials Subject to Import and Export Control, have focused on addressing vulnerabilities within the country’s financial systems to prevent misuse for the funding of weapons of mass destruction (WMDs).
The UAE’s National Risk Assessment (NRA) aims to identify the financial pathways and sectors vulnerable to exploitation for arms proliferation financing. This project has brought together multiple stakeholders to draft a comprehensive report, guiding both regulatory and legislative responses. The NRA targets both government bodies and the private sector to foster a unified approach to reducing proliferation risks.
Overall Country Risk, UAE : Medium -High
| Weighted Threats | Weighted Vulnerabilities | Total Inherent Risk | Mitigating Controls | Residual Risk |
| Medium-High | High | High | Partially Effective | Medium-High |
Major factors that contributed to these risk ratings are:
- Geographically, UAE’s proximity to Iran
- UAE being a very big trade and transshipment hub
- Ease of setting up business in UAE
Major factors that contributed to partially effective mitigation controls are:
- Law enforcement and judicial authorities have only partially effective measures in investigating and prosecuting PF cases and combating sanction evasions in the VASP sector due to the recency of sector regulation and supervision.
- Most of the international cooperation that took place by LEA’s was usually through informal channels
- Export control authorities are only partially effective in detecting PF sensitive goods and cross-border movable money
- Level of supervision over VASPs and DNFBPs by Supervisory Authorities are partially effective
- Procedures and measures taken in registering and company formation are partially effective for VASPs and DNFBPs
PF NRA Results: DNFBPs
| DNFBP | Inherent Risk | Residual Risk |
| Dealers in Precious Metals and Stones (DPMS) | High | Medium high |
| Company service providers | Medium high | Medium high |
| Lawyers | Medium high | Medium high |
| Others (Accountants, Real estate) | Medium high | Medium |
Major Parameters Considered in the Assessment
26 threat factors were divided into three main categories. Financial products or services directly related to trade in proliferation-sensitive goods had higher weightage amongst others in the DNFBP sector.
| PF THREATS |
| Financial Products or services directly related to Trade in Proliferation-Sensitive goods |
| Revenue-raising activities |
| Financial and Corporate structure to support Movement of Finances and Cash |
18 vulnerability factors were divided into five main categories. Geographic and Environmental factors, Legal persons and arrangements, and Legal and Institutional Factors had higher weightage amongst others in the DNFBP sector.
| PF Vulnerabilities |
| Geographic and Environmental factors |
| Legal persons and arrangements |
| Legal and Institutional Factors |
| Economic and Technological Factors |
| Social and Political Factors |
Recommendations
- Amend AML/CFT laws to require reporting entities to conduct institutional PF RA and have in place trade-based illicit finance and CPF compliance program
- Require PF specific CDD/KYC/EDD criteria to be added for reporting entities to level onboarding requirements across sectors
- Ensure LFIs and other relevant reporting entities have timely accurate and up-to-date UBO information to conduct adequate CDD/KYC/EDD measures by expediting the completion of national UBO registry
- Provide updated PF guidance to reporting entities based on findings from NRA
- Increase awareness of PF red flags amongst all reporting entities corelated to goAML RFRs in reporting STRs
- Increase awareness between the difference of submitting PNMR/FFRs and SARs/STRs
The UAE’s national risk assessment on proliferation financing from 2022 to 2024 demonstrates a strong commitment to addressing critical security challenges. As a central hub for global trade, the UAE’s proactive approach has significant implications for regional stability and international peace. Moving forward, ongoing updates, technological innovations, and global partnerships will play vital roles in strengthening the UAE’s defenses against proliferation financing. To read more on the basics of proliferation financing, click here.
