Getting Serious? The UK–UAE Illicit Finance Partnership Holds Promise

Any student of international illicit finance asked to draw up a list of countries that are central facilitators of this global affliction will – with certainty – include the UK and the UAE in their top five. As has repeatedly been revealed, both countries play a pivotal role as destinations and conduits for the ill-gotten gains of kleptocrats, the corrupt and organised crime groups. It is therefore an unreservedly positive sign that these two countries, both of which are major financial centres, have recently announced ‘a common interest in and responsibility for tackling the threat of illicit finance’.

This headline announcement by UK Prime Minister Boris Johnson and His Highness Sheikh Mohammed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi, in mid-September was followed by the first meeting of the UK–UAE partnership to tackle illicit financial flows. So far, so encouraging, and certainly a strong endorsement for those that have been arguing the importance of the UK developing policy-led partnerships in response to illicit finance, rather than viewing every challenge through an operational lens.

For onlookers, these two countries have much to prove and – understandably – scepticism of the seriousness with which both parties will treat this partnership will abound until concrete results are achieved. Scandals revealed by investigative journalists, the forensic review of the Financial Action Task Force (FATF, the international anti-financial crime watchdog) – notably in the case of the UAE –and the experiences of third countries that suffer as a result of UK and UAE illicit finance failings demonstrate the extent to which both countries have work to do. The Basel Governance Institute annual anti-money laundering index ranks the UAE 79th out of 110 countries assessed, and it is still possible that the country may be added to the FATF’s grey list of countries with strategic deficiencies in their financial crime defences. The UAE is also noted in the UK’s 2020 National Risk Assessment of Money Laundering and Terrorist Financing as one of the ‘particularly relevant cross-border money laundering risks faced by the UK’.

Responding to Their Critics

Responding to their wide-ranging and widely exploited illicit finance vulnerabilities, both countries have been busy. The UK’s 2019 Economic Crime Plan seeks to chart a national response to the country’s own 2018 evaluation by the FATF; and the government’s Integrated Review, published in March this year, recognised the importance of tackling illicit finance as part of the UK’s foreign, defence and security policy – notably committing to increase cooperation with the UAE ‘to tackle global illicit financial flows’.

The UAE for its part has staged a barrage of financial crime trainings, conferences and workshops for its government officials and the private sector – which this author and a number of colleagues have supported as subject-matter experts – in response to the FATF’s findings. It has also published reports that suggest a greater willingness to acknowledge and engage with its national illicit finance vulnerabilities.

And so, to the recent partnership announcement. The sentiment in the announcement is welcome, with a focus on ‘uphold[ing] the integrity of the international financial system’ and a ‘shared ambition to increase co-operation on illicit financial flows’. It also commits to ‘bolster law enforcement by enhancing intelligence sharing and joint operations between the UK and UAE against serious and organised crime networks’.

Words Need Actions

Yet, at this point, these are only words. No demonstration of this collaboration and commitment was announced to accompany the launch of the partnership, despite the number of opportunities for joint action – including asset seizures, revoking of operational licences, and arrests – that surely exist between the two countries. This was a missed opportunity. Those hoping to see action accompanying the politicians’ words have been, to date, disappointed.

Moreover, there are areas where this partnership could have been more ambitious. The UK has, to its credit, been open to engagement with NGOs and civil society actors seeking to drive the country’s response to illicit finance forward. Its 2019 Economic Crime Plan (ECP) includes a specific commitment to ‘enhance engagement with civil society [and to] work with civil society to create a formalised civil society-led mechanism to facilitate engagement on both our policy and operational response to economic crime’. This commitment has been met, with the government welcoming the formation of a Civil Society Organisations Steering Group (of which RUSI is a founding member) in February 2020 to track and inform the UK government’s delivery of the ECP by providing timely input to the Economic Crime Strategic Board, the government body responsible for executing the plan. More broadly, the UK government has willingly embraced and engaged with input and criticism from civil society and academia as it seeks to respond to its illicit finance shortcomings.

In contrast, the UAE has lacked transparency in its response to illicit finance and has traditionally been unwilling to welcome independent academic scrutiny of its illicit finance activity. For example, the country has not made public the National Strategy for Combating Money Laundering and Combating the Financing of Terrorism that reportedly underpins the country’s efforts to boost its response to financial crime, and the absence of local civil society and academic research on financial crime is notable. The UAE could therefore learn from the benefits that the UK derives from providing transparency in its plans and accepting the dedicated scrutiny and recommendations of civil society, as it seeks to strengthen its response to illicit finance in line with the commitments made in this new partnership.

The proof, as they say, will be in the pudding – or more specifically, the extent to which the frequency of scandals involving either country reduces; the rate at which assets are seized and returned to those countries that have suffered as a result of the lack of anti-financial crime diligence by both countries; and the ending of the impunity still enjoyed by many who not only sequester their illicit wealth in these countries, but also spend it in the schools, casinos, high-end boutiques and marinas that both countries offer.

The partnership announcement is a welcome start, but the need to deliver on this ambition is unavoidable. As those that have been victims of both countries’ failings look on, their expectations will rise, leaving no room for backsliding or complacency in London, Abu Dhabi or Dubai.

The views expressed in this Commentary are the author’s, and do not represent those of RUSI or any other institution.

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