The European Commission Takes Official Action Regarding UAE Investments in Europe
The European Commission initiated formal measures against UAE investments in European nations, citing concerns over corruption and potential government interference from Abu Dhabi in the finalized agreements.
The British newspaper “Financial Times” reported that the European Commission is set to launch a comprehensive official investigation into the proposed acquisition of the telecommunications assets of the Czech “PPF” group in Bulgaria, Hungary, Serbia, and Slovakia by the Abu Dhabi-based Emirates Telecommunications Group (E&).
The newspaper quoted three sources with direct knowledge of the issue that the exact timing is still unknown, but the investigation is expected to be announced next Monday, at the earliest.
The Abu Dhabi-controlled company, E&, agreed last year to pay 2.2 billion euros ($2.38 billion) for a controlling stake in the telecommunications assets of the Czech BBF group in Bulgaria, Hungary, Serbia, and Slovakia.
According to the newspaper, the European Commission is worried that the company might have received state funds, providing it with unfair support to finalize the deal, and there are significant suspicions of corruption.
The Commission is also questioning whether this government funding could give E& an advantage over its competitors in the European Union.
Last April, a European parliamentary vote ended in keeping the UAE on the European watch list of countries involved in money laundering and supporting terrorism, which constitutes a new blow to Abu Dhabi and its efforts to whiten its image.
Under the European Parliament’s vote, the UAE and Gibraltar will remain on the European Union’s watch list on the Financial Action Task Force’s “grey list.”
The decision poses a challenge for European members of the Financial Action Task Force (FATF), which had removed the UAE from its watchlist earlier this year.
Months earlier, European oversight officials specializing in anti-money laundering and counter-terrorist financing had dismissed the UAE government’s proclaimed efforts to combat money laundering. They urged Abu Dhabi to move beyond mere publicity measures.
The officials pointed out that the UAE announced its intention to create “specialized prosecution offices” to combat money laundering after it was included on a list of countries subject to “tight supervision” regarding this issue.
The UAE authorities announced that creating specialized prosecution units is “an initial step to investigate and address economic crimes and money laundering, aiming to boost global investor confidence.”
However, European officials argued that these measures seem to be mere propaganda without practical substance, lacking clarity on the powers given to anti-money laundering prosecutors and accountability for senior officials involved.
European supervisory officials specializing in anti-money laundering recommended keeping the UAE on the gray list for money laundering and opposed any upgrade in the UAE’s status by maintaining sanctions.
In March 2022, the Paris-based Financial Action Task Force placed the UAE on its gray list, citing significant deficiencies in the country’s measures against sanctions evasion, terrorist financing, and other crimes.
This rating, which positioned Abu Dhabi just one step away from the FATF’s dreaded “blacklist,” dealt a significant blow to the reputation of the Middle East’s largest financial center and posed a potential threat to its long-term credit rating, although this has not yet occurred.
The long-term threat to the UAE’s status as a business hub prompted financial officials to seek the removal of this classification as quickly as possible, promising “strong measures.”
Some members of the Financial Action Task Force’s International Cooperation Review Group, composed of banking and financial crimes experts monitoring the UAE’s progress, recently expressed dissatisfaction with the country’s unfulfilled promises. They particularly raised concerns about the reliability of the information provided by the UAE for their assessments.
All continuing indicators confirm that the UAE still represents a haven for illicit transactions and money laundering crimes, amid government shortcomings in combating them.
A research study showed that the UAE ranks very advanced in the Arab world and globally in money laundering and terrorist financing crimes, which has repeatedly made it vulnerable to international sanctions.
The UAE ranked second in the Arab world and 44th globally in money laundering crimes, according to a study issued by the Al-Zaytouna Center for Studies and Consultations, entitled: “Money Laundering in the Global Political Economy.”
The study showed that the extent of money laundering in the global economy is not as marginal as some believe, as many sources estimate that the percentage of money being laundered will reach between 3 to 5% of the total global gross domestic product in 2022.
That is, approximately 3-5 trillion dollars, and this number exceeds the gross domestic product of all Arab countries.
According to the research, numerous specialized studies have documented shortcomings in the operations of the International Financial Action Authority, a global regulatory body dedicated to combating money laundering across 187 countries.
The study identified four main channels for money laundering: financial institutions, online commerce, electronic media represented by smart cards, electronic money transfers or cryptocurrencies, and channels of in-kind assets.
