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A global anti-money laundering watchdog placed the United Arab Emirates (UAE) on its “gray list” over concerns that the Gulf country has not taken enough steps to curb illegal financial activities, CNBC reported.

The French-based Financial Action Task Force (FATF) said that the UAE was subject to increased monitoring because of “strategic deficiencies” in its attempts to counter money laundering. Still, it acknowledged that the country had made efforts to thwart money laundering and terrorism financing.

The designation places the Gulf nation on a list of 22 others including Syria, Albania, and Panama. The watchdog said the “gray list” is not as severe as the “blacklist,” which includes Iran and North Korea.

The Emirates is the financial hub of the Middle East and hosts many international companies’ headquarters. But the UAE also has a reputation for being an easy place to move large sums of cash in and out of the country and lax inspection in certain sectors, such as real estate deals, according to the Financial Times.

Following the FATF’s report, officials said the UAE takes “its role in protecting the integrity of the global financial system extremely seriously.”

The inclusion in the list will impact the UAE’s reputation as a global financial hub, although Gulf-based bankers noted that the move will not stop financial institutions looking to set up in the country.

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