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Report: Dubai is a haven for dirty money

July 8, 2020 at 3:50 pm

UAE Dirhams [SimonQ/Flickr]

Corrupt and criminal actors from around the world, including Afghan warlords, Russian mobsters, Nigerian kleptocrats, European money launderers, Iranian sanctions-busters, and East African gold smugglers, operate through or from Dubai, says a new damning report by Carnegie Endowment for International Peace.

The 130-page report into “Dubai’s role in facilitating corruption and global illicit financial flows” found wealth amassed through criminal behaviour being washed through the wealthy Gulf emirate. With nearly 30 free trade zones, the report explains, Dubai has become a haven for money laundering due to the lax regulatory oversight and customs enforcement. These areas also allow businesses to conceal criminal proceeds by forging business documents.

“Dubai’s vulnerability to illicit financial flows”, the emirate’s allure to luxury property market; “How Emirati law enforcement allows kleptocrats and organized crime to thrive”; were some of the topics addressed by ten experts on the economy of the Gulf.

Various leaked documents, from the Panama Papers, for instance, “demonstrate that Dubai is a place where many people associated with criminal activity feel free to settle down with their families, manage their networks, and engage in smuggling and money laundering”, said the report.

Illuminating “Dubai’s darker side”, the report cited the emirate’s “ambivalence”

toward unregulated financial dealings and illicit trade. The problem is “long-standing and deeply entrenched” said the report. “Unlike other sharia-based legal systems, Dubai’s civil legal frameworks provide insufficient anti–money laundering regulation and oversight—a reflection of the emirate’s long history as a freewheeling regional trading center,” the report explained.

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While acknowledging that numerous other cities also offer havens for illicit gains and luxurious lifestyles, Dubai’s allure for dirty money is on another scale. “Dubai is just one of many criminal facilitation nodes throughout the world but addressing the emirate’s problematic role presents anticorruption and law enforcement practitioners and policymakers with particularly complex and delicate challenges.”

One of the main reasons for Dubai’s allure of dirty money is said to be the lack of any domestic and international scrutiny and the absence of any external pressure. “Emirati elites are free to resist reforms that endanger their vested interests or their preferred political economic vision for Dubai and the UAE overall,” said the report.

The report predicted that “Dubai’s role as a facilitator of corruption is unsustainable over the long term”, explaining that an economy “predicated on continued international tolerance of the emirate’s permissive attitude toward many types of illicit activities” will not continue for ever with western government’s reassessing their strategies and relationships with the Gulf monarchies.

In April, the UAE was placed under a year-long observation by a global finance watchdog for failing to stem money laundering and terrorist financing by the Financial Action Task Force (FATF). The Paris-based watchdog found that Abu Dhabi was failing to address the issue and was urged to take extra measures to avoid being included on an international watchlist.

In January, former Malaysian Prime Minister Najib Abdul Razaq reportedly sought the help of Abu Dhabi Crown Prince Mohammed Bin Zayed to conceal links to a multibillion-dollar corruption case in which he was implicated.

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