Wealthy Russians have stepped up their efforts to move their funds from Europe to Dubai to evade Western sanctions placed on them over the war in Ukraine, Reuters has reported, citing financial and legal sources in the Gulf state.
A globally acclaimed tourist destination, Dubai is also considered the region’s business hub. The United Arab Emirates’ recent refusal to condemn Russia’s military operation in Ukraine at the United Nations Security Council appears to have been interpreted by Russia’s rich as an invitation.
According to Reuters’ sources, Russian citizens have been moving their funds from Switzerland and the UK to Dubai, after the former two nations sanctioned Russia and threatened to freeze the assets of prominent Russian businesspeople and politicians.
An unnamed lawyer based in Dubai told the outlet his firm had received a number of enquiries from Russian entities about shifting “very significant funds” to Dubai. Several reportedly involved hundreds of millions of US dollars.
Another source, a senior private banker, said Russian customers with accounts at private banks elsewhere were opening accounts with the same bank’s UAE branch or with local banks. They noted that the number of Russian customers had recently increased. Other sources said they had seen a recent growth in Russian investments in the region’s real estate.
Analysts say the UAE, and Dubai in particular, is a convenient location, being only a few hours’ flight from Russia and not having regulators answerable to Western states. It has also been very popular with Russian tourists over the past several years, with Russians being among the most numerous visitors and buyers of property in the emirate.
While Russian funds in Dubai are not yet subject to Western sanctions, bank sources say there is a risk of reputational harm to the region’s financial institutions that continue working with Russia while many foreign corporations are cutting ties with the country.
When asked for comment on Russian money flows to the region, the central bank, the Government of Dubai Media Office, and the UAE Foreign Ministry did not immediately respond.
Meanwhile, the Financial Action Task Force, a Paris-based global financial crime watchdog, last week put the UAE on its “grey list” of countries that are subject to increased monitoring. A source told Reuters this means the country’s banks will have to proceed with caution when it comes to welcoming Russian money if they wish to avoid EU penalties themselves.
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