Rich Russians are trying to move some of their wealth from Europe to Dubai because of the West punishmentssay financial and legal sources.
The sanctions are the result of the Russian invasion of Ukraine.
Dubai, the financial and commercial center of the Arabian Gulf, has long been a hotspot for the very wealthy. And the United Arab Emirates’ (UAE) refusal to take sides between Western allies and Moscow suggested to the Russians that their money was safe there.
The UAE, which over the years has deepened its ties with Russia, has not agreed to abide by the sanctions put in place by Western countries. Its central bank has so far not issued any guidelines regarding Western sanctions.
In many cases, wealthy Russians are looking to transfer money that is now in Switzerland or London, said a senior banker at a major Swiss private bank and a lawyer familiar with the matter.
The lawyer, who is based in Dubai, said his firm had received questions about how quickly he could transfer large sums of money – hundreds of millions of dollars – to the Gulf Arab state.
The Dubai media office, UAE foreign ministry and central bank did not immediately respond to a question about the amount of Russian funds flowing into Dubai.
The senior private banker said in some cases, Russian clients with accounts in private banks were opening accounts with the UAE branch of the same bank. Others were opening accounts in local banks, the banker added.
Russians face a weakened economy at home. They are also looking to put their money into investments, including real estate, and buy funds that don’t reveal ownership information, another financial source said.
Dubai has long been popular with Russians, who were among the emirate’s main visitors and property buyers even before the war.
The bankers said there was a risk of of reputation harm to organizations receiving Russian funds as companies around the world cut ties with Moscow.
Some major UAE banks are playing it safe approach. Banks operating in the Gulf state have in the past been punished for failing to follow rules regarding sanctions against countries like Iran and Sudan.
The Financial Action Task Force (FATF) is a global organization that examines financial crime. Last week it placed the United Arab Emirates on a “grey list” of places subject to increased scrutiny.
The Dubai media office, UAE foreign ministry and central bank did not immediately respond to questions about how banks and companies should handle sanctions against Russia.
Two sources familiar with the matter said companies in the UAE would spend more time researching the origin of their funds through a so-called know-your-customer process.
A Dubai bank source said funds from Russians are not accepted for wealth management, although they can set up to pay accounts.
“They can do it”, but the bank has compliance obstacles authorized to accept Russian money, including proof of its origin, the source said.
The UAE’s private wealth industry has yet to reach the size or complexity needed to fully absorb the wealth stored in Switzerland and other traditional monetary havens, sources said.
“They might take some of it, but I find it hard to imagine they would take it all,” said an investment management professional. “It’s not just the service element, but the investment management that most of these banks lack.”
I am John Russell.
Yousef Saba, Sumeet Chatterjee, Hadeel Al Sayegh and Alexander Cornwell reported this story for Reuters. John Russell adapted it for VOA Learning English.
words in this story
sanction – n. an action that is taken to force a country to obey international laws by limiting or stopping trade with that country — usually plural
customer – nm a person who pays a professional person or organization for services
reputation – nm the way people think about someone or something
approach – nm a way of facing something: a way of doing or thinking about something
to pay – nm a sum of money deposited in a bank account
compliance – nm the act or process of doing what you have been asked or ordered to do: the act or process of complying
obstacle -not. something that makes achievement difficult
lack – v. not to have (something)