Last week, the EU considered blacklisting the United Arab Emirates. The suggestion comes following a new data leak called ‘Dubai Uncovered,’ which provided the first detailed public overview of how criminals, tax evaders, Russian oligarchs and other illicit actors bought property in Arab Emirate tax haven Dubai. Following disclosures, the European Parliament has urged that the UAE, like North Korea, Burkina Faso and Iran, should be blacklisted.
According to EU parliamentarian Markus Ferber, “Dubai Uncovered confirms once again that the United Arab Emirates have very loose anti-money laundering (AML) provisions in place”. The disclosures from the ‘Dubai Uncovered’ leaks has prompted EU politicians to urge the UAE to implement stronger anti-money laundering measures. The allegations of large-scale money laundering seen in the UAE, along with recent criticisms of the country's AML regime, brings fear that it could jeopardize Europe's ability to combat organized crime and corruption. Although the exact amount is unknown, the leaks have revealed that European citizens and companies routed more than $30.6 billion via the emirate's real estate market warranting the bloc’s attention.
Earlier this year, following its placement on the Gray List, FATF had warned the UAE that it needed to engage more closely with international counterparts and strengthen compliance in areas vulnerable to misuse, mainly in gold trading and luxury real estate. The UAE, with Dubai’s position as the largest financial hub, continues to face criticism for strategic deficiencies in their AML regime. Due to lack of financial transparency, Dubai remains “as one of the world’s most secretive offshore jurisdictions,” and the ‘Dubai Uncovered’ leaks exposed how that could be abused as a safe haven for illicit funds. Considering recent developments and the ever-increasing number of Russian oligarchs who use the jurisdiction to avoid EU sanctions, the UAE’s risk profile has certainly been impacted. Given its role as the region’s financial center, those with exposure to the UAE will need to exercise heightened vigilance in the face of the ever-changing geopolitical landscape.