Investigations by the Organised Crime and Corruption Reporting Project (OCCRP) and the Centre for Advanced Defence Studies (C4ADS) released today raise global red flags that Dubai has become an open market for money laundering and a safe haven for the corrupt.
According to reports, the United Arab Emirates’ (UAE) secretive and weakly regulated financial sector, and unaccountable high-end real estate market combine to offer the world’s criminals a range of services. Reports show that a lack of enforcement and oversight in Dubai’s property sector is tarnishing Dubai’s shimmering cityscape with vast amounts of dirty money.
Reports also show that individuals under international sanctions are finding safe haven in Dubai. Leaked private real estate data cited in today’s reports reveals that organized crime figures and politicians are flocking to Dubai to purchase property.
On paper, Dubai has made promises to clean up its act. After international criticism, the country strengthened its anti-money laundering rules. For example, real estate agents, developers, trust and corporate services providers and lawyers involved in real estate transactions in the Dubai International Financial Centre (DIFC) are now required to conduct due diligence on customers and register with the Dubai Financial Services Authority (DFSA) for anti-money laundering supervision. This includes identifying the beneficial owner of legal customers and applying extra scrutiny to foreign politically exposed persons.
Despite these improvements, the Dubai Financial Services Authority (DFSA) completed only two investigations by the end of last year. No enforcement action appears to have been taken in the real estate sector. Furthermore, only 12 entities actually registered with the DFSA last year – an alarmingly low figure that raises red flags over whether Dubai takes its own regulations seriously.
“Dubai has been attracting secretive high-end real estate purchases by foreign companies and individuals for years, but despite the high risks of money laundering, the Government of the UAE fails to ensure that information about companies buying property is sufficiently recorded and made available, and that estate agents ensure they are acquiring all the necessary information about who is behind the deal,” said Patricia Moreira, managing director of Transparency International.
Next year, UAE will host the eighth session of the Conference of the States Parties (COSP), which is the primary policy-making body of the United Nations Convention against Corruption. In advance of this event, Transparency International calls on UAE to strengthen the enforcement of its property and financial sectors and crack down on existing abuse in both areas.