European politicians urge Commission to curb on money laundering in the UAE

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MEPs sign a letter urging prompt action.

A letter promoted by Democracy Center Transparency to counter money laundering and illegal financial activities due to impact on Europe was endorsed. 12 MEPs adopted it and called the European Commission to take prompt action like the inclusion of UAE into the European blacklist.

“We, the undersigned Members of the European Parliament, express our deep concern about the recently released report from ‘Carnegie Endowment’, which shows that Dubai’s prosperity not only is the result of years of economic development but has regrettably owed its success partly to ‘a steady flow of illicit proceeds coming from crime and corruption'” the letter said.

The letter demanded the Commission to “consider a special approach for its anti-money laundering policies towards the UAE, considering the obvious higher risks, since the Emirati governments as well as the international community are turning a blind eye”

It also urged the commission “to reconsider updating its list of high-risk third countries with regard to AML standards, by including the UAE.”

Background: The United Arab Emirates’ (hereinafter: UAE) high amounts of cash transactions and intercountry remittances, its politically exposed and wealthy individuals together with its geographical vicinity to a number of countries destabilized by conflict, makes the country the perfect environment for attracting money-laundering, kleptocrats and terrorist-financing.”[1] Although the UAE authorities do have the right tools and technical knowledge to crackdown on these criminal activities, they often choose to turn a blind eye.

To illustrate the existence of these unacceptable practices we take a closer look at Dubai, which is one of the seven emirates that make up the UAE and is known as a global financial center, for its man-made Islands, gigantic skyscrapers and extreme wealth. A recently released report from ‘Carnegie Endowment’ [2] shows that Dubai’s prosperity not only is the result of years of economic development but has regrettably owed its success partly to “a steady flow of illicit proceeds coming from crime and corruption”.

Our main area of concern when reading the report was the high amount of European money launderers who use Dubai as a place to operate from. Dubai’s weak financial regulations, low transparency standards and stable investment vehicles (from luxury real-estate to precious metals) make the city the perfect environment for laundering earnings derived from illicit activities.

After all, this allows foreign investors to purchase or hold real estate, establish trading companies and conduct financial transactions without declaring the origin of their finances or the beneficial owner of their investments. They are able to disguise earnings of crime via the over-, under and multiple invoicing of goods or the falsifying of other trade documents.[3] With the current pandemic having a huge impact on Dubai’s tourism and services sector, which is responsible for a big part of its economy, the city may become even more dependent on illicit incomes.[4]

Dubai contains approximately thirty free trade zones. While the national anti-money laundering (hereinafter: AML) laws apply universally to all businesses (inside and outside the zones) the efficacy and extent of enforcement varies from one free zone to another with even minimal enforcement outside these zones. This lack of consistency in level of oversight and even regulatory shortfall outside the zones, where a bulk of the businesses operate, is another substantial weakness in combating money-laundering.

Disregarding recently adopted legislative efforts, the report underscored the still alarming indifference by not only the Emirati governments but even by the international community towards the problematic conduct and administrative loopholes due to the weak implementation of these laws that make Dubai the perfect destination for dirty money.[5] 

For all the reasons above, the DCT issued a petition to combat these ongoing illegal practices, that are enabling global financial criminal activity and have many destabilizing effects on international level.

For more details: Florence Van den Bergh, Advocacy and Research Officer, Democracy Centre for Transparency. Email: info@dctransparency

Florence Van den Bergh

Florence Van den Bergh

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