Is the UAE a bastion of money laundering?

A new Al Jazeera report finds that the United Arab Emirates (UAE) continues to play a prominent role in global money-laundering operations conducted by organised crime networks and corrupt individuals.  

The report demonstrates that a significant part of the UAE’s wealth might originate from money laundering operations. 

In terms of financial secrecy, the UAE scores 86, which is one of the highest 10 scores in the world, according to John Christensen, the chair of the Tax Justice Network, an international independent think tank. 

In 2018, Dubai, one of the seven Emirates comprising the UAE and the financial heart of the Gulf country, was ranked ninth in the tax group’s Financial Secrecy Index. 

Other groups like Transparency International, an anti-corruption advocacy group, also pointed  to the problematic nature of the UAE’s lax or non-existent relations. 

Transparency International’s Corruption Perceptions Index from last year showed that: “Dubai has become an active global hub for money laundering … where the corrupt and other criminals can go to buy luxurious property with no restrictions.” 

The investigation exposed a database containing approximately 17,000 bank transfers, including 554 transfers issued from the United Kingdom to the UAE - where operations appear to be problematic.

The Emirati economy operates under a virtually tax-free structure allowing organised crime syndicates, individuals and companies to park dark money in the Gulf state and to wash it by buying expensive properties, cars, private jets and yachts among others, said Road Stone, the former assistant director of the UK’s Organised Crime Unit. 

The UAE attracts a lot of investment, some of which was obtained illegally, which contributes to the Gulf state’s GDP increases, according to Stone. 

In November, UK police arrested ten people accused of being part of an organised crime group, carrying nearly $20 million hidden in suitcases from Britain to Dubai. 

Is Dubai’s real estate boom fake? 

In 2018, a report by the Washington-based Center for Advanced Defense Studies identified $100 million in problematic purchases of houses and villas across Dubai. The report relied on leaked property data from the Emirates’ biggest city. 

"The permissive nature of this environment has global security implications far beyond the sands of the UAE. In an interconnected global economy with low barriers impeding the movement of funds, a single point of weakness in the regulatory system can empower and enable a range of global illicit actors," the report said. 

The report further described Dubai’s real estate market as a haven for money launderers, terror financiers and drug traffickers sanctioned by the US in recent years.

The report designated some high-profile figures like Rami Makhlouf, a cousin of the Syrian regime leader Bashar al Assad, whose brutal rule has been opposed by the UAE, as people buying real estate in Dubai’s famous man-made archipelago of Palm Jumeirah. 

Rami Makhlouf is not alone. Other political opponents of the UAE have also bought properties in Dubai. Two shareholders of companies owned by Lebanese businessmen Kamel and Issam Amhaz, who were sanctioned by Washington in 2014 on charges of funding Hezbollah, an Iranian proxy in Beirut, also purchased properties in the UAE, according to the report. 

The United Nations Office on Drugs and Crime (UNODC), reported in October 2011 that organised crime networks may have laundered around $1.6 trillion, which corresponds to the 2.7 percent of the global GDP in 2009. One-fifth of that money is coming from the illicit drug trade, the report said. 

In 2018, the UN found that money laundering levels could be reaching up 5 percent of global GDP or $4 trillion a year.