A New Leak Reveals How Convicted Foreigners Laundered $146 Billion of Dirty Money in Dubai

As part of a new European investigation exposing money laundering crimes in the UAE carried out by foreigners, either accused, convicted, or suspected of international crimes, The Independent newspaper revealed that hundreds of thousands of properties in the Emirate of Dubai are linked to illicit financing operations.

The investigation, published on Tuesday 3 May 2022, was jointly prepared by the Washington-based Center for Advanced Defense Studies (C4ADS), the Organized Crime and Corruption Reporting Project (OCCRP), and more than 20 European media institutions led by the Norwegian news website E24.

According to the 46-page investigation, foreigners control more than a quarter of the Dubai real estate market or nearly $146 billion worth of properties.

Dubai, is one of the most secretive offshore jurisdictions in the world, mainly due to a lack of financial transparency, according to the Tax Justice Network.

 

Dubai Uncovered

In its report on May 04, 2022, The Independent highlights the new European investigation that exposed the flow of dirty money from Europe and Russia towards the Dubai real estate market, explaining that Dubai has now represented nearly 3 percent of the global foreign real estate market, even though it is inhabited by only 3.5 million people.

The British newspaper -which is one of the institutions involved in the new European investigation- pointed out that Dubai has become a financial center in the Middle and a playground for the global rich, with an even darker reputation as a tax haven and a major destination for illicit cash.

The investigation, which obtained the data from 2020 with the help of secret Emirati sources, revealed that Russian politicians subject to Western sanctions, financial criminals, and corrupt European officials all own real estate in Dubai thanks to money laundering operations and the absence of Emirati oversight.

Based on publicly available information about real estate prices, the researchers estimated that foreign individuals and companies have invested about $146 billion in the Dubai real estate market.

In comparison, foreign-owned properties in London, which is also a major hub for foreign property investors, were valued in 2019 at $66 billion.

The leak of Dubai real estate data that was examined includes a total of 800,000 properties in Dubai owned by 274,000 individuals and companies from around the world, all of whom are accused of crimes of money laundering, tax evasion, embezzlement, or theft, according to The Independent.

The authors of the investigation identified many property owners in Dubai who had been accused or convicted of crimes, were subject to international sanctions, or who had hidden their true financial assets, among them are many European officials and legislators who have been accused of mismanaging public funds, and dozens of Europeans involved in money laundering and corruption, as well as more than 100 members of Russia's political elite, public officials or businessmen close to the Kremlin.

“This is the first time we have a clear actual amount of net worth for both offshore and locally owned properties in a tax haven,” said Gabriel Zucman, associate professor of economics at the University of California.

In turn, Judicial Advisor Mohammed bin Saqr al-Zaabi explained in a statement to Al-Estiklal that: “The Emirati regime provides protection and facilities to everyone who pumps money into its country, without regard to the identity of the person whether he is a criminal, convicted or corrupt, and without looking at the source of these funds, whether it was embezzlement, theft or drug dealing.”

“Dubai in particular benefits from these illegal funds because it does not have oil like Abu Dhabi, such operations revive its economy and provide it with the liquidity it needs to keep the wheel of its economy running on funds that come from abroad,” he added.

 

Strategic Direction

What Dubai is doing is not a product of the moment, but it comes in the context of a strategic direction for the Emirate for a long time, as it is considered a major destination in which suspicious figures hide their money through real estate, and therefore the entry of funds without internationally recognized controls does not present any problem.

Although the UAE does not allow foreigners to own real estate, non-Emiratis may purchase real estate under de facto 99-year leases.

Indian citizens are considered to be the largest foreign owners of real estate in Dubai, numbering 35,000 people, followed by the British, who number 23,000 people, and citizens of the EU are in third place.

The share of Russian and European owners in Dubai, who have been audited by researchers, together amounts to more than $31 billion of this total, according to the results of the investigation.

Notable Russians who own real estate in Dubai include Ruslan Baisarov, a Russian businessman with close ties to Ramzan Kadyrov, the president of Chechnya, and a close ally of Russian President Vladimir Putin.

The leak also includes Alexander Borodai, a member of the State Duma who served as prime minister of the breakaway regions of eastern Ukraine in 2014 when Russia first invaded Ukraine, and who has secretly acquired property in a luxury apartment complex on Dubai's Palm Jumeirah.

Among other Russians is Roman Lyabikhov, who was elected as the Russian Communist Party in 2021, and Dmitry Rybolovlev, president of French football club Monaco who has wealth and controversial styles.

The Independent warned the West of the increasing phenomenon of the emigration of Russian oligarchs' funds to Dubai, citing the UAE's neutrality towards the Russian attack in Ukraine and its refusal to implement the sanctions voted by the West.

Another European who owns property in Dubai is Daniel Kinahan, a member of an Irish criminal gang involved in cocaine smuggling and other crimes, who was sanctioned by the United States last month, as well as Italian meat dealer Francesco Giordano, who was arrested for tax evasion, and who owns a number of apartments in Dubai.

Other names include Tibor Bokor, the CEO of a cryptocurrency company used by extortionists and criminals facing sanctions from the United States, as well as Miroslav Vyboh, a Slovakian who is on the run on corruption charges.

Among the well-known figures who have been sanctioned and have a presence in Dubai is the well-known Turkish gangsman Sedat Bakr.

Added to this list are the names of several suspects involved in the ‘Cum-Ex’ scheme, which is an international scam that was exposed in mid-2010, and damaged the public finances of many European countries, including Germany, Denmark, Belgium, and France.

 

Money Laundering

Several reports had revealed that the UAE welcomed wealthy Russians fleeing the imposition of strict European sanctions against them, as well as high-ranking Emirati figures such as Mansour bin Zayed, who plays the role of their polarizer, seeking to use legitimate and illegal tricks to secure the transfer of these oligarchs to Dubai.

This is supported by what the Financial Times revealed on April 29 about the Russian oligarchs' search for ways to exchange their properties in London for one in Dubai and to move away from Western censorship that wants to punish Russia for its invasion of Ukraine.

In the first strong reaction against the UAE’s embrace of businessmen close to the Kremlin, the global anti-money laundering authority (FATF), in early March, put the UAE on the gray list of countries that must be monitored for illegal financing to prevent money laundering.

“The UAE authorities should plug loopholes in the real estate and precious metals sectors, which can be exploited by money laundering professionals,” the group said.

Diplomats believe that it will not be too late for the United States to pressure the UAE to confiscate and freeze Russian assets.

There are estimates that the United States could choose to go further, for example, restricting the UAE's access to the international financial system, or by imposing additional sanctions on some companies or financial institutions.

The new European investigation had concluded that Dubai had not shown any willingness to reveal all the fraudulent wealthy who hide their money on its lands or stop providing them with facilities.

Experts believed that imposing Western sanctions on financial transactions coming to and from Dubai may be the only way to persuade the Emirate to take strict measures.

From his point of view, Judicial Advisor Mohammed bin Saqr al-Zaabi believed in a statement to Al-Estiklal that “Western countries deal with the UAE according to their interests and the services the UAE provides to them.”

“If the Emirati services that are provided to the West deserve to be overlooked, they will not impose sanctions on them and they will not move, but if the UAE’s practices significantly harm their interests, they will put pressure and impose sanctions on it,” he added.

“The UAE succeeded in employing this method and attracted millions of people to live in it, regardless of their criminal backgrounds, causing an internal imbalance in terms of the number of indigenous people and a loss of identity and language in the midst of the crowds of foreigners. All this in exchange for temporary gains obtained by some Emirati rulers or those who serve them in implementing these dangerous practices for the country’s security and its existential future,” Mr. al-Zaabi stressed.

 

Tax Haven

International organizations classify the UAE as one of the secrets and safe tax havens, and this is because it has not signed any extradition treaty with the European Union, the United States, Germany, or many other countries.

In its 2020 assessment, the NGO Tax Justice Network, an advocacy group that monitors financial and tax evasion globally, ranked the UAE among the top 10 enablers of corporate tax abuse and financial secrecy.

“Dubai follows an approach in dealing with commercial and financial regulation, as well as foreign financial crimes, which is not to ask any questions and not to see any evil,” it pointed out.

“The UAE's lack of extradition treaties with most of the countries from which the owners come made it an ideal destination for fraudsters to hide their money there,” it noted.

This allows wanted suspected criminals to hide in Dubai and not face justice in the countries where they committed their crimes, as well as enjoy the money they embezzled or stole.

It is noteworthy that the police in many European countries have lists of people convicted of serious crimes residing in Dubai, but there is little hope of actually handing them over, given the reluctance of the UAE authorities to cooperate.