Dubai blacklisted by the EU – E24

The European Commission is punishing the United Arab Emirates and Dubai for a lack of efforts against money laundering and terrorist financing following a series of revelations and demands for action in the European Parliament.

The European Commission this week put the United Arab Emirates (FAE) and Dubai on the EU’s “blacklist” of countries with a high risk of money laundering and terrorist financing. The decision could have major consequences for both private individuals and companies residing in or trading with the emirate.

– Great negative meaning

– The EU’s decision to put the Emirates on the list of high-risk countries will also be incorporated into Norwegian law and the money-laundering regulations ensure that Norway and the banks will henceforth follow a very restrictive line – with thorough monitoring and control of transactions connected to the Emirates, says Professor Jon Petter Rui at the Faculty of Law at the University of Bergen to E24.

– In practice, this means that it is difficult to have a business relationship with these states and the decision will have a major negative impact on the Emirates.

Disclosures in 20 countries

The decision was taken after several months of pressure from members of the European Parliament and civil organisations, as well as revelations in E24 and over 20 European media about how European criminals, wanted persons, Russian oligarchs and politicians subject to international sanctions have invested heavily in Dubai’s real estate market.

The revelations, known as “Dubai Uncovered”, led in May 2022 to politicians from the four largest party groups in the EU Parliament demanding blacklisting of the Emirates.

– Necessary

In a statement to E24, EU Commissioner for Financial Services and Stability, Mairead McGuinness, emphasizes the importance of protecting Europe.

– It is necessary to continue to identify and list high-risk third-country jurisdictions that have strategic deficiencies in their anti-money laundering and counter-terrorist financing frameworks, says McGuinness.

There are now 25 countries on the list. One of the requirements from the European Commission is that the Emirates must “identify and fight the circumvention of sanctions” – also among private actors.

– This will help the affected countries and ensure that the EU’s financial system and our internal market work, McGuinness.

The EU’s decision is also discussed in Politico under the title “Blacklist for dirty money”.

In March, the Emirates was “greylisted” by the Financial Action Task Force, an international body for combating money laundering and terrorist financing, due to a lack of measures to stop illegal money flows. The list is the starting point for the EU’s list, but they are not overlapping.

– Free haven for crimes committed in Norway

E24 has mapped over 260 people with a Norwegian background who are registered with over 380 properties in Dubai in a leak from the emirate’s property register in 2020.

E24 revealed this autumn that 17 people who have been convicted, charged, prosecuted or wanted for serious crime in Norway are registered with close to 50 properties with an estimated value of over NOK 180 million in Dubai.

– I get upset that the Emirates are a type of free haven for crime committed in Norway. And for criminal financial gain, said Minister of Justice Emilie Enger Mehl (Sp) to E24 in November.

Most of the cases uncovered by E24 concern serious crime that has yielded or may yield a large profit: Fraud, extensive theft, gross theft, tax evasion, VAT evasion, drugs and money laundering.

The majority have declared low – or no – taxable income or wealth to the Norwegian authorities for a number of years.

Few owners follow the law

It is perfectly legal for Norwegians to own property in Dubai. But E24’s investigations also show that fewer than one in five of the Norwegian taxpayers in the list of owners declared property in Dubai in the tax return to the Norwegian authorities in line with the law. Similar findings were made in Denmark.

– The descriptions E24 has given in various reports show that it is a challenge that people who commit crimes in Norway, or who get large profits from illegal activities, have this type of free harbour. I am keen to do everything I can to make it happen, Mehl said.

– Might want to close

– When the FAE ends up on the blacklist, it becomes very impractical to trade with companies in the Emirates and with Dubai. All the banks will be watching closely, and will be very strict when it comes to money transfers to and from the Emirates, says Roland Papp, policy officer for illegal money flows at Transparency International, to E24.

The organization works for transparency about cash flows. He believes it will have consequences both for the Emirates and the business world.

– Some companies may want to give up and close offices in FAE.

The work is based on an extensive leak of data on over 800,000 properties in Dubai. For the first time, it provides an overview of who is the owner of, among other things, luxury villas, apartments, office buildings and business premises in Dubai.

E24 is leading the international collaboration with over 20 media organizations on the leaked data, which was shared by the American research foundation Center For Advanced Defense Studies (C4ADS).

A research group that has worked with the data estimates that foreigners own property worth over NOK 1,380 billion in Dubai.

In comparison, the Norwegian state budget is just under NOK 1,600 billion.

On the run

In the lists of registered owners in Dubai, E24 found several people wanted for serious crimes. One of them is the Irishman Daniel Joseph Kinahan (44), who is accused of leading an international criminal syndicate, linked to drug trafficking, arms trafficking and a number of murders by the Irish, Amyarkan and Spanish authorities.

He has denied all charges.

E24 revealed how Kinahan was allowed to buy property despite the fact that it was internationally known that he was under investigation for large-scale drug trafficking. He has not been extradited and is said to still have a place of residence in the Emirates.

In several other cases as well, European police have completed indictments, but are unable to get the persons in question out of Dubai to bring them to court.

Among them are people suspected of defrauding European tax authorities of an estimated NOK 550 billion through trading in securities. The fraud, known as “Cum-Ex”, is being investigated in Germany, Denmark and Belgium, among others.

Russian owners

Among the owners, the media identified more than 100 members of Russia’s political elite, public officials and oligarchs. Several have international sanctions against them, including for their role in the occupation of Ukrainian areas.

Among the owners who were uncovered is Ruslan Baisarov (54), an industrial magnate and one of Russia’s richest people. The market value of the five apartments and a villa on Palmen in the leak from 2020 is estimated at over NOK 80 million.

The more than 5,000 listed Russian owners controlled property to an estimated value of around NOK 30 billion in 2020.

The United Arab Emirates (UAE) has not imposed sanctions on Russia and has repeatedly refrained from criticizing the war and possible Russian war crimes in Ukraine.

Closed tax haven

The Emirates, and especially Dubai, have become notorious for large illegal money flows, and for being a haven for criminals and others who want to hide from their own authorities.

The Tax Justice Network (TJN), an international organization that works for a more even distribution of taxes, ranks Dubai among the ten most closed tax havens in the world.

Other countries recently added to the EU’s money laundering list are Congo, Mozambique and Tanzania. From before, North Korea, Iran and the tax haven Cayman Islands are also listed.

DNB: – Following closely

Director of anti-money laundering work at DNB, Hege Hagen, says the following to E24:

– This is a situation we are following closely, and we will naturally comply with any orders that come from the authorities. DNB has contractual obligations, so it does not mean that we say no to or throw out customers just because it is linked to these countries. But we can confirm that we follow up both transactions and connections to high-risk countries in addition, and this also places greater demands on our customers. We already have good routines for this type of customer relationship from other countries, so this will not be a new problem for us.

During the coming month, the European Parliament and the European Council can object to the decision and start a new hearing.

The United Arab Emirates (FAE) responds as follows to an inquiry from E24 that it is now on the high-risk list of money laundering, via its embassy in Oslo:

– The FAE takes its role in protecting the integrity of the global financial system extremely seriously. Through continued interagency coordination across FAE, as well as cooperation with national and international counterparts in the public and private sector, FAE has since March 2022 taken decisive action to solve this important problem. The FAE remains committed to expanding its platforms for proactive cooperation to combat financial crime as a top national and international priority.