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NEWS: Pressure grows on UAE to show it is enforcing sanctions against Russia

FATF to revisit decision to remove UAE from ‘greylist’ after reports of Dubai money laundering

By AML Intelligence Correspondents

THE US, UK and EU are pressing the United Arab Emirates (UAE) to show it is cracking down on firms evading sanctions imposed on Russia over the war in Ukraine.

American, British and EU officials visited the Gulf state last week as part of a wider coordinated effort to prevent sanctioned goods from reaching Russia, a British foreign secretary spokesperson said, declining further comment.

Sources said the officials asked the UAE in a series of separate meetings to share detailed trade information on its exports to Russia and on the re-export of so-called dual-use goods that have both civilian and military purposes.

Asked for comment, a UAE official did not address whether talks had taken place but said bans on certain dual-use products “deemed essential in mitigating the conflict in Ukraine” had been issued and that preliminary data indicated there had been no export or re-export of such products so far this year.

The official did not share the preliminary data.

It comes just two weeks after the European Parliament refused to remove the UAE – and Gibraltar – from the Union’s watchlist of “high risk third countries.” The European Commission had sought the removal but this was overwhelmingly rejected by MEPs and there is now no prospect of the decision being re-visited before the autumn.

MEPs gave sanctions circumvention concerns as the reason for not following FATF in removing UAE from the EU’s watchlist.

A U.S. State Department spokesperson said a U.S. delegation had visited the UAE as part of an ongoing dialogue about transshipment trends, especially of dual-use goods that support the Russian defense industrial base.

Among Western concerns is that companies in the UAE are involved in the export of computer chips, electronics, machinery and other sanctioned products to Russia that could be used to aid Moscow’s military effort against Ukraine, the sources said.

UAE imports of some sanctioned dual-use products have increased since Russia was hit with Western sanctions, the sources said, adding that Russian trade data had shown the origin of imported sanctioned goods as being the Gulf state. Reuters was not immediately able to verify the reported data.

The sources said UAE officials had last week repeated assurances given in September that export controls had been put in place that banned the export of sanctioned products, without providing any evidence of such measures.

Sanctions against Russia over its invasion of Ukraine in February 2022, including bans on exports of sensitive goods, have largely been enforced by Western states and other countries are not necessarily compelled to comply with them.

However, the U.S. has taken action against individuals and companies circumventing the sanctions, including in the UAE and has also pressed NATO member Turkey, among others.

The UAE official said Abu Dhabi had a clear and robust process in place to deal with sanctioned entities, which had been exercised against several companies since the start of the war.

“We remain in close dialogue with our international partners, including the US and EU, concerning the ongoing conflict in Ukraine and its implications for the global economy” the official said in the emailed statement, which did not mention Russia by name.


The sources familiar with the Western diplomatic outreach to the UAE said it was likely more companies in the UAE could soon be hit with Western sanctions for circumventing sanctions against Russia. The European Commission did not respond to Reuters’ requests for comment.

Existing sanctions have had limited impact. Russia, which has accused the West of trying to bully other nations into following its restrictions, has found ways to procure dual-use products through third countries.

Russia’s government did not respond to a request for comment for this article during national holidays.

The UAE, a magnet for international wealth and trade, has sought to maintain balance in its ties with Washington, its most important security partner, and Moscow.

The Gulf state’s economy benefited from an influx of Russian wealth, which has drawn scrutiny from Washington and other Western allies who have sought to isolate Moscow over the war.

But the UAE has condemned the invasion of Ukraine and also helped facilitate prisoner swaps between Russia and Ukraine.

Western officials are also asking the UAE for details of oversight of companies registered in its many so-called free zones, including laws and regulations that govern anti-money laundering and sanctions compliance, the two of the sources said.

Earlier this year, the UAE was dropped from a global watchdog’s list of countries at risk of illicit money flows, an acknowledgement of efforts to bolster anti-money laundering practices.

Western diplomats also say UAE banks have closed accounts of some Russian nationals and that it was now generally more difficult for Russians to open accounts after the U.S. threatened sanctions against financial institutions in third countries that were found to be helping Russia skirt sanctions.

However, last week, during the visit by Western officials, the European Parliament voted to keep the UAE on its own watch list for countries found to have deficiencies in their framework to counter money laundering and terrorist financing.

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