The US has called on financial institutions in the United Arab Emirates to remain vigilant in combating Russian sanctions evasion as western states fret that their Gulf ally, and others such as Turkey, could emerge as havens for illicit cash linked to the Kremlin.
Wally Adeyemo, deputy treasury secretary, welcomed UAE institutions’ commitment to preventing money laundering, but said the Gulf state — like other global financial hubs — faces the “threat of illicit financial flows”. He underscored the need “for vigilance and proactive action” in combating Russian sanctions evasion, including in the UAE.
“We know that Russian banks have employed deceptive payment practices and used shell companies and other means to hide the true nature of their transactions,” according to a copy of his prepared address to a UAE banking roundtable released on Wednesday.
“Financial institutions must be exceedingly cautious in handling any Russia-related businesses and in managing the risks associated with financial institutions that have exposure to the Russian financial system,” he added.
Hundreds of Russians and companies have been sanctioned by around 30 jurisdictions, including the US, since the invasion of Ukraine in February. UAE officials have told their western counterparts that sanctioned Russian individuals and entities will not be able to do business in the country.
Western officials have recognised UAE banks’ rigour in dealing with the inflow of tens of thousands of Russians into the Gulf’s commercial hub since the invasion. Many global lenders based in the UAE are aware of the danger, having previously been fined for transactions with neighbouring Iran, which has been under sanctions for years.
People involved in setting up businesses and securing visas for new Russian residents say due diligence on their clients can lead to delays and problems in opening accounts and transferring money, but that many, especially the very wealthy, have nonetheless managed to move cash to the UAE and buy properties.
Adeyemo, who arrived in the UAE earlier this week, warned that insufficient due diligence “is not a defence” and the US could target non-US citizens for providing “material support” to a sanctioned entity.
Diplomats have been concerned about the visible presence of yachts and private jets belonging to sanctioned Russians in the UAE, fearing that one of their closest regional security partners could undermine US and European attempts to constrain president Vladimir Putin.
The Madame Gu superyacht, owned by Russian parliamentarian Andrei Skoch who is under sanctions, was recently observed berthed at Dubai’s Port Rashid terminal. Andrey Melnichenko’s Motor Yacht A has been moored in Ras Al Khaimah for months. The coal and fertiliser magnate has been sanctioned by jurisdictions including the UK and EU.
On Wednesday, Adeyemo arrived in Turkey, where he was due to meet government officials as well as members of the banking and finance community in Ankara and Istanbul.
Turkey, a Nato member, has opposed Russia’s invasion of Ukraine and has supplied armed drones to Kyiv. But it has also been eager not to damage its close energy, trade and tourism ties with Russia, and has declined to sign up to western sanctions against Moscow.
A US official said that Adeyemo would use his meetings with Turkish officials to discuss “regional economic issues, combating terrorist financing, and co-ordination on the implementation of unprecedented multilateral sanctions on Russia for its war against Ukraine”.