A woman takes a picture with a smartphone of the upmarket Marina district from the Palm Tower in Dubai, United Arab Emirates, June 9, 2021. REUTERS/Christopher Pike

DUBAI, March 10 (Reuters) – Wealthy Russians are trying to move some of their wealth from Europe to Dubai to protect their assets from a growing wave of Western sanctions against Russia over its invasion of Ukraine, officials said. financial and legal sources.

Dubai, the Gulf’s freewheeling financial and commercial hub, has long attracted the world’s ultra-rich and the UAE’s refusal to take sides between Western allies and Moscow signaled to Russians that their money was safe there.

The United Arab Emirates, which over the years has deepened its ties with Russia, has not matched the sanctions imposed by Western countries and its central bank has so far not issued any guidelines regarding Western sanctions.

In many cases, wealthy Russians are seeking to transfer funds to Dubai that are now in Switzerland or London – which have both sanctioned Russian individuals and organisations, a senior banker at a major Swiss private bank has said. and a lawyer familiar with the case.

The Dubai-based lawyer said his firm had received requests from Russian entities about how quickly they could transfer ‘very large funds’ worth hundreds of millions of dollars to the Arab state of the Gulf.

“The UAE is a good middle ground – a few hours flight away and doesn’t have a regulator completely in cahoots with Western regulators,” said an investment management professional.

The Dubai media office, UAE foreign ministry and central bank did not immediately respond to a question about the extent of Russian funds flowing into Dubai.

The senior private banker said that in some cases, Russian clients with accounts in private banks opened accounts with the UAE branch of that same bank. Others were opening accounts in local banks, the banker added.

Russians, faced with a crumbling economy at home, are also looking to pour their money into investments, including real estate, and buying funds that don’t disclose ownership information, another financial source said.

Dubai, a global tourist destination, has long been popular with Russians, who were among the emirate’s top visitors and property buyers even before the war and subsequent sanctions plunged its economy into turmoil and its currency fell to record lows. Read more

The United Arab Emirates introduced a “golden” visa program in 2018 – which grants 10-year residency – to investors and other professionals.

PRUDENT BANKS

The UAE’s decision to abstain in a UN Security Council vote condemning the invasion, coupled with continued exposure of Gulf sovereign wealth funds to Russia, was seen as a comfort to wealthy Russians, the sources said.

There is no indication that Russian wealth flowing into Dubai is subject to Western sanctions. However, bankers said there was a risk of reputational damage to institutions receiving Russian funds as multinationals around the world cut ties with Moscow.

Some major UAE banks are taking a cautious approach. Banks operating in the Gulf state have in the past been sanctioned for failing to comply with sanctions imposed on countries like Iran and Sudan.

And the global financial crime watchdog, the Financial Action Task Force (FATF), last week put the UAE on a “grey list” of jurisdictions under increased scrutiny. Read more

“Being on the gray list, they (UAE) probably have to be more careful than normal. Now the last thing they want is for Europe to use this as another reason to keep them on that list.” , said the lawyer.

The Dubai media office, the UAE foreign ministry and the central bank did not immediately respond to questions regarding advice to banks and businesses on how to comply with sanctions against Russia, or the protocols in place if other countries request the seizure of any sanctioned assets, should they be in the UAE.

Two sources familiar with the matter said companies in the UAE would spend more time researching the origin of their funds through a so-called know-your-customer process.

WEALTH MANAGEMENT

A source from a Dubai bank said funds from Russians are not accepted for wealth management, although they can open deposit accounts.

“In principle, they can do it,” but the bank has high internal compliance hurdles to clear to accept Russian money, including proof of its origin, the source said.

The nascent private wealth industry in the UAE has yet to achieve the scale or sophistication needed to fully absorb the wealth stored in Switzerland and other traditional monetary havens, sources said.

“They might take some of it, but I find it hard to imagine they would take it all,” the investment management professional said. “It’s not just the service element, but the investment management that most of these banks lack.

Reporting by Yousef Saba, Hadeel Al Sayegh, Alexander Cornwell and Lisa Barrington in Dubai, Sumeet Chatterjee in Hong Kong; Editing by Kim Coghill

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