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UAE tightens financial control on Russian flows under U.S. pressure, Bloomberg reports

UAE tightens financial control on Russian flows under U.S. pressure, Bloomberg reports Illustrative photo (Photo: Getty Images)
Author: Daria Shekina

Russian firms based in the United Arab Emirates will come under closer scrutiny from local banks. The reason for this is pressure from the United States, reports Bloomberg.

"The UAE attracted a flood of Russian money in the first year after President Vladimir Putin ordered troops into Ukraine, with firms finding banking quick and easy to navigate," the material states.

Bloomberg notes that this process is gradually becoming more challenging as refusals become more widespread, given that the UAE shows less inclination toward the risks associated with sanctions and aims to exit the so-called grey list.

It is mentioned that money transfers, whether for companies repatriating funds to Russia or those transferring cash to a third country, have also become subject to stricter controls and now take longer. Some banks demand additional documentation and occasionally freeze funds, attempting to justify the transfer or questioning the source of the money.

US pressure on the UAE

In recent months, officials have sought to address evident gaps in sanction compliance as the UAE aims to remove itself from the list of jurisdictions subject to enhanced scrutiny by the Financial Action Task Force (FATF), a group combatting global money laundering.

Meanwhile, the US, UK, and European Union have intensified pressure on Emirati officials to combat illegal flows and close channels used by Moscow to circumvent trade sanctions and fund the Kremlin's military machine.

"This month, the Biden administration targeted several UAE-based shipping firms, part of a crackdown on non-compliance with its oil price cap," Bloomberg reports.

The UAE government's response

A UAE representative stated that the country took its role in protecting the integrity of the global financial system extremely seriously.

"The increased resources and expertise we have put in place underpin the UAE’s continued commitment to combating economic crime and disrupting illicit networks, both at home and abroad," the official said.

UAE Minister of State for Foreign Trade Thani Al Zeyoudi noted that as part of FATF investigations, UAE banks requested additional information from current and potential clients, including specific checks related to sanctions lists.

UAE's approach to sanctions against Russia

While the country has not imposed restrictions against Russia, it seeks to avoid directly assisting the Kremlin in bypassing the current sanctions imposed by the US, EU, and UK.

In late September, Bloomberg reported that the United Arab Emirates was considering implementing export controls that could harm Russia's military machine.

Earlier in November, media outlets reported that the United Arab Emirates would soon restrict exports of dual-use goods to Russia.