Dubai, which has grown to be an important hub for private banks, still seems beset by corruption and organized crime.
While Switzerland has moved swiftly to eradicate what came to be seen as harmful activities, other financial markets weren’t quite as ambitious.
That at least is the impression one gets from the «Corruption Perception Index 2018» published by Transparency International, the global anti-corruption group.
Sanctioned Individuals Own Property
Dubai for instance finds itself under the spotlight for its lenience in treating corruption and financial crime. The emirate is one of the financial markets, where many financial service providers opened offices.
Transparency International based its damning conclusion on a 2018 report called «Sandcastles», which was compiled by the Organized Crime and Corruption Reporting Project and the Center for Advanced Defense Studies. The organizations identified 44 properties, worth $28.2 million in total, that belonged to people named in international sanctions’ lists. A further 37 properties, worth $80 million, are owned by people in their entourage.
Bought in Cash – All Too Common
The NGOs say that two factors combine to make the emirate a favored target for tainted money. Firstly, Dubai has a vibrant market for luxury real estate. And secondly, the regulatory environment remains lax, with a high emphasis placed on secrecy and anonymity.
Despite some efforts to tackle the problems, it still is far too easy to buy property in cash without having to answer any questions about the background of the money.
A Pathway for Tainted Assets
«The permissive nature of this environment has global security implications far beyond the UAE. In an interconnected global economy with low barriers impeding the movement of funds, a single point of weakness in the regulatory system can empower a range of illicit actors,» the study authors said.
«Lax regulatory and enforcement environments – in Dubai, but also in other financial centers – have attracted criminal capital from around the world and offered a pathway into the international financial system for illicit actors and funds.»
Corruption Remains a Burden
Still, Dubai is doing fairly well in the «Corruption Perception Index» on grounds of its level of education, wealth and welfare scores. The country is listed 23rd among 180 countries.
The fact that Dubai is not equally strong in terms of political rights and democratic institutions comes as no surprise – which in turn is an important factor why corruption remains such a burden for the country.
