Report Cites Nigeria in Dubai Global Corruption Saga
A new report has identified Nigeria as one of the major
countries whose citizens use Dubai, the economic capital of the United Arab
Emirates (UAE), to launder proceeds of corruption and other illicit financial
activities. Carnegie Endowment for International Peace sponsored the report
titled, “Dubai’s Role in Facilitating Corruption and Global Illicit Financial
Flows.”
The authors are eight globally renowned anti-money
laundering (AML) and financial crime specialists. They include Policy Director
for Global Financial Integrity (GFI), Lakshmi Kumar, and Associate Fellow,
Chatham House, and non-resident scholar, Carnegie Endowment for International
Peace, Matthew Page, and a Fellow of the United Kingdom-based Centre for
Democracy and Development (CDD).
One of the authors, Jodi Vittori, is also a non-resident
scholar in the Democracy, Conflict, and Governance Programme, and an expert on
the linkages of corruption, state fragility, illicit finance, and United States
national security.
The report states that while the vast majority of financial,
business, and real estate transactions in Dubai are not associated with illegal
activity, part of what underpins its prosperity is a steady stream of illicit
proceeds from corruption and crime. It adds that the foremost obstacle to
reduction of Dubai’s problematic role is its economic dependence on illicit
financial flows.
It notes that corrupt and criminal actors from around the
world operate through or from Dubai, stressing, “Afghan warlords, Russian
mobsters, Nigerian kleptocrats, European money launderers, Iranian
sanctions-busters, and East African gold smugglers, all find Dubai a conducive
place to operate.”
A Nigerian, Ramon Olorunwa Abbas, popularly known as
“Hushpuppi”, was recently arrested in Dubai and is currently facing trial in
the United States for alleged money laundering and cyber fraud.
According to the report, Dubai’s property market is a magnet
for tainted money.
It says the Dubai property market is, “Built to attract
foreign buyers, the emirate is dominated by towers of upscale flats and
man-made islands studded with luxury villas. Property developers and real
estate agents accept huge sums from politically-exposed persons – individuals
entrusted with a prominent public function, as well as their families and
associates – and other suspicious buyers.”
International law enforcement agencies, the report stresses,
find it especially difficult to acquire information and solicit cooperation
from Emirati authorities.
It notes that in its April 2020 report on the UAE, the
intergovernmental Financial Action Task Force (FATF) specifically called out
Dubai for its limited number of money laundering prosecutions and convictions,
adding that as a result, the FATF has placed the emirate under a year-long
observation to ensure that it fully implements recently passed anti-money
laundering legislation, actively works to dismantle international money
laundering networks, and improve formal cross-border cooperation on criminal
cases.
It says, “Indeed, the emirate’s comparative advantage as a
trade and financial hub relies to a large extent on its openness to dubious
characters and transactions.
“The wealth has helped to fuel the emirate’s booming real
estate market; enrich its bankers, moneychangers, and business elites; and turn
Dubai into a major gold trading hub.
“Meanwhile, both Emirati leaders and the international
community continue to turn a blind eye to the problematic behaviours,
administrative loopholes, and weak enforcement practices that make Dubai a
globally attractive destination for dirty money.”
The report adds, “Even individuals targeted by international
sanctions use Dubai property to launder money due to weak regulations and lax
enforcement.
“Now, one of the world’s largest gold hubs, Dubai is also a
place to launder artisanally-mined gold, especially from conflict-prone parts
of East and Central Africa. Opaque business practices and regulatory loopholes
allow this laundered gold to enter world markets on a massive scale.
“With approximately 30 free trade zones, Dubai is a haven
for trade-based money laundering. Operating with minimal regulatory oversight
or customs enforcement, these zones allow businesses to disguise the proceeds
of crime via the over- and under-invoicing of goods, multiple invoicing, and
falsifying of other trade documentation.
“Many migrant workers are also treated as commodities in
Dubai through the kafala system, an exploitative migrant labour scheme that
shares some characteristics with human trafficking.”
The report states that the central government of the UAE,
Dubai officials, and Emirati law enforcement agencies largely possess the
technical knowledge and capacity to tackle these challenges. It points out that
Emirati regulators, officials, and law enforcement agents are aware of how
Dubai is being used as a conduit for illicit financial transactions, noting,
“This is a feature, not a bug, of Dubai’s political economy.”
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