Report shines light on Dubai’s role in facilitating global illicit financial flows

A new, extensive report by the US think tank Carnegie Endowment for International Peace shines a light on Dubai’s role in facilitating graft and global illicit financial flows.

The report, published on Tuesday, describes the emirate country as a major crossroad for grey networks and international finance, allowing corrupt and criminal actors from around the world to operate through or from Dubai.

Endorsing the report, the Organised Crime and Corruption Reporting Project (OCCRP) said such enforcement has “turned Dubai into a hotbed of dodgy dealings”. 

“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,” the report said, offering context about the environment within which financial flows in Dubai function.

It has long been suspected that government leaders at the centre of a list of scandals revealed in Malta hold money and property in Dubai – a favourite destination among them.

When Joseph Muscat was in the eye of the storm after two months of daily street protests at the end of 2019, he flew to Dubai with his family. The Shift had revealed the tickets, costing at least €20,000, were purchased in Jordan.

17 Black, the once-secret company owned by Yorgen Fenech who is the prime murder suspect in the assassination of journalist Daphne Caruana Galizia, is based in Dubai. Documents had shown 17 Black to be a ‘target client’ of Panama companies owned by the former Prime Minister Joseph Muscat’s former chief of staff Keith Schembri and former Tourism Minister Konrad Mizzi.

17 Black was also involved in the corrupt Montenegro wind farm deal. In fact, Dubai is exactly where the President of Montenegro Milo Djukanovic flew to after the last visit of Muscat to Montenegro in November 2019, as citizens were on the streets in Valletta calling for Muscat’s resignation.

In February, police superintendent Antonovich Muscat from the Economic Crimes Unit had also told a public inquiry board how the police had hit a wall when attempting to obtain information and verification from Dubai regarding 17 Black. The unit’s chief, Ian Abdilla, eventually admitted Dubai had been uncooperative.

“We tried to connect with them through Europol but they did not cooperate with the EU at all… In these places without regulation, you are at their mercy, unfortunately,” Muscat had said, insisting that Dubai was critical to the investigation, yet cooperation was lacking.

The new report explains the reasons why Dubai is so attractive to dirty money, one of them being almost 30 “free trade zones” in the emirate in which there are no taxes and ownership is open to any citizen without regard to their nationality.

Each of these zones has their own commercial regulations, labour laws and property laws, as well as independent regulatory authorities that are themselves subject to virtually no oversight from the UAE’s customs and financial institutions, the OCCRP said.

The report states that although kleptocrats and criminals are similarly active and able to exploit lax regulations in the US, the UK, and many other European countries, they face significantly more scrutiny from law enforcement, media and civil society in those countries than they do in Dubai.

“The dreamy, ultramodern coastal metropolis has long been the destination of choice for corrupt foreign politicians and drug traffickers,” OCCRP said in a statement, recalling an investigation of their own which showed the ease with which shady characters could launder money through the emirate’s real estate and trade sectors.