Wealthy Russians flock to Dubai as west tightens sanctions
Gulf emerges as potential financial safe haven amid toughened financial rules
Russians have flocked to set up businesses and buy property in the United Arab Emirates in an effort to secure residence and park assets in the Gulf as the US, UK and EU tighten financial sanctions, relocation experts, brokers and lawyers said.
President Vladimir Putin’s assault on Ukraine, western sanctions on the Russian central bank and the removal of some lenders from the Swift messaging network have made it harder for Russians to establish themselves outside their home country.
Some are looking to the UAE, long a financial haven for those fleeing instability as well as a popular tourism and investment destination for Russians. There are already an estimated 40,000 Russians and 15,000 Ukrainians in the UAE, along with about 60,000 Russian-speaking expatriates from former Soviet states. Oligarchs’ superyachts often drop anchor in Dubai, a playground for the super-rich.
“Russians are now unwelcome banking customers in Europe, even though the majority went there to get away from Putin”, said Peter Gray, partner at ADG Legal in Dubai. “People are worried about what the banks will do — the banks are afraid of sanctions and expensive investigations and so are reluctant to continue business with Russian nationals, regardless of their political affiliation.”
While the UAE has long committed itself to enforcing previous UN sanctions, the commercial hub is a potential bolt-hole for those avoiding national restrictions as the Gulf state charts a relatively neutral stance in the conflict.
The UAE abstained on a UN Security Council vote condemning the Russian invasion of Ukraine while backing a subsequent general assembly motion. It reversed an early decision to cancel visa free access for Ukrainians. Abu Dhabi has fostered close ties with Moscow in recent years, joining forces against Islamist forces across the region and co-operating on energy policy.
Establishing businesses in the UAE allows Russians to secure visas for themselves and their families. Virtuzone, which helps companies set up in the UAE, has seen interest surge from Russians, Ukrainians and Belarusians since war broke out. “I am receiving 50 inquiries a day — it’s booming right now,” said Maryia Vinahradava, who heads Virtuzone’s Russian-speaking team, citing one Russian firm with about 500 employees that wants to relocate to Dubai. Before the crisis, she got a new business lead every two days.
“People are worried about business continuity,” she said. “One trader had received a notification from their lawyer in Germany that they could no longer continue their trading activities with Japan and China from there and advised him to open up in the UAE.”
Buying property is another option for people wanting to move to the UAE. An investment of Dh750,000 ($200,000) in real estate secures three years’ residence; larger investments can secure longer-term “golden visas”. While anyone trying to move money to the UAE from sanctioned banks would “face a problem,” Vinahradava said, other lenders are managing to move funds into the Gulf state.
With financial institutions increasingly concerned about censure, Russians are nonetheless finding the space for basic financial transactions narrowing. Western sanctions on Russia’s financial system have raised already high barriers to opening a bank account. “Opening an account is difficult,” said one Russian businessman based in Dubai for more than two decades. “If you have another account in a non-sanctioned country, it’s fine. But if it’s from Russia, then you are in trouble and at the mercy of the bank — 90 per cent are rejected.”
In some cases, Russians are also turning to cryptocurrencies and informal money exchanges, known as hawala, according to the businessman. “There are plenty of guys who can facilitate this out on the Palm [Jumeirah],” he said, referring to the luxurious, man-made development on Dubai’s coast that is popular with Russians. “Once you have the cash, or even better a banker’s cheque, then it’s easy to buy a property or do something else with the assets.”
Some real estate agents in Dubai also said higher-profile brokerages, including Knight Frank, had referred Russian clients to them. Knight Frank declined to comment. People aware of its business operations denied there was any outright ban on Russians but said all clients faced stringent due diligence for compliance purposes.
The new financial inflows come at a particularly sensitive time for the UAE, which on Friday was placed on the Financial Action Task Force’s “grey list”. This means increased monitoring by the inter-governmental agency of their efforts to counter money laundering and terrorist financing. The UAE hosts the top names in global finance at two international centres in Dubai and Abu Dhabi. Its real estate and commodities markets have long been prone to abuse by money launderers and tax evaders. After Friday’s meeting, FATF said all jurisdictions should be vigilant against money laundering that “risks resulting from Russia’s aggression against Ukraine.”
Emirati officials have said the country would welcome Russian investors and Ukrainian refugees while acknowledging western sanctions. Local lenders also voiced caution. They can still open accounts for Russians, but it is “no longer a simple or easy thing to do”, said one banking executive. “With these new sanctions in place, banks will find it much harder to accept transfers from Russia, in any form,” he said.