Dubai has been known for its lustre, but lately it has been wearing off following the increasing cases of money laundering and financial frauds emerging in the emirate. The Dubai economy is not entirely built upon illicit funds. However, a swamp of networks doubtlessly run in the city of gold, contributing to its free flow of finances, generated from criminal and corrupt sources.
Last month the emirate was accused of harbouring a de facto manager of several firms – part of an organized gang – who was under a French investigation for carrying out financial fraud, money laundering and concealment of employee details for tax fraud, etc. The manager was caught while he was trying to flee to the United Arab Emirates from France, after transferring portions of his illegal assets to Dubai.
Money laundering in the UAE is as common as it gets. In July 2020, a US-based foreign policy think tank, Carnegie Endowment for International Peace, released an explosive report about the covert networks and channels through which the United Arab Emirates has been funding terrorism, conducting transnational organized crimes and laundering money contributing to a shady Dubai economy.
In March, 160,000 euros were confiscated from the accounts filed by the company in question, which were related to breach of trust acts in the form of hijacking leased vehicles. During the same time, the company’s manager when investigated, was found carrying a bag that consisted of 152,000 euros in cash. Another reason for seizing the cash was that it wasn’t declared beforehand. Meanwhile, during further investigations another set of accounts were inspected, which led to the seizing of 70,000 euros along with a house worth 580,000 euros and a vehicle. This led to a sum total of 671,554 euros worth of seizure in criminal assets. The French police were able to seize approximately 700,000 euros and indict 6 people for being associated to the case, one of whom was even arrested.
The case was of a transport firm in Lunel, a commune in France that hid work, misused assets belonging to corporates, carried out financial frauds and laundered funds via organized crime networks.
The case of money laundering in Dubai entrusted upon the French police not only exposed the existence of an “ecosystem of Lunelloise societies”, but also that the members of the same family were likely of being linked with the organized crimes being investigated by the police for fraud.
As part of running the network, the transportation firm – the Lunellio transport company – didn’t pay off the employer and employee taxes, committing VAT fraud. In addition, it paid a namesake group of employees, having no link to the organization, while paid its genuine employees using fake pay slips who then funnelled the money to overseas accounts like in Dubai.
Fabrice Belargent, the prosecutor of the Republic of Montpellier claimed that the firm got caught in the crosshairs of the investigation with the obvious concealment of some employees and diverting the routes of rented vehicles, owned by the transportation firm.
Carnegie Endowment for International Peace
In the April 2020 report of the intergovernmental Financial Action Task Force of the United Arab Emirates, Dubai has been called out for prosecuting and convicting only a handful of money laundering cases, despite being known as a hub for one.
Therefore, the FATF issued a year-long observation of the emirate to guarantee that it has completely implemented the following:
Anti-money laundering legislation
Improved formal regional criminal case cooperation
The observational period ruling will ensure that practitioners and policymakers are unable to oversee the failure of the Dubai economy in taking corrective policy measures and enforcement steps required for stemming illegal financial flows in the United Arab Emirates.
