Dubai a haven for trade-based money laundering says US study

Dubai is a “haven for trade-based money laundering”, much of which is facilitated by the emirate’s free trade zones according to a report published by the Carnegie Endowment.

Dubai’s Role in Facilitating Corruption and Global Illicit Financial Flows says part of what underpins Dubai’s prosperity is a steady stream of illicit proceeds from corruption and crime and presents anticorruption practitioners, law enforcement agencies, and policymakers with particularly complex challenges.

Free trade zones

With approximately thirty free trade zones, Dubai is a haven for trade-based money laundering according to the report.

It says these zones operate with minimal regulatory oversight or customs enforcement, allow businesses to disguise the proceeds of crime via 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 adds.

Gold trade

The report also focuses on the gold trade and says Dubai is a place to launder 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.

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 concludes.

Dubai’s Role in Facilitating Corruption and Global Illicit Financial Flows can be found here.

Categories: Trade Based Financial crimes News

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