June 13, 2024

Dubai attracts Russians seeking to protect assets amid sanctions

Russians flocking in Dubai to avoid sanctionsRussians flocking in Dubai to avoid sanctions

As western nations such as the US, UK and EU tighten financial sanctions, wealthy Russians are increasingly relocating to Dubai to set up businesses and buy property. This move is an attempt to secure residence and park assets in the Gulf as Russian nationals are no longer welcome as banking customers in Europe.

Gulf as ‘haven’?

This is largely due to 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, which has made it harder for Russians to establish themselves outside their home country.

Many Russians are now looking to the UAE, long a financial haven for those fleeing instability as well as a popular tourism and investment destination for Russians. The commercial hub is a potential bolt-hole for those avoiding national restrictions as the Gulf state charts a relatively neutral stance in the Ukraine conflict.

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Russians in Dubai

Brokers, relocation experts and lawyers have noted the increase in wealthy Russians moving to Dubai. This is largely because establishing businesses in the UAE allows Russians to secure visas for themselves and their families.

Companies such as Virtuzone, which help companies set up in the UAE, have seen interest surge from Russians, Ukrainians and Belarusians since the war broke out. Many are worried about business continuity, as they have received notifications from their lawyers in Europe that they can no longer continue their trading activities with other countries such as Japan and China. They are therefore turning to the UAE to establish themselves and their businesses. Virtuzone’s Russian-speaking team has reported receiving 50 inquiries a day, a significant increase from one new business lead every two days prior to the crisis.

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Propping up the property prices

For those who cannot or do not want to establish a business in the UAE, buying property is another option. An investment of Dh750,000 ($204,000) in real estate secures three years’ residence, and larger investments can secure longer-term “golden visas.” Real estate agents in Dubai have reported an increase in Russian clients, including those referred by higher-profile brokerages such as Knight Frank.

However, anyone trying to move money to the UAE from banks under sanctions would face a problem, and while other lenders are managing to move funds into the Gulf state, financial institutions are increasingly concerned about censure. Western sanctions on Russia’s financial system have raised already high barriers to opening a bank account, and many are finding the space for basic financial transactions narrowing.

One Russian businessman based in Dubai for over two decades noted that opening an account is difficult, with 90% of accounts from Russia being rejected. In some cases, Russians are also turning to cryptocurrencies and informal money exchanges, known as hawala, to move their funds. While these methods are less secure, many Russians are using them to move their assets and buy property in Dubai.

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The UAE has long committed itself to enforcing previous UN sanctions, but it is a potential haven for those avoiding national restrictions as the Gulf state charts a relatively neutral stance in the Ukraine conflict.

The UAE also 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, and 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.

The trend of wealthy Russians relocating to Dubai is likely to continue as western sanctions tighten, and more and more Russians look for a safe haven to secure their assets and establish their businesses.

By Mo Nabil

Mo Nabil is a finance columnist for Fund23 with a deep understanding of the Middle East financial landscape. With years of experience covering the region's financial industry, he is a respected voice in the field, known for delivering insightful and thought-provoking analysis. His articles and columns offer valuable insights into the latest trends and developments shaping the region's economy, making him a go-to source for readers seeking expert perspectives on Middle East finance.

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