By George Porter
In recent years the United Arab Emirates (UAE) has been considered an emerging economic fulcrum, poised between the West, China and Russia, as well as being a major financial power in the region. Previously attracting negative attention following its inclusion in the EU’s list of non-cooperative jurisdictions for tax purposes, the UAE’s reputation was improved when it was removed from this list in 2019 after implementing the EU’s recommendations. Similarly in March 2022, the UAE was added to the Financial Action Task Force (FATF) grey list, meaning it was subject to increased monitoring. This was as a result of what the FATF stated were “strategic deficiencies” in efforts to stop money laundering and terrorist financing.
At the European Anti-Financial Crime Summit 2023 a prominent investigative journalist stated that in terms of money laundering “Dubai is the new Panama”. This characterisation cannot be divorced from the influx of Russian assets into the country following Russia’s invasion of Ukraine, with sanctioned oligarchs being able to move private jets and yachts, as well as more liquid assets, into the country. However, evidence suggests that practices are improving within the UAE, with crackdowns on sanctioned Russian banks as well as other key reforms and a reallocation of resources toward compliance with FATF recommendations. These changes led to positive comments from the FATF and commentators predicting that the UAE’s removal from the FATF greylist is imminent.
While great strides have been made in improving access to company data in the UAE in recent years, the jurisdiction does present some unique challenges with regards to transparency. These issues primarily arise from the fragmentation of registries, with a total of eight registries across the country–one for each of the emirates–aside from Fujairah which has two. This fragmentation is further complicated by the vast amount of free zones and free ports within the nation, which can have different transparency requirements and are less accessible than the rest of the country.
While a full overview of each registry’s capabilities and limitations would exceed the scope of this article, we can illustrate some of the issues via a quick example. Dubai’s main register is maintained by the Department of Economic Development, which provides information including the name of a company, its incorporation date, names of managers and partners, share capital and its main activities. However a company based in Dubai may not be registered with the Department of Economic Development, but may instead be inside one of the 24 free zones that are based throughout Dubai. The free zones are supervised by three registers, but compared to many jurisdictions with a central national registry, having four for a single city (the Department of Economic Development plus the three free zone registers) greatly increases the complexity of obtaining company data.
Establishing ultimate beneficial ownership for a company in the UAE is also tough exercise. While the Cabinet Resolution No. (58) of 2020 regulating Beneficial Owner Procedures compels companies within the UAE to declare their ultimate beneficial owner (UBO), there is no requirement for entities registered in free zones to make a declaration, and no requirement to make the UBO declarations public. This is not to say that all registers deliberately obscure ownership. Often half measures will be observed, for example a simple list of shareholders is provided with no differentiation between the percent of shareholding each shareholder has–a common practice of the Dubai International Financial Centre, one of the most prominent free zones. Efforts are clearly being made to provide a more transparent company information system, but it is evident that these measures are designed to work with FATF’s recommendations to combat sanctions evasion and money laundering, rather than providing a transparent public resource.
Legal records in the UAE are more centralised than company information, though again each emirate typically has their own judicial department. If details of a case are known, such as the case number and year it took place, then services like the Judicial Department of Abu Dhabi’s case inquiry system can provide rapid access to relevant records. However, this system mainly provides access only to civil cases, with details of criminal cases being placed beyond public access.
Media freedom in the UAE is severely limited, with Reporters without Borders ranking it 145/180 in their press freedom index, down from 138/180 last year. This ranking is a result of close ties between the government and the owners of Emirati media organisations as well as strong censorship legislation that allows the National Media Council to sanction foreign media content and any media that threatens “social cohesion”. In practice the “social cohesion” pretext is sufficient to allow censorship of any media content that is critical of government policy, ruling families, religion or the economy. Prosecution for defamation or supposed violation of strict cybercrime laws is common, often resulting in prison sentences.
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