Financial Crime World

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Financial Sanctions Evasion Methods in the United Arab Emirates Under Scrutiny by US Government

In a recent move, the US government has issued a multi-agency notice highlighting red flags and warning of enhanced enforcement efforts related to third-party intermediary evasion of US Russia-related sanctions and export controls. The notice specifically cautioned against shipping US goods to Russia in violation of US sanctions, citing recent enforcement actions and criminal cases that involved the use of shell companies and transshipment points to export restricted US goods to Russia.

The UAE: A “Country of Focus” for US Investigators

The Financial Times reported that a senior Treasury official stated that the UAE is a “country of focus” for US investigators. This should come as no surprise, given the significant migration of Russian wealth to Dubai and other Emirates since the Russian invasion of Ukraine. The presence of wealthy Russian nationals in the region, with their extensive purchases of real estate and luxury goods, has attracted attention.

Red Flags to Watch Out For

Companies and individuals in the UAE and elsewhere in the Gulf doing business with Russia are advised to take notice of the increased US attention and bear in mind the red flags referenced in the recent advisory notice. These red flags may not present in obvious ways, and Gulf citizens and entities must be aware of indirect or non-obvious Russian connections.

Compliance is Key

The US guidance is clear: companies that maintain meaningful controls and voluntarily report issues face lower fines and penalties than those that do not. Companies seeking to protect themselves from sanctions risk should review their sanctions exposure and obtain advice from US legal counsel familiar with both the sanctions enforcement regime and the controls required to mitigate risk.

LBKM’s Expertise

LBKM has worked successfully on behalf of numerous persons and entities based in the Middle East, Southeast Asia, and Eastern Europe on a variety of US sanctions issues, including advising multinational companies on sanctions compliance, obtaining the release of blocked funds, and convincing OFAC to remove sanctions on designated individuals. If you have questions or concerns about the scope or reach of US sanctions enforcement, please contact LBKM for a privileged and confidential discussion.

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