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Money laundering booms as tax cheats target UAE
12/30/2005
FUJAIRAH, United Arab Emirates, Dec 29 (Reuters): Money laundering is flourishing in the United Arab Emirates where fraudsters can pull off complex tax scams or buy speed boats with paper bags of cash with relative ease, officials say.
The Gulf Arab state, which has no income tax, is now a hub for so-called missing trader fraud that robs European Union governments of billions of euros in value-added tax revenue, diplomats told a money laundering conference yesterday.
Some of that money has trickled through to networks of Islamic militants, they said.
The UAE has been cracking down on money laundering, particularly since the Sept. 11 attacks on the United States, but dirty money is still around, especially in Dubai, booming financial hub of the world's top oil exporting region.
"Partly this is a problem of success... Although Dubai is a fantastic place for legitimate businesses to work, it is also a fantastic place for criminals to work," said Robert Deane, deputy head of the British embassy in the UAE capital Abu Dhabi.
Businessmen say less sophisticated money laundering has long thrived in a country that is now trying to position itself as an offshore tax-haven to rival the Bahamas or Switzerland.
"When your customer's 'accountant' turns up to pay for a new boat with a patch over his eye, a Russian accent and brown-paper envelopes stuffed with cash, you know something's up," an executive in the leisure boat business told newsmen in Dubai.
The West has been piling pressure on the Arab world to crack down on money laundering since the Sept 11 attacks, fearing that militant groups such as al Qaeda could tap into these funds.
US authorities fined Dutch bank ABN AMRO $80 million earlier this month for failing to comply with US anti-money laundering laws, including through its operations in Dubai.
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