Dubai atop a “toxic tide of illicit cash”

January 29, 2010

Today’s post involves another news story about the connections between crime and terrorism.  However, this article is better than average, because it doesn’t try to equate terrorism with international crime, like the speech analyzed here in yesterday’s post.

Last Sunday’s Guardian printed a follow-up to the story of hawaladar Naresh Jain’s arrest.  I’ve blogged about Jain here earlier, so I’ll cut out the background and go straight to the heart of the Guardian piece, which is how Dubai was the perfect setting for Jain’s and other people’s crimes:

Jain has reportedly admitted to Indian police that he has laundered cash, but denies being involved in the drugs trade.

However, investigators believe that his businesses are based on huge sums of cash originating in Africa and passed on to him by diamond smugglers and drug dealers – and that most of that illicit cash flows into Dubai. But the allegations against him do not make him unique in the emirate. “[Jain’s arrest] was an important incident, but many wanted men reside in Dubai,” says Dr Christopher Davidson, an expert on Gulf economics at the University of ­Durham.

To many, Jain is the latest, perhaps the biggest, example that proves the United Arab Emirates is not so much awash with vast oil wealth but built on a toxic tide of illicit cash: a place where Russian mafia and drug cartels clean their dirty cash and al‑Qaida finances terror atrocities. And at its heart is Dubai, a world financial centre that in the past 15 years has grown exponentially.

As Dubai’s ruling elite pick through the wreckage of its bombed-out economy, which exploded under the weight of $60bn of debt last year, an equally pressing issue threatens to undermine not just Dubai but the UAE as a whole.

Next month, a meeting of the Financial Action Task Force (FATF), the powerful intergovernmental body responsible for combating money laundering and the financing of terrorist networks, will meet in Abu Dhabi. The meeting is expected to establish which countries to put on a high-risk jurisdiction list following a request by G20 finance ministers last year. It is thought likely that the UAE will feature on the list. Such a development would be a serious blow to the money men of Dubai, but would confirm many people’s fears that it remains a port of choice for dirty cash.

The notion is causing renewed concerns among senior US officials. Last month an American ambassador to Afghanistan, E Anthony Wayne, said that every day $10m in cash was being smuggled from Kabul to Dubai in briefcases, much of it from the Afghan heroin trade, which has boomed since the US invasion. Wayne said a US investigation found that $190m in cash was smuggled in just 18 sample days.

Insiders say that obtaining a UAE passport, which allows the bearer to open a bank account, is still relatively easy. Experts suggest that airport customs in some of the UAE states provide easy routes to move goods and cash around. In addition, Dubai real estate has a notorious reputation as a front for laundering, where apartments are bought up by unknown entities who never live there. “After 9/11, there was a crackdown on corruption, but they’re careful not to talk about money-laundering because it is part of the lifeblood,” says Davidson at the University of Durham.

“The place is built on it,” insists one seasoned Dubai businessman. “It’s a commercial port. There’s a free trade zone. That’s what made its livelihood.”

One minor correction to the above—Mr. Wayne may have been sent on a mission to Afghanistan, but he is not the U.S. ambassador there.

What’s interesting on the drug front is that apparently the Taliban is hoarding its revenues in Dubai.  Saving up for life after July 2011, perhaps?

Funny thing about Dubai real estate being “notorious” for money laundering.  We didn’t hear a peep about that during all the fanfare surrounding the Burj Tower opening.

Read the whole Guardian story here.


  1. He was a part of D-gang .. which is actively funded terrorism, and became famous in india after 1993 bombay bombings ..


    • Puneet–can you give more information about D-gang?

  2. Its WonderFul Post, Excellent work, keep it up

  3. Its WonderFul Post, Excellent work, keep it up

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