UAE Grants Russian Lender a Rare Banking Licence to Operate in the Region

The CBUAE has approved a banking licence for Russia’s MTS bank, a move that risks deepening concerns among the western nations.

The CBUAE (Central Bank of United Arab Emirates) has approved a licence for Russia’s MTS bank as per the officials, and concerns rise among western nations over the emergence of the gulf state as a potential financial haven for Moscow.  

Briefing on the matter, the official revealed that the central bank approving licence of the Russian lender not subject to the western sanctions would meet the growing demand of Russian expatriates, “It’s all about the business case [and] the number of Russians living here now,” said one person briefed on the decision.

Within a year since the Ukraine and Russia conflict, UAE has housed thousands of Russians, mainly in Dubai, and these Russians have escaped the financial restrictions in Europe and avoided the military draft. Many have issues opening bank accounts at those lenders already providing services in the country. The Russian MTS bank is the first foreign financial firm to receive a licence in the UAE in several years. 

This financial interaction between UAE and Russia has made the US and European nations concerned since the sanctions were ramped up after the invasion. Brain Nelson, the US treasury under-secretary for terrorism and financial intelligence, raised matters of the licence of MTS bank in his recent visit to Abu Dhabi, “[He] conveyed broad concerns about financial connectivity with Russia, even via non-sanctioned banks,” said a person familiar with the discussions.

UAE grants Russian lender rare banking licence. It’s time we put our foot down with this active defiance from a supposed ally. The UAE needs to stop providing sanctuary to Russians or stop doing business with us.
https://t.co/W7FOoartI7

— Bill Browder (@Billbrowder) February 8, 2023

According to the statement of the treasury, Nelson also held meetings with government counterparts and financial institutions to convey US’s determination to enforce sanctions aggressively.  

“Permissive jurisdictions risk losing access to developed markets for conducting business with sanctioned entities or failing to carry out effective due diligence,” the statement added.

The CBUAE declined to comment on MTS Bank, a subsidiary of Russia’s largest mobile operator. 

The global Anti-Money Laundering watchdog, FATF (Financial Action Task Force) has placed the UAE under enhanced supervision in 2022, and this development comes at a sensitive time. The middle east financial hub hopes to showcase its strengthened financial compliance and tightened criminal scrutiny to sufficiently come off the FATF’s grey list. The decision will be made later in February 2023. 

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