As Western nations escalate sanctions on Russian entities, recent shifts in global financial activity have led to an increase in cross-border transactions through MEA financial centers, including those in the Gulf Cooperation Council (GCC). The United Arab Emirates, in particular, has recorded increased commercial engagement across sectors. In this context, the role of risk-based compliance strategies—including beneficial ownership verification, sanctions screening, and regulatory alignment—has become increasingly important to sustain trust and operational continuity in a dynamic international environment. This article examines how sanctions evasion is reshaping the MEA financial landscape, highlighting the economic and compliance risks facing the region.
Sanctions Evasion Tactics in MEA Russia’s exclusion from Western financial systems has accelerated its pivot toward MEA jurisdictions that have not mirrored U.S. or EU sanctions. This shift has enabled Russian actors to operate through countries such as the UAE, Türkiye, and South Africa by using elaborate networks of shell companies, re-export schemes, and hidden beneficial ownership structures. The U.S. Treasury and its allies have responded by sanctioning entities across these regions for facilitating the transfer of goods, capital, or military-grade technology to Russia.
For banks and businesses in the MEA, these developments carry serious implications. Institutions that inadvertently process transactions for sanctioned individuals or entities risk losing access to dollar clearing systems or even facing secondary sanctions. In response to international pressure, some UAE financial institutions have preemptively shut down Russian-linked accounts or tightened onboarding processes.
The UAE has emerged as a particularly attractive safe haven for Russian capital. Since the onset of the war in Ukraine, Dubai’s real estate market has seen a more than 200% increase in purchases by Russian nationals. Additionally, a growing number of Russian businesses have established operations in UAE free zones, often taking advantage of favorable incorporation laws and historical opacity around ownership.
One of the most concerning aspects of the UAE’s involvement is its role in re-exporting dual-use goods, civilian items with potential military applications. In 2022, UAE exports of semiconductors to Russia rose fifteenfold. At the same time, more than 75 tonnes of Russian gold were imported into the UAE, compared to just 1.3 tonnes in 2021. Experts warn that such commodities can be refined and re-exported with masked origins, posing challenges to traceability and exposing global buyers to hidden compliance risks.
Compliance and Enforcement Gaps While the UAE has made strides in updating its Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) framework, leading to its removal from the Financial Action Task Force (FATF) grey list in 2024, gaps remain. The verification of beneficial ownership remains a persistent challenge, particularly for businesses registered in offshore or free zone jurisdictions. Compliance teams face mounting workloads as they adapt to an influx of clients from high-risk jurisdictions like Russia.
UAE regulators have stepped up enforcement. In 2024 alone, authorities shuttered over 30 gold refineries found in breach of AML requirements. Regulatory reforms have also included updates to AML legislation, enhanced financial intelligence capabilities, and the creation of a dedicated financial crime court. These actions signal a stronger commitment to enforcement, though observers note that many of these efforts are still reactive and driven by diplomatic pressure from Western governments.
International Pushback The global response to MEA’s role in sanctions circumvention has grown more forceful. High-level delegations from the U.S., UK, and EU have visited the UAE multiple times since 2023 to request tighter controls on dual-use exports and corporate registration practices. In turn, U.S. authorities have sanctioned UAE-based companies involved in re-exporting banned technologies, laundering Russian-origin gold, and helping obscure the origin of Russian oil shipments.
For MEA countries that rely on access to Western markets and correspondent banking relationships, such pressure presents a strategic dilemma. While the economic benefits of Russian business are significant, the reputational and financial risks of inaction are growing. Institutions and regulators in the region are under increasing scrutiny to demonstrate that compliance improvements are substantive and not just symbolic.
Looking Ahead: Striking the Balance As the geopolitical environment remains unstable, MEA financial institutions and regulators must strike a balance between seizing short-term economic opportunities and protecting long-term financial integrity. Enhanced due diligence, stricter screening for beneficial ownership, and improved data-sharing across jurisdictions will be critical to mitigating sanctions-related risks.
The influx of Russian wealth into MEA jurisdictions has placed the spotlight firmly on the region’s financial controls. While reforms are underway, more proactive enforcement and a shift from reactive to preventive compliance strategies are needed. The credibility of MEA financial hubs depends on their ability to assure global partners that they are not weak links in the sanctions enforcement ecosystem.
Financial actors that invest in robust compliance systems will not only reduce their exposure to enforcement actions but also position themselves as trustworthy players in an increasingly risk-sensitive global market. For MEA countries, especially the UAE, this is an opportunity to redefine their role on the world stage—not as facilitators of circumvention, but as champions of transparency, security, and financial resilience.