CURRENCY EXCHANGES SAY THAT ARE BLOCKING RUSSIAN ACCOUNTS SANCTIONED BY THE WEST

Some countries are neutral and refuse to take sides between Western allies and Moscow

Russians liquidating crypto in UAE in hunt for safe havens

Cryptocurrency exchanges say they are taking steps to ensure digital currency is not used as a vehicle to evade sanctions.

aljazeera.com |

Crypto firms in the United Arab Emirates (UAE) are being deluged with requests to liquidate billions of dollars of virtual currency as Russians seek a safe haven for their fortunes, according to company executives and financial sources.

Some clients are using cryptocurrency to invest in real estate in the UAE, while others want to use firms there to turn their virtual money into hard currency and stash it elsewhere, the sources said

One crypto firm has received lots of queries in the past 10 days from Swiss brokers asking to liquidate billions of dollars of Bitcoin because their clients are afraid Switzerland will freeze their assets, one executive said, adding none of the requests had been for less than $2bn. . .

The country’s economic affairs secretariat (SECO) said in an emailed statement that crypto assets were subject to the same sanctions and measures Switzerland has imposed on “normal” Russian assets and individuals, so if a person is sanctioned their crypto assets must also be frozen in Switzerland.

Dubai, the Gulf region’s financial and business centre and a growing crypto hub, has long been a magnet for the world’s ultrarich and the UAE’s refusal to take sides between Western allies and Moscow has signalled to Russians their money is safe there.One real estate broker, whose company has partnered with a cryptocurrency service to help people buy property, said: “We’ve been seeing a lot of Russians and even Belarusians coming to Dubai and bringing whatever they can bring, even in crypto.”

Way out of sanctions?

A financial source in the UAE confirmed that Russians were buying property in Dubai, using crypto as a way of getting their money out of other jurisdictions and into the Gulf state.

Cryptocurrency exchanges have said, while giving few details, they are blocking the accounts of Russians sanctioned by the West over Moscow’s invasion of Ukraine, which Russia calls a “special military operation”.

Major exchanges such as Coinbase Global Inc and Binance say they are taking steps to ensure that crypto is not used as a vehicle to evade sanctions, and they collaborate with law enforcement on the issue.

Still, as crypto offers users a high degree of anonymity, European countries such as Germany and Estonia have this week called for tighter oversight to snuff out any loopholes that could allow sanctions-busting.

Three Western diplomats said they were increasingly alarmed by the number of Russians who in recent weeks were seeking refuge in the UAE for their fortunes, including in property, and were wary that some could be acting on behalf of those under sanctions.

> Two of the diplomats said they were sceptical the UAE would crack down on Russian wealth in the Gulf state, which they said was predominantly held in Dubai, citing the country’s neutral stance in the conflict.

> A third said they hoped the UAE, which is also a gold trading hub, understood the implications for its reputation and would take action.

The UAE was put on a “grey list” this month for increased monitoring by financial crime and money laundering watchdog the Financial Action Task Force (FATF). . .

Two sources familiar with the matter said UAE companies had reputational concerns about doing business with Russians, but felt the state’s abstention at the United Nations Security Council, when Russia vetoed a resolution condemning its invasion of Ukraine, was a signal they should not impose restrictions on Russians.

The UAE, which has deepened ties with Russia over the years, has not matched sanctions imposed by Western nations and its central bank has not issued any guidance regarding the measures. . .

‘Trying to protect themselves’

Apurv Trivedi of Healy Consultants, which advises on setting up businesses, including crypto companies, said they had definitely been getting more interest from Russian clients.

“They’re basically trying to protect themselves against the inflationary pressures that are happening against the Russian currency. So crypto has been a very good exit for them to manage the risks that they’re facing,” Trivedi said. “It’s a good liquidity provider for them.”

. . .“We’ve seen a lot of Russians hedging their bets against the devaluation of the rouble by moving a lot of assets into crypto. And the UAE is relatively loose in terms of its regulation and authorities over transferring crypto here.”

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