According to a report from Swissinfo, the United Arab Emirates (UAE) has become a new safe haven for wealthy Russians who have been affected by Swiss sanctions. Switzerland joined the European Union in adopting sanctions against Russian individuals, companies, and organizations in response to Moscow’s military operation in Ukraine. As a result, wealthy Russians have been forced to move their assets elsewhere, with the UAE being a popular destination.
The report cites a study from the Boston Consulting Group (BCG), which highlights a “significant exodus of Russian assets” that led to a $100 billion increase in wealth deposited in the UAE last year. This marks the fastest annual growth of any offshore booking center. Swiss private banks are concerned about this trend spreading to clients from other countries and are eager to convince wealthy elites that the sanctions against Russia do not dilute Switzerland’s neutrality, which is a key selling point for individuals residing in politically unstable countries.
Gregoire Bordier, president of the Association of Swiss Private Banks, emphasized that clients still believe in Switzerland’s neutrality and its adherence to the fundamental rules of neutrality. He stated that the focus should be on “where are you going” rather than “where are you now.”
Reports suggest that the UAE’s refusal to condemn Russia’s military operation in Ukraine at the United Nations Security Council may have been perceived by wealthy Russians as an invitation to move their funds to the country. Reuters has previously reported that Russian citizens have been shifting their assets from Switzerland and the UK to Dubai, especially after these countries imposed sanctions on Russia and threatened to freeze the assets of prominent Russian businesspeople and politicians.
In fact, data from real estate agent Betterhomes, as cited by the Wall Street Journal, reveals that Russians became the third-largest property buyers in Dubai in the second quarter of 2023. This is a significant jump compared to being the ninth largest buyers in 2021.
It is evident that the UAE has emerged as an attractive destination for wealthy Russians seeking to protect their assets from sanctions. This shift is a cause for concern for Swiss private banks, as they aim to maintain their reputation as a neutral and secure jurisdiction for international wealth management.
In conclusion, the United Arab Emirates has become a haven for Russian wealth impacted by Swiss sanctions. The influx of Russian assets to the UAE has been significant, prompting concerns among Swiss private banks about the potential outflow of clients from other countries. The refusal of the UAE to condemn Russia’s military operation in Ukraine has been interpreted by wealthy Russians as an invitation to relocate their funds. This trend has resulted in Russians becoming major property buyers in Dubai. The challenge for Switzerland lies in convincing wealthy elites that the sanctions against Russia do not compromise its neutrality.
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