Observations of the Banking Sanctions Landscape from the UAE

I was in Abu Dhabi and Dubai on business last week and spent quite a bit of time trying to determine what is going on there with respect to sanctions on Syria and Iran. Speaking with different people in various industry sectors, my observation is that indeed, Dubai is the frontline of the global (particularly US) sanctions regime, particularly Iran.

So what are the key observations?

1. Banks in the Persian Gulf states are increasingly vigilant. It used to be that banks in the U.S. and Europe were more careful and banks in the Gulf Cooperation Council (GCC) states were less subject to regulations. That may still be the case, but my understanding is that US and to a lesser extent European depository institutions have devoted the resources (internally and externally) to really learn the limits of the law. Therefore, if they are assured as to the legality of a transaction (even if it is of Syrian or Iranian origin) they may not take any issue with it. Banks in the Gulf may be less likely to do that. They most likely do not have U.S. lawyers advising them on the limits and instead just pursue an exceptionally conservative approach that filters out legitimate transactions with the illegitimate. It is even difficult for many nationals of these sanctioned countries to open bank accounts with some institutions – something very rarely seen in the United States.

2.  Even Currency Exchangers are afraid. Many currency exchangers have stopped working for Iran. These entities were formally eager in many ways to pick up where the banks dropped off – handling remittances. This is a huge business in the GCC, especially given the plethora of foreign workers sending remittances. People needing to send money out of Iran appear to often need  to use a number of small exchangers to transfer funds. It’s not a matter of simply handing say, $50,000 or $100,000 to one entity who will send the funds to Dubai. This still happens, but not as easily.

Is the GCC effectively shutting down the funds transfer business and limiting its own role as a east-west financial hub? In our work, it appears that less and less funds of Iranian origin are transiting through the GCC. As the GCC clamps down, we are seeing countries like Turkey and Hong Kong fill in that role. One lady yesterday told me she recently received funds through an exchanger in Lithuania!

It will be particularly interesting to see how these developments evolve and how things will transpire if there is the slightest move towards the status quo ante of the sanctions.

An international trade compliance (sanctions, export controls, customs, anti-corruption) and defense lawyer.

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Akrivis Law Group, PLLC
Washington, DC

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This website aims to provide notes and commentary on international legal, business, and political developments in economic and other sanctions. It is intended solely for information and entertainment purposes and should in no way be construed as legal advice. Laws, regulations, and policies change from time to time so some information on older posts can very easily be dated. If you have any questions or are unclear on any of the subject matters addressed or discussed on this site, please consult a licensed legal professional. Views presented in the comments and outside links do not necessarily reflect those of the website author. All external links on this website to articles and documents are external and provided for informational purposes only. They have no relation to the author of this website unless specified otherwise.

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Copyright 2023 Farhad R. Alavi.

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