The United Arab Emirates Business and Golden Visa Programmes are gaining popularity among wealthy individuals from across the globe. With a record number of people receiving golden visas recently, concerns are being raised about the background checks of such applicants.
Reportedly, the UAE golden visa programme is also under the radar of the Organization for Economic Co-operation and Development (OECD) and Financial Action Task Force (FATF). It is monitoring the conduct of the programme, particularly concerning the vetting procedures as majority of the applications are processed without background checks.
The scrutiny started as reports surfaced suggesting that individuals with criminal backgrounds had managed to obtain the Golden Visas. The reports have raised eyebrows within the international community, as international partners appear to be upset over allegations of high stake money laundering taking place through UAE.
Notably, the United Arab Emirates Visa programme is experiencing a surge with a notable increase in applications every year.
As per information available in the public domain, by November 2023 alone, over 150,000 golden visas had been issued to people from different countries and territories. The numbers reflect a growing global interest in the UAE Golden Visa.
The review of the programme by the OECD and FATF has the potential to affect the Middle Eastern country’s standing on the global stage and its reputation as a destination for investment and residency.
Experts believe that despite being a country with stricter rules and regulations, the UAE must also do multi-layered due diligence on all applicants for both business and golden visas incorporating independent vetting procedures.
The robust background checks must also include on-ground and offline checks of the applicants, as well as the review of their financial documents, and source of income. Similar to some other famous programmes of this sort, the UAE must also adopt similar procedures and authorise independent third party agencies to conduct the checks along with their in-government checks.
The UAE must take proactive measures to address any loopholes in its vetting processes, reaffirming its commitment to transparency and accountability. Experts also say that failure to do so could jeopardize the programme’s credibility and its ability to attract high-quality applicants in the future.
What is due diligence?
Due diligence is a thorough scrutiny of one’s identity, this includes checking a person’s birth certificate, place of residence, source of income, source of funds in the bank account, checking references, and police and criminal records among several other types of on-ground and off-ground checks.
In some cases, certain countries offering similar programmes also engage international entities to cross-examine their applicants to ensure that no such individual with an illicit background acquires a golden visa, residency or citizenship.
Notably, due diligence is also required to identify any individuals with black, grey lists issued by the OECD.
Why UAE should start multi-layered due diligence?
Over the years, Golden Visa Programmes across the globe have met with critical scrutiny by the European Union, the United Kingdom as well as the United States. One of the significant reasons remains the efforts of illicit individuals to succeed in forging their identities and getting away with their misconducts.
In some cases with other jurisdictions, people with “red corner” notices issued to their names managed to get golden visas in some countries and absconded from their home countries to escape any criminal proceedings. UAE shall also take assistance from third-party due diligence agencies, and engage them to run background checks.
Similar programmes become an easy path for people with questionable backgrounds to gain entry into certain countries and territories. A lack of due diligence makes it much easier for these people to get away with their activities.
Exploitation of Financial Freedom
The recipients of such Golden Visa Schemes often take advantage of the financial freedom and tax exemptions in Dubai, and often tend to exploit it.
UAE’s numerous free zones offer unique regulatory environments that, while driving economic growth, also present distinct challenges in terms of financial oversight. These zones are known for their less stringent regulatory requirements, which can be exploited for money laundering and other illicit activities.
The Financial Action Task Force (FATF) has also highlighted the need for improved oversight in these zones, particularly in sectors like banking, real estate, and the precious metals trade.
European Union Scrutiny
While the EU monitors these developments, it has also emphasized the need for the UAE to deepen its understanding of the associated risks at both national and emirate levels. The EU’s approach appears to be geared more towards collaborative efforts in enhancing regulatory frameworks and less towards punitive measures. This includes dialogue and support in areas such as counterterrorism and AML practices.
International Response and Collaboration
Internationally, the UAE has been responsive to criticisms by enhancing collaborations and aligning more closely with global standards. For instance, it has made strides in strengthening laws related to anti-money laundering (AML) and countering the financing of terrorism (CFT). The UAE’s efforts include improving the operational capacity of its Financial Intelligence Unit and increasing international legal cooperation.
