Financial Paradise Lost?

The second-largest bank in the United Arab Emirates, NBD, has decided to block investment accounts from Russians, including those with residency in the UAE, citing pressure from EU depositories. This news comes as, only days prior, leaked US intelligence expressed concern that its ally was getting too close to the Kremlin.

After the invasion of Ukraine, the UAE welcomed a massive influx of middle-class and elite Russians moving to the country and investing in its real estate. Recently, leaked US classified documents detailed Russian intelligence officials bragging about convincing the Emiratis to conspire against the US and the UK. 

Soon after these developments, Russians with accounts in NBD began receiving letters announcing that their assets would be transferred to separate accounts and that they could not withdraw their funds. The measure only makes exceptions for EU-, European Economic Area-, or Swiss-Russian residents.

NBD cites its need to comply with the requirements of EU depositories that it works with, Clearstream and Euroclear, as the reason for its actions. Both banks suspended operations with the Russian National Settlement Depository shortly after the war in Ukraine started. However, after introducing restrictions for Russian citizens, European banks, including Euroclear, suggested they transfer their assets to a "friendly jurisdiction."

No other Emirati banks have announced similar measures.