Legal experts have said Russian oligarchs, looking for new jurisdictions to store their wealth, may be turning towards Dubai and Israel due to a lack of other options, as they seek to avoid sanctions and exit Russia’s crumbling economy.
Speaking to City A.M. David Savage, head of financial crime at London law firm Stewarts, said Russian oligarchs will have been looking towards various offshore jurisdictions to store their cash, to prevent their assets from being frozen.
However, the sanctions expert said that of the jurisdictions on offer, Dubai may act as the safest haven for Russian wealth, due to the UAE’s decision not to sanction Russia, as well the high number of investment opportunities.
He noted that to a lesser extent Israel may also pose an attractive offer to Russians seeking to send their money offshore, due to the country’s strong economy and its close proximity to Russia.
Savage explained that Russian oligarchs seeking to shift their wealth offshore will be looking for a “non-EU, non-NATO aligned country,” that has not yet sanctioned Russia.
However, he noted that as of today, the majority of the world’s most economically developed countries have now imposed sanctions on Russia, including almost every European country, as well as the US, Canada, Australia, New Zealand and Japan.
Savage notes that for oligarchs looking to hide their wealth, even the traditional offshore havens are now off limits, as the UK’s sanctions regime also extends to Britain’s overseas territories, including the Cayman Islands, the British Virgin Islands, and the Turks & Caicos, which have built fortunes out of offering the global super-rich places to hide their money.
As such, the list of potential havens is limited. At the moment, the only economically developed countries that have not yet sanctioned Russia are Israel, the UAE, and South Korea.
“It’s slim pickings,” Savage said, as he noted that rich Russians may also be looking towards countries such as India and China to escape Russia’s crumbling economy.
Nonetheless, for most Russian oligarchs, Israel and the UAE are the obvious choices, due to the fact that both countries are located relatively close to Russia, compared to Asia’s biggest economies
Both Israel and Dubai are also attractive due to having thriving property markets and offer abundant investment opportunities.
Furthermore, a number of high profile oligarchs – including sanctioned Russian billionaire Roman Abramovich – have strong links to Israel and hold Israeli citizenship, while the UAE’s relative openness to high net worth individuals (HNWIs) also makes it an attractive destination.
Meanwhile, the UK has sought to ensure Russian oligarchs are not able to plough their cash into cryptocurrencies, by seeking to make clear that sanctions also apply to crypto.
Savage noted that volatility associated with cryptocurrencies may also put off Russian oligarchs from investing, as he argued those seeking to avoid being hit are likely looking for safer stores of money.
All in all, the lawyer noted that the stability of the UK system is what made London particularly attractive to Russian oligarchs in the first place, as he suggested oligarchs may now be looking for a new “Londongrad” in which to store wealth in the future.