The UAE is home to a thriving trade in financial secrecy. It offers shell companies that mask their real owners’ identities; dozens of internal free-trade zones that provide even more shadows for them to hide in; and a regulatory system known for what anti-corruption advocates call its “ask-no-questions, see-no-evil approach” to dealing with money tied to gold smuggling, arms trafficking and other crimes.

“The UAE provides secrecy, complexity and control,” Graham Barrow, a money laundering expert and co-host of The Dark Money Files podcast, told ICIJ. “It’s a perfect storm. An invitation to criminals to make the most of it.”

According to the International Consortium of Investigative Journalists, members of the six royal families that govern the seven emirates have a hand in almost every business activity in the UAE — as landlords of office towers and other properties, as owners of major corporations, as silent partners who take a share of the profits in other enterprises and as public officials overseeing sovereign funds and government-owned businesses. And, in turn, the emirates’ rulers decide who will serve as regulators overseeing businesses that they and their families may profit from.

The more than 11.9 million files in the Pandora Papers include some 190,000 confidential files from SFM Corporate Services, a UAE-based firm that has billed itself as “the World’s #1 Offshore Company Formation Provider.” SFM is one of thousands of firms in the Emirates that help clients incorporate companies, including hard-to-track companies for people living and doing business outside of the UAE. These company formation providers are part of a global web of lawyers, accountants and other operatives who make the offshore financial system possible.

ICIJ’s review identified the owners of at least 2,977 companies in the UAE, the British Virgin Islands and other offshore financial centres that were incorporated with SFM’s help or received other services from SFM. The owners of these companies include the Belgian gold tycoon, the internet mogul, the dark web impressario and more than 20 other people accused of financial crimes and other wrongdoing around the world, ICIJ research found.

SFM said in a statement that it operates in a manner that is “absolutely legal in every aspect. SFM abides by the applicable laws and regulations in every jurisdiction it operates in.”

For several years, SFM operated out of an office on 16th floor of the H Hotel tower at 1 Sheikh Zayed Road, a building that ICIJ research indicates is owned by Sheikh Hazza bin Zayed Al Nahyan, the UAE’s former national security adviser and brother of Sheikh Mohammed bin Zayed, the crown prince of the emirate of Abu Dhabi and next in line to become UAE president.

Sheikh Hazza did not reply to questions that ICIJ sent to him via the UAE Embassy in Washington and the Abu Dhabi Executive Council media office.

Along with internal records from SFM, the Pandora Papers include tens of thousands of additional files related to the UAE, including documents from Seychelles and other jurisdictions that reveal offshore holdings of at least 35 members of the UAE’s ruling families.

Heavyweight Emirati royals with offshore holdings revealed in the data include Sheikh Hazza; his successor as national security adviser, his brother Sheikh Tahnoon bin Zayed; and the UAE’s prime minister and ruler of Dubai, Sheikh Mohammed bin Rashid Al Maktoum.

The files show that the prime minister is connected — via two companies in the British Virgin Islands — to the founder of Dark Matter, a UAE-based cybersecurity firm that has been accused of spying on human rights activists and government officials in multiple countries.

In September, three former senior managers at Dark Matter, all former American military and intelligence personnel, admitted in a deferred-prosecution agreement with U.S. authorities that they had helped hack mobile phones and computers around the world. Dark Matter has not been charged. It has acknowledged working closely with the UAE government but denies it has engaged in hacking.

The leaked records also show that Sheikh Tahnoon, the UAE security adviser, owned a British Virgin Islands company using unregistered “bearer shares,” which provide deep levels of secrecy because they are owned by whoever physically holds the share certificates. Long associated with financial misconduct, bearer shares have been banned in many jurisdictions.

Sheikh Tahnoon became embroiled this year in a U.S. political scandal involving the chairman of President Donald Trump’s 2016 inaugural committee, the American billionaire Thomas Barrack. A U.S. indictment charges that Barrack acted as an unregistered agent for the UAE by providing help to high-level Emiratis — including an Emirati official widely understood to be Sheikh Tahnoon — as they sought to covertly sway Trump administration policies. Barrack has pleaded not guilty.

Sheikh Mohammed and Sheikh Tahnoon did not respond to questions. Other Emirati royals, the UAE embassy in Washington and media offices for the Dubai and Abu Dhabi governments also did not respond to ICIJ’s questions.

Concerns about the UAE’s role as a centre for financial crime have been around for decades. In the 1990s, the Bank of Credit and Commerce International — a global institution that was majority owned by the Abu Dhabi royal family and the Abu Dhabi government — was implicated in bribery, money laundering, sex trafficking and terrorism financing, earning it the derisive moniker “Bank of Crooks and Criminals International.”

The UAE’s status within the world’s offshore financial secrecy system has grown markedly over the past decade. In 2009, Tax Justice Network, an anti-corruption research and advocacy group, listed Dubai at No. 31 in its ranking of the most important offshore jurisdictions — based on their levels of financial secrecy and the scale of their offshore financial activities. By 2020, the UAE ranked No. 10 on the group’s Financial Secrecy Index.

One thing that sets the Emirates apart from other secrecy havens is that the U.S considers the UAE a critical military ally and a bulwark against terrorism in the Middle East.

Because of the role the UAE plays in American national security and economic interests in the region, the U.S. hasn’t put the kind of pressure on the Emirates that it has on Switzerland, the British Virgin Islands and other offshore havens, according to Jodi Vittori, an expert on terrorism financing and a nonresident fellow with the Carnegie Endowment for International Peace. (IPA Service)