Loopholes in background checks for UAE Golden Visas raise concerns globally

The United Arab Emirates Business and Golden Visa Programmes have been facing challenges due to the loopholes in their due diligence procedures. The programme is widely popular among wealthy individuals which has surged the number of applications and raised concerns related to the background checks of the applicants.

Press Editorials- a Brussels based organization reported that the UAE golden visa programme has recently been in discussions due to the quality of their vetting procedures. The sudden hike in the number of people receiving golden visas has put these programmes on the radar of the Organization for Economic Co-operation and Development (OECD) and Financial Action Task Force (FATF).

The scrutinization of the conduct of the programme has been initiated by the OECD and FATF, as the reports suggested that the majority of the applicants have been given visas without robust background checks. As per the Press Editorials, several individuals with criminal backgrounds had also managed to obtain the Golden Visas, putting the programmes at risk.

The reports of the cases of high-stake money laundering taking place through UAE have further intensified the discussions as the international community showcased their displeasure with their conduct. In addition to that, the sudden surge in the number of applicants obtaining UAE golden visas has also marked the growing global interest in the programme.

The statistics in the public domain outlined that over 150,000 golden visas have been issued to people from different countries and territories by November 2023. The entire scenario has led the OECS and FATF to come into action, which could serve as a risk to the reputation of the destination for investment and residency along with its standing on the global stage.

As per the Press Editorials, several experts have assessed the issue and noted that the problem could be resolved only with the implementation of multi-layered due diligence on all applicants. The applications must undergo an independent vetting process despite the strict rules and regulations of the UAE.

Experts suggested that the UAE must conduct robust background checks, which should include on-ground and offline checks of the applicants, as well as the review of their financial documents and source of income. The region has also been referred to adopt similar procedures used by other famous programmes of this sort.

The UAE must authorise independent third party agencies to conduct the vetting process along with their in-government checks. Experts mentioned that the proactive measures must be put in place to mitigate the loopholes the due diliegence processes, otherwise it could harm the creadability and integrity of the programmes.

Due Diligence is defined as the process of conducting robust vetting of one’s identiy, including the cheking of the 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 addition to that, there are several countries that authorize international entities to cross-examine their applicants, aiming to ensure their reputable backgrounds. The procedure is also used to identify individuals with black, grey lists issued by the OECD.

Reasons for UAE to start multi-layered due diligence 

The European Union, the United Kingdom, and the United States have been assessing the Goldern Visa Programmes over the years in order to mitigate cases of misconduct and other crimes. They have drawn their attention toward these programmes after some of the individuals with the “red corner” notice haves been managed to gain golden visas in some countries.

These individuals have applied for visas to escape any criminal proceedings in their home countries, raising questions over the integrity of the programmes. Due to this, the experts have asked the UAE to adopt multi-layered due diligence and engage with third-party due diligence agencies to run background checks.

Moreover, such programs have also served as an easy way for people with questionable backgrounds to gain entry into certain countries and territories in some cases. Such applicants obtaining Golden Visas often take advantage of several benefits such as financial freedom and tax exemptions in Dubai.

The free zone of UAE also provides a regulatory environment that can be exploited for money laundering and other illicit activities. The Financial Action Task Force has also suggested improving oversight in these zones, particularly in sectors like banking, real estate, and the precious metals trade.

The European Union also monitored these developments and outlined that there is a need for the UAE to enhance background checks. The EU emphasised the need for collaborative efforts in order to enhance regulatory frameworks, including dialogue and support in areas such as counterterrorism and AML practices.

As per the reports, the respone of the UAE to criticisms has also featured the enhancement of the collaboration and work closely with global standards. The region has also adopted measures to deal with money laundering (AML) and countering the financing of terrorism (CFT).