Global Probes Expose UAE’s Breach of Sanctions on Russia and Iran

International investigations have revealed that the UAE has violated international sanctions imposed on Russia and Iran and helped the two countries bypass them in activities worth billions of dollars and euros.

Reuters reported that around $2.3 billion in dollar and euro banknotes have been shipped to Russia since the U.S. and EU imposed currency export bans in March 2022 following Russia’s invasion of Ukraine.

The newly revealed figures indicate that Russia has successfully circumvented sanctions restricting cash imports, suggesting that dollars and euros continue to be valuable for trade and travel despite Moscow’s efforts to decrease reliance on hard currencies.

Customs data, sourced from a commercial provider that tracks and gathers information, reveals that cash was transferred to Russia from countries such as the UAE and Turkey, which have not imposed trade restrictions on Russia. The origin country for over half of the total amount, however, was not specified in the records.

In December, the U.S. government warned that it would impose sanctions on financial institutions aiding Russia in bypassing existing sanctions. Throughout 2023 and 2024, sanctions were also enforced on companies from third-party countries.

The Chinese yuan has overtaken the dollar to become the most widely traded foreign currency in Moscow, despite persistent major payment problems. Dmitry Polevoy, head of the investment department at Astra Asset Management in Russia, said many Russians still want to have foreign currency in cash for foreign trips as well as small imports and domestic savings.

“For individuals, the dollar remains a reliable currency,” Polevoy said.

Russia began labeling the dollar and euro as “toxic” in 2022 after sweeping sanctions were imposed, severely limiting its access to the global financial system and disrupting payments and trade. Approximately $300 billion of Russia’s foreign reserves have been frozen in Europe.

A European Commission spokesman declined to comment on specific sanctions cases but noted that the EU contacts third countries when it suspects sanctions are being circumvented.

The customs records cover the period from March 2022 to December 2023, and Reuters was unable to access more recent data.

The documents revealed a sharp increase in cash imports just before the invasion. Between November 2021 and February 2022, $18.9 billion in dollar and euro banknotes were brought into Russia, compared to just $17 million in the previous four months.

Daniel Pickard, head of the international trade and national security practice at U.S. law firm Buchanan Ingersoll & Rowney, said the surge in pre-invasion shipments suggested that some Russians wanted to protect themselves from potential sanctions.

The data certainly understates the actual cash outflows, Pickard added.

Following the invasion of Ukraine, the Russian central bank swiftly reduced individual foreign currency withdrawals in an effort to stabilize the weakened ruble.

According to the data, just $98 million in dollar and euro banknotes left Russia between February 2022 and the end of 2023.

In contrast, foreign currency inflows were significantly higher. The largest declarer of foreign currency was Aero-Trade, a relatively obscure company that provides duty-free shopping services at airports and on flights. During this period, Aero-Trade declared approximately $1.5 billion in banknotes.

AeroTrade registered 73 shipments, each valued at $20 million or euros, all of which were processed at Moscow’s Domodedovo Airport, an international hub close to the company’s headquarters. In customs declarations, these shipments were described as revenues or proceeds from in-flight trade.

In most cases, AeroTrade was listed solely as the declarant, the entity responsible for preparing and submitting customs documents.

Customs records indicate that one shipment of 20 million euros handled by AeroTrade in February last year was imported by Yves Rocher Vostok, a subsidiary of the French cosmetics group Yves Rocher, which continues to operate dozens of stores in Russia. The data did not disclose the country of origin or the supplier’s name.

The Rocher Group, the parent company of Yves Rocher in France, stated that neither it nor Yves Rocher Vostok had any involvement with AeroTrade or requested the transfer.

According to customs records and an informed source, over a quarter of the $2.27 billion in banknotes was imported by banks, primarily as payment for precious metals.

Between March 2022 and December 2023, several Russian banks received $580 million in cash from abroad and exported a similar amount in precious metals. The records indicate that much of the gold or silver was sent to the companies that supplied the banknotes.

For example, Russia’s Vitabank imported $64.8 million in banknotes from Turkish gold trading company Dimas Kuyumculuk in 2022 and 2023. During the same period, Vitabank exported $59.5 million worth of gold and silver to the Turkish company.

A person familiar with Dimas’ operations confirmed that the company was involved in a series of cash-for-gold transactions involving Vitabank and two other Russian banks between March 2022 and September 2023.

Sending banknotes from the UAE to Russia was the only solution Dimas found to complete long-term contracts signed before Western sanctions came into effect with Russian gold suppliers, while complying with Turkish and international regulations on cross-border payments, the person said.

It was no longer possible to settle invoices by traditional bank transfer, he added, since sanctions have effectively cut Russia off from the Western financial system.

The source explained that abandoning existing agreements would have exposed Dimas Kuyumculuk to financial penalties and reputational damage. The Turkish gold trading company has avoided dealings with entities subject to Western sanctions and adheres strictly to all national and international compliance procedures.

In the third quarter of last year, following the expiration of all pre-war contracts with Russian companies, Dimas ceased these reciprocal trade activities.

Other significant importers of cash include entities connected to Rostec, the state-owned military-industrial conglomerate.

Smuggling Iranian Oil Under UAE Names

Iran has been sending small shipments of crude oil to new destinations such as Bangladesh and Oman, according to shipping sources and data. This move reflects Tehran’s efforts to sustain output levels close to five-year highs.

Oil sales are crucial to Iran’s economy, and the country is exploring ways to bypass U.S. sanctions on its crude exports, which were reimposed by former President Donald Trump in 2018 after the U.S. withdrew from the nuclear deal.

Exempt from OPEC production quotas, Iran aims to maximize both its output and exports.

Oil Minister Javad Owji stated in July that Iran exports crude oil to 17 countries, including some in Europe, as reported by the semi-official Mehr news agency. These details could not be independently verified.

Claire Jungmann from United Against Nuclear Iran, a U.S.-based organization, informed Reuters that, according to shipping data, one of the new trade routes involved the vessel Golden Eagle, which was observed near the Bangladeshi port of Chittagong earlier this year. This vessel had received oil from another ship that had loaded the crude at Iran’s Kharg Island.

The Golden Eagle unloaded parts of its cargo onto smaller tankers in ship-to-ship transfers around Chittagong in April, Jungmann said, according to satellite data her group collects of tanker movements linked to Iran.

A second source who independently tracks oil exports confirmed the shipment to Bangladesh.

An official from Bangladesh’s state-owned oil company, which operates the country’s main refinery, stated that the company had not purchased the cargo and finding the actual buyer was challenging.

OPEC data indicates that Tehran’s oil production has exceeded 3.2 million barrels per day this year, the highest level since 2018. This increase marks one of the largest boosts in OPEC output for 2023, despite ongoing U.S. sanctions.

Iranian crude exports have reached new highs this year, with the period from March to May being the strongest three-month stretch since mid-2018, according to Petro-Logistics, a Geneva-based tracking firm.

However, Virginie Pannik of Petro-Logistics noted that “volumes seem to have plateaued now.”

Shipping sources report that at least eight oil cargoes, primarily from Iran, are en route to Syria, with some already unloaded. However, these shipments are lower than the peak levels observed in previous years, as Iran adjusts its export destinations.

Claire Jungmann, based on her organization’s export data analysis, noted that Iranian oil deliveries to Syria averaged 57,190 barrels per day (bpd) in 2024, compared to 147,000 bpd in 2022.

Additionally, Jungmann cited shipping data showing that a separate tanker delivered a cargo believed to be Iranian oil to the Omani port of Sohar in June. This shipment involved a ship-to-ship transfer from another vessel that had loaded the oil at Iran’s Kharg Island earlier this year.

The ship-tracking source confirmed the shipment had arrived in Sohar.

Iran has also started shipping cargoes to the northeastern Chinese port of Dalian, adding a new destination for its oil.

Tehran’s exports to China, which does not recognize U.S. sanctions, have been flowing to the port, helping to keep the country’s oil imports near record levels.

Traders are relabeling Iranian oil heading to China as coming from other sources such as Malaysia, Oman or the United Arab Emirates, tanker trackers and traders say.

Iran’s oil exports have now peaked and have been steady at around 1.5 million barrels per day since February, said Homayoun Falakshahi, senior crude analyst at Kpler.