The West has shut Russia out of many American and European banks in response to the invasion of Ukraine.

One way wealthy and middle-class Russians, and businessmen close to Russian President Vladimir Putin, have circumvented the unprecedented sanctions Russia faces has been to send their money to the United Arab Emirates (UAE), the uberwealthy federation of seven semiautonomous, autocratic petro-states in the Persian Gulf that has chosen not to participate in US-led sanctions.

For years, sanctioned businessmen close to Putin have been investing big in the UAE’s luxury real estate, per leaked databases. In recent months, it has become a yacht sanctuary. More Russian private jets than ever are flying from Moscow to the UAE, according to the New York Times, and Russian billionaire Roman Abramovich parked his Dreamliner in Dubai. The Emirati national airlines, meanwhile, is one of the few that continues direct service from Russia. (The Emirates is also a longtime Russian mob hub and a longtime Russian tourist hub.)

“We can see where their yachts go, we can see where their aircraft are going, and it’s all going there,” said Jodi Vittori, an anti-corruption expert at the Carnegie Endowment for International Peace. “That’s just a one-stop shop for illicit finance.”

Dirty money from Putin’s inner circle has also flowed in London’s luxury real estate market and into the United Kingdom’s offshore economy, among other less-regulated global cities and markets, like art and cryptocurrency, that provide the shield of anonymity.

But this is dark money going into a dirty money hub. Though watchdog groups have tried to track the dollar amounts being sequestered in the Emirates, the secretive nature of transfers and that some are from lesser-known Russians who are not on sanctions lists makes the shape and scale of it difficult to map.

“The UAE is a big hole in the bucket,” Karen Greenaway, a former FBI agent, explained. “The movement of money — and we can’t see it — allows Russia to continue to run its economy and its war economy.”

Two former Treasury officials with experience working in the Middle East told me that’s a major problem. It’s among the reasons why, in March, the Financial Action Task Force, an intergovernmental standard-setting body based in Paris, gray-listed the UAE. That global watch list identifies countries with known money laundering and illicit financing. Now, international financial institutions that operate there need to monitor transactions more carefully. Those risks could bruise the UAE’s robust economy. In response, experts told me that the UAE is trying to implement reforms, to get off the gray list and to improve its standing. A spokesperson for the UAE’s anti-money laundering and anti-terrorism financing office said in a statement, “The UAE has already adopted a series of tangible measures to expand engagement with the Financial Action Task Force (FATF) and enact effective national reforms.”

But as Russians flee to the UAE and send their money there, the Biden administration is only drawing the Emirati leadership closer to Washington. During his Middle East trip in July, President Joe Biden invited Emirati President Mohammed bin Zayed al-Nahyan to the Oval Office. So how is it that the UAE is able to get away with being a destination of choice for Russian cash while maintaining such a tight relationship with the US?

How the Emirati system allows this to happen

The Emirates is a global financial center that is built on freewheeling regulations. “Dubai basically started out as a pirate cove,” Sarah Chayes, author of the book Thieves of State: Why Corruption Threatens Global Security, said. Several dozen financial free zones and free trade zones provide havens for foreign money to avoid taxes, and the country’s loose regulations make it a particularly fruitful place for expats and foreign companies. There is no income tax; value-added tax was only introduced in 2018; and its first corporate tax regime is set for 2023.

Dubai has become home to illicit finance and other valuables like gold, art, and, more recently, crypto. Chayes recalled seeing what appeared to be heavy suitcases full of cash arriving in the UAE’s airport from Afghanistan when she was working as an adviser to the Pentagon, and later learned that millions in cash was coming into the UAE from Afghanistan per year.

It’s a center for American and international companies, often their base and port of call for Middle East business. There’s also the golden visa program, where luxury property buyers can get extended Emirati residence permits (which are short of impossible for international laborers to receive).

Christopher Pike/Bloomberg via Getty Images

A former Treasury official, speaking on the condition of anonymity, explained that the UAE being a conduit for sanctions evasion is nothing new. “The laissez-faire attitude has benefited them economically,” they said. “It’s something that’s pretty openly notorious.” It’s a known risk that strategic consultants advise clients on.

And there are indicators that UAE officials are ignoring corruption. US financial officials file millions of suspicious activity reports annually as they monitor money flows within banking institutions, for example. But Lakshmi Kumar of Global Financial Integrity has noted that the UAE’s free zones, for example, post a suspiciously low number of such reports. She thinks the UAE is not monitoring suspicious activity in a comparable way to similarly sized economies.

“The lack of numbers can tell an evocative and effective story,” she told me. “The reason [the Emirati economy is] allowed to have that freedom and comfort to operate is because there is no stick on the other end.”

The enforcement issue may have to do with leadership. The UAE doesn’t have democratic institutions or independent agencies, and many courts, law enforcement, and executive agencies are run by members of the royal family. “I think that ultimately one other reason why the Emirates really aren’t interested in doing anything about Russian oligarchs is because they have their own oligarchs,” Greenaway said.

Dissent is not tolerated, prison sentences are harsh, and high-tech surveillance is widespread. As Vittori told me, “This is one of the world’s most significant surveillance states as far as we can tell.”

Despite the apparent corruption and the UAE’s implicit support to one of the US’s chief adversaries, the Emirates holds a prominent position in Washington. Experts told me what the UAE brings to bear — in terms of cooperation on counterterrorism and its 2020 accord with Israel after decades without diplomatic relations — is just too important for US policymakers to prioritize accountability on other issues.

“The US has helped bring the UAE and Israel and its neighbors together, but we want to make sure that the US stays at the table,” Michael Greenwald, a former senior Treasury official, told me.

It’s also worth noting that it took more than a decade for the UAE to deal with terrorist financing. That suggests that, even absent the political will needed, it could take time to build up an infrastructure to monitor Russian dark money.

“The entire architecture built up against ISIS and al-Qaeda terrorists was not going to be successful in going after Russian oligarchs,” a former senior intelligence official, who spoke on the condition of anonymity, told me. “We built a door to stop horses from escaping, but now we have different animals altogether.”

What could the US do about Russian dirty money in the UAE?

The urgent need to stop corruption was a central tenet of a speech that senior Treasury official Elizabeth Rosenberg delivered to Arab bankers in February this year.

“Nearly every act of corruption flows through the formal financial system, the system we are all a part of, which means all of us have the ability — and the responsibility — to stop it,” she said. Much as the US clamped down on terrorist financing internationally after the September 11, 2001, attacks, she explained, the US would now focus on corruption. But two weeks later, Russia invaded Ukraine — and since then, the messaging has shifted.

UAE Presidential Court/Handout/Anadolu Agency via Getty Images

When Deputy Treasury Secretary Wally Adeyemo visited the United Arab Emirates and met with bankers in June, the word “corruption” was absent from his remarks. He did tell an Emirati newspaper, however, that he had raised the issue of Russians using the UAE financial sector in his meetings.

“I’m here today to thank those who have cooperated in this effort and to underscore the need for your vigilance and proactive action in combatting Russian sanctions evasion, including in the UAE,” Adeyemo told bankers. (An Emirati delegation visited Washington in early July to discuss cooperation.)

Nothing as strongly worded came out following President Joe Biden’s meeting with the UAE president during his recent Middle East trip. Russia did not appear in a US-UAE joint statement that came out of that conversation, but the document says, “President Biden recognized the UAE’s efforts to strengthen its policies and enforcement mechanisms in the fight against financial crimes and illicit money flows.” Earlier that day, a senior Biden administration official evaded a question on the UAE as a haven for Russian money and emphasized that the UAE voted on the right side of a United Nations General Assembly vote against Russia.

But the Biden administration recognizes that the UAE has become an alternate financial hub for sanctions-busters.

As Barbara Leaf, the State Department’s top Middle East diplomat who served as ambassador to the UAE from 2015 to 2017, put it in a recent congressional hearing, “As far as the UAE, I am not happy, I am not happy at all with the record at this point, and I plan to make this a priority, to drive to a better alignment, shall we say, of effort.”

The question then becomes: What would making it a priority look like?

After being gray-listed, the UAE’s Executive Office of Anti-Money Laundering and Counter Terrorism Finance promised to initiate new inspections of institutions, “with the aim of achieving full compliance with Financial Action Task Force (FATF)’s international standards.”

The gray-listing was a wake-up call, and Emirati financial authorities are more carefully monitoring daily financial transactions, according to a business consultant based in the Emirates, who would only speak anonymously. “The central bank is really cracking down,” they told me, “because senior financial officials here are actually worried about the reputation.”

“The UAE is actively building on the significant progress made to date,” the spokesperson for the anti-money laundering office said. “Looking ahead, the UAE will continue to develop its ability to detect, investigate and understand money laundering and terrorist financing, and advance financial crime compliance frameworks within the country and around the world.”

This is a start, but anticorruption experts seek a more systemic reckoning. The lack of political will on the Emirati side is the unanimous answer for why so little has been done to reform. And the lack of appetite on the US side helps explain why the US has not put pressure on the Emiratis.

Few countries in the Washington ecosystem have as influential boosters as the Emirates. On the UAE embassy’s social media, for example, former general and Trump administration Defense Secretary James Mattis touts how great the country is.

“The US will probably not take any serious steps to punish the UAE for this,” says Giorgio Cafiero of the consulting firm Gulf State Analytics. “Because the country has a very liberal veneer, and a narrative of being a tolerant country. It also is a country that does a lot of lobbying in Washington, for many reasons, the UAE escapes criticism in the US.”

In fact, the United Arab Emirates was the honored guest of the Smithsonian Folklife Festival this year on Washington’s National Mall. The country is so good at wins, while flouting the rules.