Rich families from the middle east often bank their money in places like Switzerland or Singapore, much to the dismay of wealth managers based in the region, who would prefer to manage that cash locally.
Middle Eastern governments, hoping to develop a domestic financial services sector, have an interest in bringing the money home. That is why financial zones in Dubai and Abu Dhabi, to take two examples, have set up funds regimes designed to attract the wealth of locals (see cover story).
These efforts have been helped by an international drive to combat tax evasion and promote transparency. Thanks to regulation such as the Common Reporting Standard, and to leaks such as the recent Paradise Papers, bank secrecy in offshore wealth centres is no longer guaranteed.
For Middle Eastern wealth managers, these changes are positive.
But, there are challenges. The Gulf region seems less stable today than it has in years. Qatar is diplomatically isolated and subject to an embargo (see pages 14-16) and Saudi Arabia has begun an assault on corruption that some are calling a purge. The Saudi authorities have reportedly leant on banks in the UAE to give up account details of individuals who have been detained as part of the investigation.
In this volatile environment, some rich Middle Eastern citizens will insist on keeping a portion of their wealth overseas as a sort of insurance policy. For the region’s wealth managers, that is a limit to growth.
George Mitton, Editor, Funds Global MENA
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