Money Laundering in Real Estate in the UAE

The real estate market is one of the non-financial sectors in the UAE that is most vulnerable to money laundering. Since there has historically been a lack of transparency and comprehension of AML rules, money laundering concerns have multiplied and gotten more prominent along with the industry’s expansion. As a result, fraudsters continue to be drawn to using real estate for money laundering.

New reporting requirements for specific real estate transactions carried out in the UAE have been published by the Ministries of Economy (MoE), Justice (MoJ), and Financial Intelligence Unit (FIU) of the UAE. The UAE is one of the first countries to implement such a mechanism for real estate transactions involving virtual assets.

The MoE, MoJ, FIU, and other authorities, including the Executive Office for Anti-Money Laundering (AML) and Countering the Financing of Terrorism, participated in numerous meetings and discussions that led to the decision (CFT).

New reporting requirements for Real Estate transactions

As a result of the new rules, all real estate brokers, attorneys, and agents will be required to submit reports to the FIU for any purchase or sale of freehold real estate properties in the United Arab Emirates that includes any of the following three methods of payment, whether for all or part of the property’s value:

  • Single or multiple cash payment(s) equal to or above Dhs55,000
  • Payments that include the use of a virtual asset
  • Payments where the fund(s) used in the transaction were derived from a virtual asset

Real estate agents, brokers, and law offices must obtain and record the identification documents of the parties to the applicable transaction and any other pertinent transaction-related documents as part of the reporting mechanism.

The parties to the aforementioned real estate transactions, whether natural persons or legal entities are subject to the rules.

Regulatory circulators released by the MoE and MoJ informed the pertinent private sector entities of the precise requirements. To further assure readiness, UAE authorities worked together to hold three different seminars with real estate agents, brokers, and legal firms. These sessions assisted in educating attendees about the new reporting requirements and enhancing their familiarity with the FIU’s goAML system.

Ali Faisal Ba’Alawi, head of the UAE FIU, said: “These new measures will improve the quality of financial intelligence available to the FIU and will be used to trace the suspicious movement of funds or investments as part of our fight against money laundering and terrorism financing.

“Importantly, the requirements further strengthen the stability and integrity of the UAE’s real estate sector and provides all stakeholders with greater transparency in a sector that is a key contributor to the UAE’s economy.”

Abdulla bin Touq Al Marri, Minister of Economy, said the adoption of the highest standards of transparency and governance, in addition to the necessary regulations to ensure economic and financial stability while combating malpractice within the business community, are priorities of the Ministry of Economy and its partners in local, federal, and private sector entities.

Abdullah Sultan Bin Awwad Al Nuaimi, Minister of Justice, said, “The introduction of reporting rules for certain transactions in the real estate sector is another example of how the UAE is coordinating across the government and with the private sector to strengthen the national framework for anti-money laundering and countering the financing of terrorism.”

The Central Bank of the UAE recently released updated guidelines on AML/CFT for licensed financial institutions (LFIs) about the risks associated with payments and the preventive measures that LFIs should use to mitigate such risks.