UAE ups anti-money laundering scrutiny with new real estate regulations

Three UAE government departments are to work together to enforce new reporting requirements on payments for real estate transactions including using virtual assets. 

In a statement issued by the WAM news agency, the Ministry of Economy (MoE) and the Ministry of Justice (MoJ), in partnership with the UAE Financial Intelligence Unit (FIU) said that payments for real estate transactions in the UAE through virtual assets, sale of virtual assets, or cash amounts above AED55,000 will now be subjected to additional reporting to authorities.

"The UAE is one of the first countries to implement such a mechanism for real estate transactions involving virtual assets, marking the latest example of the UAE's sustainable and evolving approach to the global fight against money laundering and terrorist financing. 

"The decision was made following multiple meetings and discussions amongst the MoE, MoJ, FIU, and other competent authorities in the UAE, including the Executive Office for Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT)", the statement said. 

All real estate agents, brokers, and law firms will have to file reports to the FIU for purchase and sale transactions of freehold real estate properties in the UAE that include any of the below three methods of payment, whether for a portion or the entirety of the property value: 
1. Single or multiple cash payment(s) equal to or above AED 55,000 
2. Payments that include the use of a virtual asset 
3. Payments where the fund(s) used in the transaction were derived from a virtual asset 

The reporting mechanism requires real estate agents, brokers, and law firms to obtain and record the identification documents of the parties to the applicable transaction, among other relevant documents related to the transaction. The rules apply to both individuals and corporate entities that are parties to the above real estate transactions.

The relevant private sector entities have been informed about the specific requirements in regulatory circulators issued by the MoE and MoJ, the statement further said.  

UAE authorities have also collaborated to host three separate workshops with real estate agents and brokers, as well as law firms, helping to guide them through the new reporting requirements and enhance their familiarisation with the FIU's goAML system.

The MoE and MoJ highlighted that they "apply a proactive, risk-based supervisory approach in line with UAE legislation and the international standards set by the Financial Action Task Force (FATF)".

Abdulla bin Touq Al Marri, Minister of Economy, said "the real estate sector is one of the key sectors for investment and a vital pillar of the country's economic development". 

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."

He added, "By working closely together to provide a clear regulatory framework and effective reporting tools, the UAE is able to take quick action to protect the economy from known and emerging risks."

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."