UAE issues new reporting rules for real estate transactions to combat money laundering

Transactions made with $15,000 or more in cash have to be reported to country’s Financial Intelligence Unit

Real estate agents, brokers and law firms will be required to file reports to the Financial Intelligence Unit on certain purchase and sale transactions. Timo Volz / Unsplash
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The UAE has introduced new reporting requirements for “certain real estate transactions” conducted in the country to fight money laundering and terrorism financing.

As part of the latest directive, all real estate agents, brokers and law firms are required to file reports to the Financial Intelligence Unit on the purchase and sale transactions of freehold properties that involve three methods of payment, whether for a portion or the entirety of the property value.

These include single or multiple cash payments equal to or above Dh55,000 ($14,976), payments involving the use of a virtual asset, and payments and where the funds used in the transaction were derived from a virtual asset, state-news agency Wam reported on Monday.

“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 report read.

“The rules apply to both individuals and corporate entities that are parties to the above real estate transactions.”

The decision was made following several meetings and discussions among the Ministry of Economy, the Ministry of Justice, the FIU and other relevant authorities in the UAE, including the Executive Office of Anti-Money Laundering and Countering the Financing of Terrorism.

“The real estate sector is one of the key sectors for investment and a vital pillar of the country’s economic development,” said Abdulla bin Touq, Minister of Economy.

"Therefore … the UAE is keen to adopt procedures and regulations that promote sound financial practices in the sector, in line with the highest international standards."

The new requirements, which apply to both the real estate and legal sectors, aim to “ensure the development of their regulatory frameworks, leaving little or no room for manipulation or illegal practices that could negatively impact the work environment and the economy and investment within these sectors”, Mr bin Touq said.

The UAE has strict laws to prevent money laundering as well as the financing of terrorism. The country has consistently issued regulations over the years to clamp down on financial crime.

Last year, the country established the Executive Office of Anti-Money Laundering and Countering the Financing of Terrorism, an agency to deal with money launderers, organisations and people suspected of financing terrorists and organised crime.

In November 2020, the Ministry of Economy set up a new anti-money laundering department to ensure that all non-financial businesses and professionals comply with local laws.

The Central Bank of the UAE has also been penalising exchange houses operating in the country for failing to achieve the appropriate levels of compliance with anti-money laundering regulations.

"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,” said Ali Ba'Alawi, head of the FIU.

The new regulations come as the UAE’s property sector continues to recover from the impact of the coronavirus pandemic. They also follow government initiatives such as residency permits for retirees and remote workers, as well as the expansion of the 10-year golden visa programme and the economic boost generated by Expo 2020 Dubai.

The value of property deals in Dubai more than doubled last year and broke a 12-year record in terms of sales transactions, buoyed by demand in the secondary real estate market, according to listings portal Property Finder.

Updated: August 08, 2022, 12:06 PM
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