The UAE’s real estate sector is the biggest and fastest growing in the Middle East region. The Dubai real estate market continues to increase month on month with the value of real estate sales transactions quickly positioning the UAE as the most attractive, and flexible real estate investment destination.

Transactions surrounding real estate have historically been used to help facilitate money laundering (ML) and combating financing of terrorism (CFT) operations and recent studies suggest that in the UAE, through the use of cash and cheques, real estate has become one of the most popular ways to launder money.

It is therefore critical that Designated Non-Financial Businesses and Professions (DNFBPs) or specifically in this example, real estate agents/brokers who are involved in activities in the real estate sector, are familiar with their Customer Due Diligence (CDD) obligations under the UAE’s Anti-Money Laundering / Combating of Financial Terrorism laws. Agents/brokers are responsible for assessing the various risk factors to help them identify and report suspicious transactions.

What is a DNFBP? Is your company in this category?

According to Article (3) of the AML-CFT Decision, the definition of Designated Non-Financial Businesses and Professions (DNFBPs) includes:

Brokers and real estate agents when they conclude operations for the benefit of their customers with respect to the purchase and sale of real estate.

What Makes Real Estate a Risky Business from an AML Perspective?

The National Risk Assessment has identified professional third-party money launderers (PMLs) as one of the biggest threats facing the UAE. One of the PMLs preferred techniques is real estate transactions and investments.

What are the obligations of the Real Estate Sector?

As per Circular Number 05/2022 issued by the Ministry of Economy (MoE), all real estate agents/brokers and law firms licensed in the UAE are to meet new reporting requirements and this comes into effect from 1st July 2022. This includes submitting a Real Estate Activity Report (REAR) for specified transactions pertaining to real estate.

Reports must be submitted on purchasing and sales of freehold property*, according to the UAE law, where payment is made using the following methods:

- Physical cash or several transactions equal to or exceeding AED 55,000 (single payment or through several transactions)

- Virtual assets

- Funds converted from/to a virtual asset

What are the documents required?

Real Estate agents need to obtain the following documentation:

Identification documents:

Individual Corporate

– Valid Emirates ID or Passport copy – Trade License

– Articles of Association

– Register of Beneficial Owners

– Emirates ID or passport copy for all Beneficial Owners

– Emirates ID or passport copy for all shareholders/partners

- Obtain and record receipts, invoices, contracts, purchase and sale agreements.

- Submit a ‘Real Estate Transaction Report’ via Financial Intelligence Unit

*Freehold property – allows the owner to have complete ownership of property including the land that the property stands on.

Other mandatory requirements:

1. Suspicious Transaction Report (STR),

2. Suspicious Activity Report (SAR),

3. Funds Freeze Report (FFR),

4. Partial Name Match Report (PNMR),

5. High Risk Country Report (HRC) and

6. High Risk Country Activity Report (HRCA).

Failure to report suspicious transactions is a federal crime. This applies to any person, including DNFBPs or their managers and employees, of whom all would be liable.

How can PRO Partner Group help?

PRO Partner Group’s compliance team can assist to set up your company Anti-Money Laundering framework, policies and processes. If you need assistance with setting up a regulatory compliant company, onshore or offshore setup, restructuring, local partner or PRO support matter in Abu Dhabi, Dubai, the wider UAE, Oman, Qatar or Saudi Arabia, then please do get in touch with us on +971 (0)4 456 1761 for Dubai or +971 (0)2 448 5120 for Abu Dhabi, email us at info@propartnergroup.com or complete the contact form below and we will be delighted to assist you.