Dubai’s real estate sector is implementing rigorous measures to prevent illegal financial activities, aligning with global standards to combat money laundering and terrorism financing. This initiative follows the recent tightening of rules by the UAE government, mandating that property agents, brokers, and law firms report cash transactions exceeding Dh55,000 to the UAE’s Financial Intelligence Unit.
Developers in Dubai have emphasized their commitment to ensuring legal and financial integrity in property transactions. Imran Farooq, CEO of Samana Developers, highlighted the comprehensive anti-money laundering (AML) compliance systems in place. These systems, supported by specialized software, align with the Financial Action Task Force (FATF) standards and UAE’s National Risk Assessment and Regulatory Requirements. Farooq asserted that every customer undergoes thorough verification before engagement, with cash transactions capped at Dh55,000 per transaction to ensure compliance.
Similarly, Farhad Azizi, CEO of Azizi Developments, described the meticulous verification process for potential buyers. Upon signing an offer to purchase (OTP), buyers must submit detailed documentation, including passport copies and Emirates ID, where applicable. The source of funds and deposit payments are rigorously examined, and only funds cleared by UAE financial institutions are accepted into escrow accounts before finalizing the Sales and Purchase Agreement (SPA).
Madhav Dhar, co-founder and COO of ZāZEN Properties, reinforced the importance of buyer vetting to prevent involvement in criminal activities. His firm conducts thorough AML checks on potential clients and restricts cash payments to an initial reservation amount of up to $10,000, which is preferably handled via cheque or bank transfer.
Dubai developers are also adapting to the growing interest in cryptocurrencies. While cryptocurrencies are accepted, their transfer must go through UAE financial institutions that conduct due diligence. However, some developers remain cautious. Dhar noted that ZāZEN Properties is hesitant to fully embrace cryptocurrency payments until there is more regulation and guidance specific to real estate transactions.
The enforcement of a Dh55,000 limit on cash transactions is gaining traction among Dubai’s leading developers. Recently, two major master developers, accounting for 30-40% of property sales by value, implemented this limit, signaling a significant shift in the market. This move aims to enhance transparency and reduce the risk of illicit financial flows. As more developers adopt this limit, the market is expected to see increased reliance on banking channels for property payments.
The UAE’s stringent AML measures have garnered international recognition, with the FATF recently removing the country from its Grey List, bolstering its global reputation. The measures not only ensure compliance with international standards but also safeguard the investments and interests of legitimate buyers.
In summary, Dubai’s real estate market is transforming with the implementation of strict financial regulations. Developers are adopting advanced AML systems, limiting cash transactions, and cautiously integrating cryptocurrency payments to ensure transparency and legality. These efforts reflect the UAE’s commitment to maintaining a well-regulated and secure real estate environment.