New compliance required for property transactions in the UAE
The UAE government has always been proactive and stringent when it comes to regulating and monitoring the real estate market. The introduction of new compliance requirements for property transactions in the UAE is another significant step in that direction. These laws have been instigated as a stringent deterrent against all forms of money laundering. Read on to find out all new reporting rules for real estate transactions in the UAE.
NEW COMPLIANCE REQUIREMENTS FOR PROPERTY TRANSACTIONS IN THE UAE
As per the transactions rules in the real estate sector, reports have to be submitted to the Financial Intelligence Unit (FIU) by brokers, real estate agents and law firms on sales transactions or purchase of freehold properties that involve three modes of payment:
- Multiple or single cash pay-out equal to or above AED 55k.
- Payments involving the use of virtual assets.
- In cases where money has been derived from a virtual asset.
Even if only part of the payment falls under the above-mentioned criteria, a report will have to be filed. The entity overseeing this exercise i.e., real estate agents, brokers and law firms, have to acquire and record the identification documents from the parties involved. The new rules for reporting real estate transactions apply to individuals as well as companies.
WHAT ARE THEY SAYING?
Transactions rules in the real estate sector were announced after several meetings took place between the Ministry of Economy, the FIU, the Ministry of Justice, the Executive Office of Anti-Money Laundering and Countering the Financing of Terrorism.
Minister of Economy H.E. Abdulla bin Touq stated that the introduction of these new laws is to, effectively, extinguish the opportunity for manipulation or illegality:
“The real estate sector is one of the key sectors for investment and a vital pillar of the country’s economic development. 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,” he said.
“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 Abdulla bin Touq added.
The Head of the FIU, Ali Ba’Alawi also stressed that new compliance requirements for property transactions in the UAE will help combat money laundering:
“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,”
FAQS ABOUT NEW COMPLIANCE REQUIREMENTS FOR PROPERTY TRANSACTIONS IN THE UAE
HOW WILL THE SYSTEM WORK?
The details about the exact procedures have not been announced yet. However, relevant private sector firms have been contacted and specific requirements have been explained via regulatory circulators issued by the Ministry of Economy and Ministry of Justice. Furthermore, workshops will be organised with these relevant stakeholders to guide them through the goAML system of FIU.
WHAT ARE THE RULES REGARDING OWNERSHIP OF PROPERTY BY FOREIGNERS IN DUBAI?
Read our guide about the rules of foreign ownership of land in Dubai to get complete clarity on the subject. New reporting rules for real estate transactions in the UAE will also apply in such circumstances. Properties can owned jointly by investors. Read about our discussion on jointly owned property law in Dubai to find out more.
That concludes our look at the new compliance requirements for property transactions in the UAE. The UAE has become one of the few countries that have introduced a mechanism to monitor real estate bought via virtual assets. This follows the establishment of the Dubai Virtual Assets Regulatory Authority.
These steps show a desire by the UAE government to be proactively agile and a determination to combat terrorism financing through money laundering.
