Private developers in Dubai are starting to prepare for a cash limit of 55,000 dirhams in future real estate transactions.

In Dubai, private developers are anticipating the imminent introduction of new regulations regarding cash transactions in real estate. In the future, there are plans to limit the use of cash to55,000 dirhamsIn every transaction. Currently, two leading developers in Dubai have already implemented this restriction, and it has noticeably impacted the real estate market, as they account for30 to 40 percentfrom the total sales volume. At the end of last week, these companies notified their clients and partners about the decision to limit cash payments, with the maximum cash amount being55,000 dirhamsThe remaining funds must go through banking channels. Sources in private companies suggest that authorities will soon impose similar restrictions on all cash transactions. The CEO of one of the major developers expressed doubt that this measure would only affect their company: “It is clear that there is a desire to limit the number of cash transactions in the Dubai real estate market in order to increase the transparency of such operations.”

Developers hope to complete their current cash-based deals before the new rules come into effect. Currently, cash transactions account for about20 percentin the Dubai real estate market. If there is a restriction in55,000 dirhamsIf it is widely implemented, the cash transaction market may completely cease to exist.

Developers and brokers are already required to closely monitor the sources of their clients' funds. One of the leading developers explained it this way: "According to our internal policy, cash transactions are now limited."55,000 dirhams“For every transaction, whether it concerns the purchase or rental of real estate. These changes are necessary to maintain high standards of financial integrity and transparency in the real estate sector.”

The introduction of a cash limit is part of broader anti-money laundering (AML) regulations and know your customer (KYC) requirements that are already in place in the UAE. According to Samir Lahani, managing director of Global Capital Partners: "Even if part of the funding is done in cash and the rest through banking channels, the responsibility for the clarity of the source of funds and knowledge of the buyer still lies with the banks, brokers, and developers."

When assessing risks associated with real estate, the following factors must be taken into account:

• Specific information about the client— is he under sanctions, does he have a criminal past, what is his legal residency status, and is he a "politically exposed person"?
• Information about the deal— the availability of cash or a source of funding;
• Jurisdiction— should we avoid blacklists or tax havens?
• Delivery method— Does the deal include a personal meeting with the buyer, or is it done through an intermediary?

Clients and brokers need to be cautious and understand that not only developers but also buyers themselves must adhere to all regulations and follow all rules, as otherwise they may face serious penalties.

The real estate market in Dubai has become one of the strongest in the world, largely due to clearly defined regulations, including AML rules. A well-regulated framework will allow the system to avoid unwarranted shocks by eliminating the possibility of "ghost owners," added Navid Ali, an accountant.

The authorities in the UAE actively monitor all transactions under AML regulations. "Real estate can absorb large sums, and often money launderers use this route to legalize their illegally acquired funds," noted Atik Munshi, managing partner of Finexpertiza UAE. "To close this loophole, regulators have not only developed rules but also continuously monitor such transactions in various ways."

Real estate buyers are required to comply with AML regulations, whether they are purchasing a property through a broker or directly from a developer. "Buyers need to understand that when intending to make purchases, they will be asked to provide proof of the source of funds," Munshi added. "Any cash payments over55,000 dirhams"They will be subject to verification, as the developer or agent will also report this to the central bank."

If the buyer is raising funds through personal loans or gifts from family and friends, they will need to prepare all the relevant documents that confirm the source of funding. Additionally, transactions conducted using virtual assets, such as cryptocurrency, will also need to undergo appropriate scrutiny and confirm their legality.