UAE introduces new reporting requirements for real estate transactions.

OAE tightens real estate investment rules; brokers must report cash transactions of AED 55,000 and above. Emirates unveils new requirements for transaction reporting as part of regulatory strengthening.

The Emirates has tightened real estate investment rules and required real estate agents, brokers and law firms to report cash transactions of Dh55,000 and above to the UAE Financial Intelligence Service. The government has announced new requirements for certain real estate transactions to strengthen the regulatory system in the fight against money laundering and terrorist financing. In addition, experts noted that the government's latest move could lead to a temporary slowdown in the real estate sector, which attracted more than Dh150 billion in investments in the first half of 2022. Real estate transactions are expected to generate approximately 5.5% of the UAE's total GDP annually.

The Ministry of Economy (MOE) and Ministry of Justice (MoJ) have developed new criteria for real estate transactions in partnership with the UAE Financial Intelligence Service (FIS). The two ministries said in a statement on Monday that all real estate agents, brokers and law firms are required to report to the Fed on real estate sales and purchase transactions of single or multiple cash payments of Dh55,000 and above, payments involving the use of virtual assets, and payments whose funds are derived from a virtual asset. The rules apply to natural and legal persons, according to the statement. The decision was taken after several meetings and discussions between the DOE, the DOJ, the Fed and other UAE competent authorities, including the Executive Office for Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT). The UAE is one of the first countries to introduce such a mechanism for real estate transactions involving virtual assets, the latest example of the UAE's sustainable and evolving approach in the global fight against money laundering and terrorist financing.

Abdullah Bin Tawq Al Marri, Minister of Economy, said the real estate sector is one of the key sectors for investment and an important pillar of the country's economic development. Therefore, he said, the UAE is keen to adopt procedures and regulations that promote healthy financial practices in the sector in line with the highest international standards.

Fighting money laundering Abdullah Sultan bin Awwad Al Nuaimi, Minister of Justice, said the introduction of reporting rules for certain transactions in the real estate sector is another example of the UAE coordinating with the government and the private sector to strengthen the national system to combat money laundering and terrorist financing. "By working closely together to ensure a clear regulatory structure and effective reporting tools, the UAE can act quickly to protect the economy from known and emerging risks," he said.

Ali Faisal Ba'Alawi, head of the UAE Federal Reserve Bank, said these new measures will enhance the quality of financial intelligence available to the Fed and will be used to identify suspicious movement of funds or investments as part of the fight against money laundering and terrorist financing. "These requirements further strengthen the stability and reliability of the UAEreal estate sector and provide all stakeholders with greater transparency in a sector that is a key contributor to the UAE economy," he said.

A step in the right direction, according to Saad Maniar, senior partner at Crowe, real estate is one of the key drivers of economic growth and the latest move could lead to a temporary slowdown, which is a necessity to control inflation. At the same time, he said the new rule will help fight abuse and ensure long-term sustainable growth. "With this move, the UAE is increasing regulatory compliance and it is a step in the right direction to strengthen the stability of the financial system," Maniar told Khaleej Times on Monday.

Atique Munshi, managing partner at FinExpertiza UAE, said real estate is one of the few sectors that absorbs large amounts of funds and some of these amounts may be illegal or laundered. "Closing the ins and outs through proper screening and documentation is a way to ensure that only clean money is being used in these real estate transactions. The UAE government has been very smart to involve and hold some real estate related firms such as brokers and law firms responsible to create an indirect chain of accountability as an emergency warning signal," Munshi told Khaleej Times on Monday. "This compliance methodology will not only strengthen the quality of reporting, but will also significantly enhance the UAE's reputation as a jurisdiction that has zero tolerance for money laundering. Cash and digital money are several instruments commonly used for such laundering and these rules are expected to curtail their illicit entry," he said.