Dubai – Only Honest Funds Wanted

Dubai – Only Honest Funds Wanted

Nov 29, 2022

by Admin

The Emirates has issued new reporting requirements for transactions as part of its efforts to strengthen regulatory framework.

The UAE has strengthened regulations governing real estate investments and requested that cash transactions totalling Dh55,000 (approx. INR 12.25L) or more now be reported to the UAE's Financial Intelligence Unit.

With a view to enhance its regulatory framework for fighting money laundering and combatting the funding of terrorism, the government has established new reporting requirements for specific real estate transactions.

A temporary slowdown in the real estate sector, may also result from the government's most recent action, according to experts. The UAE's total gross domestic product (GDP), according to estimates, is produced by real estate operations to the tune of 5.5% annually.

Together with the Financial Intelligence Unit of the UAE, the Ministries of Economy (MoE) and Justice (MoJ) devised the new standards for real estate transactions (FIU).

The following three payment methods may be used to purchase or sell freehold real estate properties in the UAE. According to a statement released by the two ministries, all real estate brokers, attorneys, and agents are required to report such transactions to the FIU.

  1. A single or several cash payments totalling at least Dh55,000 (approx. INR 12.25 L)
  1. Payments that come with the use of an online resource
  1. Payments made using virtual assets as the source of the fund(s) utilised in the transaction

The same rules apply to both individuals and businesses.

Real estate agents, brokers, and law offices must now obtain and record the identification documents of the parties to the applicable transaction as well as any other pertinent transaction-related documents as part of the reporting mechanism. According to the statement, the new regulations will be applicable to both private individuals and corporate enterprises.

The MoE, MoJ, FIU, and other relevant UAE authorities, including the Executive Office for Anti-Money Laundering (AML) and Countering the Financing of Terrorism, held numerous meetings and discussions before making the decision (CFT).

The real estate industry is one of the most important areas for investment and a fundamental pillar of the nation's economic development and as a result, the UAE is eager to create policies and guidelines that support ethical financial practises in the industry and are consistent with the highest international standards.

The new requirements, with regard to the reporting rules of both the real estate and legal sectors, ensure the development of their regulatory frameworks, leaving little to no room for manipulation or illegal practises that could adversely impact the work environment, the economy, and investment within these sectors.

Efforts to combat money laundering

The introduction of reporting requirements for specific real estate transactions, is another illustration of how the UAE is coordinating within the government and with the private sector to strengthen the legal framework for fighting money laundering and countering the financing of terrorism.

This new rule will enable the UAE to take prompt action to protect the economy from known and developing threats by working closely together to establish a clear regulatory framework and effective reporting tools.

Taking the appropriate course of action

Real estate is one of the main drivers of economic growth and the most recent action may result in a brief slowdown. which will help manage inflation. The new rules will assist prevent fraud and guarantee long-term sustainable growth at the same time.

Only honest funds accepted

According to Atik Munshi, managing partner of FinExpertiza UAE, real estate is one of the few industries that consumes significant quantities of money, some of which may be illegal or laundered.

"A strategy to guarantee that only clean money is used in these real estate transactions is to plug the inlets and outlets through effective screening and documentation. Munshi told Khaleej Times on Monday that the UAE government had "very cleverly implicated and set the onus on some of the DNFBP's like real estate brokers and law companies so an indirect reporting chain is created as an early warning signal.

Have you been considering buying a property in Dubai? 

Do you feel that these changes will affect your decision? 

Do you think this decision will have an adverse effect on real estate prices in Dubai?

Whether you are a property broker or a purchaser in Dubai, we would love to hear from you, let us know your thoughts.

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