The Significance of AML Compliance in the UAE for the Real Estate Industry
In the flourishing land of UAE, business is expanding by leaps and bounds and one sector that is booming bright is the real estate sector. It is one of the important non-financial sectors where there is too much money involved. This industry segment plays a pivotal role in enhancing the economy of UAE.
There are umpteen real estate transactions happening with not much of analysis. Hence there is high risk of money laundering activities. And it is crucial to keep these money laundering activities and terrorism financing in strict regulation, since there is a huge occurrence of such unwanted incidents.
It is necessary for the officials to frequently monitor the real estate sector and regulate such unwanted activities through a defined control mechanism. UAE has implemented special provisions for “Anti-Money Laundering and Combatting the Financing of Terrorism” (AML/CFT) needs in the real estate sector. Implementing this set of AML and CFT regulations, in accordance with the global best practices, is sure to save the business owners from getting duped and occurrence of any fraud.
This article focusses on the real-life conditions where the real estate business owners must be careful, in terms of money laundering occurrences. We also talk about the AML requirements that must be adhered to, for complete control over the industry segment.
Possible Money Laundering Activities That Could Raise An Alarm
- Complete cash payment for the entire property
- Complicated loan arrangements through which illegal money is transferred to the legal system
- Improper valuation of property in terms of either high or low amount
- Regular reconstruction and enhancements in property
- Collaborating with third-party agencies having a clear criminal record
- Sale or purchase of property many times
- Unexpected rise in financial condition, sale or buy of property, lending of money
- Utilization of property for illegal activities such as drug usage
- Purchase of real estate in foreign countries with illegal funds
- Disguising the original nature of proceeds and transfer crime proceeds to hide its origin
- Helping the offender to be freed from getting punished
The AML Rules and Regulations for Real Estate Sector in UAE – An Overview
Federal Decree Law No. 20 of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Illegal Organizations was announced for complete conformity with international standards on anti-money laundering and financing of terrorism. This, being the main law for AML, applies to all real estate agents and brokers operating in the UAE.
This law aims to fight money laundering activities and the financing of terrorist activities, instituting a full proof legal framework. The set regulations are needed since there is less awareness of such things happening amidst the rest estate stakeholders. Getting duped through such happenings leads to a disturbance in the economy of UAE.
AML Compliance Requirements for Real Estate in the UAE
In UAE, the real estate agents and brokers must adhere to the following needs to follow the AML regulations:
- One must study in detail; the possible risks associated with money laundering and follow a risk-based methodology that can help assess and mitigate issues depending upon different factors.
- One must perceive the latest trends and patterns that are popular in terms of being aware of the ML and FT issues that could happen
- Brokers must have complete data on client’s information to avoid any mishap
- Agents must go by the customer due diligence (CDD) processes like screening clients, background checks, identity verification of business owners, source of funding etc. so that relevant action can be taken whenever any unfortunate incident happens
- One must check for all legal arrangements and relationship between stakeholders to assess any forthcoming incident
- One must continuously keep checking on high risk clients and their happenings along with their financial involvement and real estate transactions
- All relevant policies, record keeping, approaches and measures must be in place to be availed as and when needed
- One must immediately report any type of questionable activity to the relevant authority
- Brokers must submit their ‘Real Estate Activity Report’ regularly to the financial institutes
- One must design a structure and hire resources that match up with the requirements set by the AML/CFT program authorities
- All involved financial institutions must strictly follow the ‘Know Your Customer (KYC)’ routine to keep a strict eye on all details of customers
- Detailed documents must be collected, and approval must be taken from customers in case of high value transactions
- There must be separate teams that make up the annual risk plan and its further plan of action, hold tests to ensure all actions are being monitored and if not, necessary steps to be taken
- Necessary liaison with domestic and international resources must be monitored closely since they are areas where money laundering and terrorist activities may grow big
- Detailed risk analysis must be carried out on a routine basis to keep in track with the happening activities and possible frauds that could come up in the future
- Risk assessment must be done through insightful dashboards to search for fraudulent activities, its nature time of occurrence, possible risk measure to be taken and their relevant status
How is UAE Getting Trained for AML Implementation?
Awareness and training about how to protect the real estate sector from money laundering and terrorist activities is a must. Financial institutes in UAE must have AML and CTF training programs that can orient all those involved to combat the illegal activities.
The Central Bank of UAE (CBUAE) is one of the officials for AML controls in the UAE. It oversees regulating all financial institutes like banks, money changers, finance organizations etc. in UAE. Yet another institute is the Dubai International Financial Centre (DIFC) that looks after such activities in banks, investment companies, insurance organizations, asset managers etc.
These organizations ensure detailed training sessions for all employees and involved stakeholders on staying aware of such fraudulent activities taking place and necessary actions to be taken thereafter.
It’s a Wrap Up
Confirming to AML regulations is a much-needed task and hence needs a certain level of expertise and experience. We @ Horizon Biz Consultancy can be of assistance in fulfilling all your needs for AML and CFT in UAE. As a financial advisor, we have had years of experience in different domains pertaining to accounting, taxation, and financial systems.
We can assist you in selecting the best AML software for your business, creating AML specific policies for your organization, filing AML risk assessment statements, conducting training for stakeholders etc.
Get in touch with us for any kind of financial assistance and we will be happy to help!