On Wednesday, developers in Dubai said they follow ‘very relentless’ protocols to confirm that no illegal money pours into their projects. Anti-money laundering and combating the financing of terrorism (AMLCFT) actions are in place for investors buying property in the emirate.
Strict Due Diligence
Developers told Khaleej Times that they conduct due diligence on property buyers “not only because it is a legal requirement that is strictly enforced by the UAE, but also for (their) own safety, to ensure that those who invest with (them) can afford to do so legitimately.”
As Khaleej Times reported in August 2022, the UAE had withdrawn real estate investment regulations and requested brokers, property agents, and law firms to register cash transactions worth Dh55,000 and overhead with the UAE’s Financial Intelligence Unit.
UAE Refutes Claims of Harboring Criminals
On Tuesday, a report allegedly claimed that the UAE has “served as a haven for some of the world’s most wanted criminals, due in part to the secrecy its real estate sector affords.” The UAE official rubbished the claim on Wednesday.
Developers’ AML/CFT Compliance
According to Samana Developers CEO Imran Farooq, the UAE has a well-regulated real estate sector that complies fully with global AML and CFT regulations.
“We have an AML compliance system in place, and every customer is verified before being brought on board. The cash payment is limited to Dh55,000 per transaction. We use specialized software to control and comply with AML/CFT regulations. The software fully complies with FATF standards and is built in line with UAE’s National Risk Assessment and Regulatory Requirements with modules based on international best practices. It has all the prerequisites to manage Regulatory AML/CFT Compliance obligations,” Farooq said.
UAE’s Removal from FATF Grey List
In February 2024, the UAE was praised by the FAFT governing body for being removed from the Grey List, which would bolster its international standing.
Developers’ Strict Buyer Vetting Process
Farhad Azizi, CEO of Azizi Developments, said that as a first step, “when a buyer signs the offer to purchase (OTP), they must provide all their documents, including their passport copies and Emirates ID if applicable. We rigorously examine the buyer’s identity, information on their source of funds, and Payment for the deposit.“
The legitimacy of funds is to be fully ensured. Azizi continued: “Payment has to be cleared through one of the UAE’s financial institutions for us to accept it. Once their compliance is clear, we will receive it in our escrow accounts and proceed with the property transaction. It is only at this stage that the property’s Sales and Purchase Agreement (SPA) can be signed.“
Madhav Dhar’s Comments on Buyer Vetting
Madhav Dhar, co-founder and COO of ZāZEN Properties expressed that they don’t take buyer vetting lightly and guarantee that every potential client is subjected to a suitable anti-money laundering (AML) inspection before he is carried on the table to complete a deal. He said this is essential to protecting businesses from being directly or indirectly acquired in criminal activity.
Cash and cryptocurrencies are accepted
Virtually all payment methods, including cash and cryptocurrency, are accepted by UAE developers.
“However, these funds have to be transferred to the Escrow accounts of the respective projects, which in turn the buyers can only do via financial institutions in the UAE that have to conduct their due diligence,” said Tizian H G Raab, head of PR and communications at Azizi Developments CEO’s office.
He added that buying properties through cash or cryptocurrencies is unlimited “as long as the funds are legitimate and accepted by the concerned financial institutions.”
Raab underscored: “We are operating under the umbrella of very competent authorities, such as the Dubai Land Department and the UAE Central Bank, all of which enforce the transparency of fund sources.“
According to Madhav Dhar, the maximum cash reservation amount for a certain unit is $10,000. “However, even this is now being requested as a cheque or bank transfer as it is easier and more efficient. We are watching cryptocurrencies to better understand the risks and are unlikely to allow their usage until there is more regulation or guidance in place for real estate specifically.“
Quota for buyers
Imran Farooq said most property investors in Samana projects buy in cash.
“The cryptocurrency offers the convenience of Payment and is very much acceptable at Samana Developer. To control and comply, Samana Developers has set a limit of Dh55,000 per transaction,” he said, adding that the private developer has set an internal limit of a two-floor per bulk buyer, provided it gets 30 percent as a down payment. On the regular down payments, Samana offers up to one floor or ten units per customer. These policies are set to manage the financial risk if a customer defaults on Payment,” he added.
