Anti-Money Laundering in Real Estate in UAE
The real estate industry in the UAE is one of the most sensitive non-financial industries to money laundering. The absence of openness and understanding of AML requirements historically means that money laundering risks have proliferated and grown with the industry’s growth. Thus, money laundering through real estate remains a major attraction for fraudsters.
Authorities are taking steps to make the sector more monitored. However, it is finally up to companies in the sector to ensure that they are complying with regulations. Using competent AML consultants in Dubai, such as HLB HAMT, can ensure that firms are adhering to AML regulations, which will create an additional layer to handle potential issues and protect AML compliance for companies in the UAE.
Money Laundering Practices
Criminals’ exploitation of the real estate sector has wide-ranging negative consequences for national security. The following strategies have been recognised as being employed by scammers.
- Hiding the illicit origins of funds
- Exposure to a precise financial flow system is limited
- Ease of conducting business with brokers in the massive real estate market
- Fabrication of a property’s evaluation or value
- Complex loans or credit finance are used
- Taking advantage of the wealth derived from real estate to benefit criminals
- Use of Non-financial experts (such as real estate and legal experts)
- Keeping the identity of the beneficial owner or owners hidden or masked
- Use of Corporate vehicles
- Making unneeded upgrades and enhancements to a property on a regular basis
- Using trusts and other business structures like shell corporations, or front firms to conceal possession
- Use of assistance of a variety of other professions in order to hide their assets and avoid discovery
The real estate industry in the UAE requires realtors, dealers, and other individuals to maintain AML adherence. Financial institutions are required to conduct due diligence procedures and report suspicious actions via the goAML site, which is run by the financial intelligence unit.
Seven criteria to recognize the Potential Money Laundering Risks
- Successfully establish customer due diligence and continuous monitoring methods that are risk-based.
- Create and record rules and processes to lower the probability of money laundering.
- Create a solid AML/CFT structure, such as establishing a Compliance Officer.
- Be mindful of the size, complexity, integrity, regional sources, or any exceptional aspect of financial arrangements or instruments used in the purchase and sale of real estate.
- Be completely conscious of risks as well as the time period during which the danger of money laundering is highest.
- Mysterious activities should be identified and reported.
- Brokers and agents must have clear knowledge on the sort of real estate transaction that a customer is involved in.
Perform strategies for customer Due Diligence
Depending on the categorization and assessment of the risk, real estate brokers, and developers must implement the relevant customer due diligence (CDD) steps.
- Ascertain that the customer’s profile is suitable with the real estate transaction’s parameters.
- Stay updated for any connections to Political Exposed Persons (PEPs), mainly in the presence of overseas market participants.
- You must keep a close eye on your client’s beneficial owner’s identification and gather all essential documentation.
- You should have a set procedure in place for screening consumers and run security checks.
- You must take account of the legal contract or framework utilised in the trade, as it may lead in the owner’s or source of funds’ identity being concealed.
Although the degree and scope of the dangers presented by the real estate sector and the Licensed Financial Institutions (LFI) differs, they do have some basic traits that LFIs should be aware of and consider.
Once you find potential risk consumers, you must monitor their transactions on a frequent basis. You should keep track of how often and what kind of deals they have done.
Adopting reliable and accurate internal procedures, restrictions, and processes are some of the most important steps. You must evaluate the success of these policies and make any updates as needed. Any questionable activities must be reported to the Financial Intelligence Unit as soon as you detect them. You must enter and maintain all the critical data for the alleged transaction.
Assistance of HLB HAMT
The real estate industry plays a significant role in the UAE’s economy. As a result, preventing money laundering is vital. By implementing AML measures with the assistance of expert AML consultant, you will be able to protect your business from any unlawful activity or business connection, as they will be adequately prepared with the correct, essential anti-money laundering controls.
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