Developers in Dubai on Wednesday said that they have very stringent anti-money laundering and combating financing of terrorism (AMLCFT) measures in place for the investors buying property in the emirate to ensure that no illegal money flows into their projects.
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 tightened real estate investment rules and asked property agents, brokers, and law firms to report cash transactions worth Dh55,000 and above to the UAE’s Financial Intelligence Unit.
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On Tuesday, a report allegedly claimed that the UAE has “served as a safe 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.
Imran Farooq, CEO of Samana Developers, said the UAE is a well-regulated real estate market and fully compliant with the international AML and CFT-compliant systems.
“We have an AML compliance system in place and every customer is verified before bringing on board. The cash payment is limited to Dh55,000 per transaction. We use specialised software to control and comply with AML/CFT regulations. The software is fully compliant with FATF standards and built in line with UAE’s National Risk Assessment & Regulatory Requirements with modules based on international best practices. It has all the prerequisites to manage Regulatory AML/CFT Compliance obligations,” Farooq said.
In February 2024, the UAE earned praise from the FAFT governing body for the removal from the Grey List as this would bolster the country’s international standing.
Farhad Azizi, CEO of Azizi Developments, said as a first step, “when a buyer signs the offer to purchase (OTP), he/she has to provide all of his/her documents, including their passport copies and Emirates ID if applicable. We rigorously examine the buyer’s identity and 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 in order to be accepted by us. Only once it clears their compliance will we receive it in our Escrow accounts and proceed with the property transaction. It is only at this stage that the Sales and Purchase Agreement (SPA) of the property can be signed.”
Madhav Dhar, co-founder and COO of ZāZEN Properties, said they don’t take buyer vetting lightly and ensure that every potential client is subjected to a proper anti-money laundering (AML) check before he is brought on the table to finalise a deal because it is key to safeguarding businesses from becoming directly or indirectly caught up in criminal activity.
Cash and cryptocurrencies accepted
UAE developers accept nearly all forms of payment, including cash and cryptocurrencies.
“However, these funds have to be transferred to our 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.
There is no limit to buying properties through cash or cryptocurrencies, he added, “as long as the funds are legitimate and as such 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.”
Madhav Dhar said they only accept up to $10,000 in cash as an initial reservation amount for a particular unit. “However, even this is now being requested in the form of a cheque or bank transfer as it is easier and more efficient. We are watching cryptocurrencies to understand the risks better and are unlikely to allow its usage until there is more regulation or guidance in place for real estate specifically.”
Quota for buyers
Imran Farooq said the majority of 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 per cent as a down payment. On the regular down payments, Samana does not offer more than one floor or 10 units per customer. These policies are set to manage the financial risk if a customer defaults on payment,” he added.