UAE requires reporting real estate transactions for cash or virtual assets

The United Arab Emirates (UAE) Ministry of Economy has issued a directive requiring payments for real estate transactions through virtual assets or cash amounts above AED55,000 to be reported to the country’s Financial Intelligence Unit (FIU).

All real estate agents, brokers and law firms are now obliged to file reports to the FIU for purchase or sale of freehold real estate properties including any of the three methods of payment. The rule applies not just to transactions where virtual assets are used directly but also where the funds used have been derived from a virtual asset. The reports will be used to trace the suspicious movement of funds or investments as part of the fight against money laundering and terrorism financing, said head of the FIU, Ali Faisal Ba’Alawi.

Agents, brokers and law firms will also have to obtain and record identification documents for all parties to a transaction. The Ministry of Economy and Ministry of Justice have issued regulatory circulars informing private sector entities about the new requirements. The rules apply to both individuals and corporate entities.

The UAE is one of the first countries to implement such a mechanism for real estate transactions involving virtual assets. PwC’s recent report, The UAE Virtual Assets Market, emphasises the highly internationalised customer base of the real estate sector and its vulnerability to transactions in cash, as observed by the global Financial Action Task Force in its 2020 mutual evaluation report on the jurisdiction.

Earlier in 2022, Dubai introduced a virtual assets regulatory regime supervised by the Dubai Virtual Assets Regulatory Authority. Some real estate firms are now accepting payments in cryptocurrencies, although the UAE nominally prohibits the use of cryptocurrencies as a method of payment. Real estate buyers must work with a third-party broker to convert their crypto-assets to fiat currency before sending it to the seller.

 

 

 

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