AML Policy Template

AML Policy Template for Real Estate Agents and Brokers in UAE

Most financial transactions in real estate are done through money laundering. In simple words, money laundering is the process of disguising illegal money as legal money. It’s a way of making money obtained from illegal activities like drug trafficking, terrorism, and other financial crimes look like it was obtained from a legitimate source. This means money laundering is broadly defined as to include any action to obscure the source of money or the manner in which it was acquired.

Since real estate agents often handle large amounts of money, they are ideal targets for money launderers and criminals who want to disguise their activities. The risk of being involved with money laundering can damage an organization’s reputation, affect its risk management systems, and lead to legal repercussions, fines, and penalties. However, with adequate anti-money laundering (AML) controls in place, an organization can protect itself and society by detecting financial crime early and deterring criminals from using its services. This blog will cover what is AML policy, its relevance in UAE and how real estate agents can adopt an AML policy template.

What is AML and its Relevance in the UAE?

• The Global Financial Integrity (GFI) Report 2017-2018 estimated that illicit financial flows from developing countries to developed nations totaled $1.6 trillion in 2016.
• In the UAE, AML has become a hot-topic due to terrorist funding and money laundering activities by international criminal organizations, money laundering by certain individuals as well as foreign exchange violations. The financial regulators have introduced updated Guidelines for Financial Institutions and a New Specialized Money Laundering Court aimed at strengthening regulations on anti-money laundering.
• Real estate agents, brokers, and law firms must report purchase and sale transactions of real estate properties that include cash payments of equal to or above AED55,000, virtual asset transactions , transactions where funds were derived from a virtual asset and other suspicious transactions to designated authorities. These entities are also required to implement risk management processes as mandated under the aml regulations.
•  As an agent or broker of real estate in the UAE, it is essential for you to be compliant with relevant regulations and abide by AML guidelines so that you can ensure the safety of buyers' money and protect yourself from any legal liability.

AML Compliance Services for Real Estate Agents and Brokers

•  Real estate agents and brokers in the UAE are now obligated to file reports to the Financial Intelligence Unit (FIU) for all freehold real estate transactions that involve any of three payment methods - cash payments equal to or above AED55,000, payments involving virtual assets, and payments derived from virtual assets.
• Professionals in the real estate sector are required to comply with AML/CTF laws, and must register in the financial intelligence unit system called goAML before March 31, 2021. Anyone involved in the real estate sector should be aware of these regulations and follow them to ensure a safe and secure environment for all parties involved.

Key Requirements of an AML Policy Template

•  All real estate agents, brokers and law firms in UAE must file reports to the Financial Intelligence Unit (FIU) for purchase and sale transactions of freehold real estate properties that include payments made with physical cash or several transactions equal to or exceeding AED 55,000.
•  The FIU has developed a set of strict anti-money laundering guidelines for financial institutions and organizations operating in the UAE. In addition, entities regulated by the MoE and MoJ must comply with these guidelines. This includes requiring entities to have an anti-money laundering policy and risk-based due diligence framework in place.
• The requirements apply to both individuals and corporate entities that are parties to real estate transactions. All individuals should be aware of their obligations under these regulations.
•  The MoE and MoJ have issued regulatory circulars with specific requirements for the private sector entities. These requirements aim to prevent money laundering activities within UAE financial institutions and organizations.

Benefits of Adopting an AML Policy Template

•  AML compliance is a must for all financial institutions, businesses, and individuals.
•  This is especially crucial in the real estate sector as it involves reporting of verified transactions involving the use of virtual assets and funds derived from virtual assets.
•  The obligations of the real estate sector include reporting requirements and submission of a Real Estate Activity Report (REAR) for specified transactions.
• Real estate agents and brokers can use AML policy templates to streamline their processes, ensure visibility, and accountability. These templates provide an amicable approach to ensuring AML compliance in the sector, with relevant provisions outlined clearly.

By adopting these templates, real estate businesses can simplify their processes and avoid potential pitfalls associated with non-compliance. The benefits of this will be evident in reduced financial risk exposure and enhanced customer confidence.

What are the key elements of an AML Policy template?

•  AML and anti-money laundering policies are of vital importance to financial institutions and businesses. These policies outline the steps taken to prevent money laundering and reduce the risk of financial crime.
•  Real estate agents and brokers in UAE must create an AML/CFT policy that is approved by management and tailored to their branches, subsidiaries, and affiliates. This policy should detail how AML/CFT risk is managed. It'd cover customer due diligence, monitoring transactions for suspicious activities, and reporting suspicious transactions to the FIU.
•  Parties involved in a real estate transaction must file reports to the FIU for purchases and sales of freehold real estate that include payments that include the use of a virtual asset, and payments derived from a virtual asset. These reports must include information such as the name of the party making payment, purpose of payment, value of payment, etc.
•  The rules apply to both individuals and corporate entities that are parties to the real estate transaction.
•  AML/CFT policies help financial institutions prevent money laundering, terrorist financing, and other financial crimes effectively.

How can a Real Estate Agent or Broker customize their AML policy?

•  To create a customized AML policy, real estate agents and brokers should understand their AML/CFT obligations under the AML-CFT Decision.
•  To reduce money laundering risk, agents and brokers should prepare policies and procedures to minimize financial transactions with customers deemed to be high-risk. These include monitoring transactions for suspicious activities, conducting customer due diligence, and reporting suspicious transactions to relevant authorities.
•  They must also implement risk-based customer due diligence and ongoing monitoring procedures, such as conducting KYC on customers, conducting regular verifications against publicly available records of financial transactions, and regularly testing their anti-money laundering systems.
•  Finally, they should consult a professional to book a free half-hour consultation to discuss options for mitigating AML risks in a holistic manner.

By following these steps, real estate agents and brokers can create reliable policies that prevent money laundering and safeguard the interests of both customers and the financial system.

Conclusion

By implementing an effective and systematic approach to managing money laundering and terrorist financing risks, real estate agents and brokers can build a reputation of being trusted professionals in their industry. An AML Policy is a key component of an organization’s risk-based approach to combating money laundering and terrorism financing. It helps agents/brokers establish a framework for identifying, assessing, and managing money laundering and terrorist financing risks associated with real estate transactions. By adopting an AML policy, real estate agents/brokers ensure that they are fulfilling their due diligence obligations under the legal framework of UAE and are able to fulfill the requirements of anti-money laundering regulations.