Key Points
- Money laundering is a serious crime in the UAE, governed by Federal Decree‑Law No. 10 of 2025.
- It involves concealing, transferring, or using assets derived from criminal activity.
- Penalties can include imprisonment up to 10 years, fines up to AED 100 million for companies, and asset confiscation.
- The laundering process usually follows three stages: placement, layering, and integration.
- Banks, DNFBPs, and virtual-asset service providers have strict AML compliance obligations.
- Fintrack Tax Consultants LLC helps businesses navigate AML compliance and regulatory obligations.
What Is Money Laundering — Legally and Practically
Money laundering is the act of taking money derived from illegal activities and making it appear legitimate. Under UAE law, it encompasses:
- Moving money to disguise its origin.
- Using illicit funds personally or through intermediaries.
- Helping others hide or integrate criminal proceeds.
Even if the underlying crime has been addressed, money laundering is treated as a standalone offense. The funds involved are not limited to cash—they may include real estate, financial instruments, precious metals, or digital assets.
Why This Matters for Businesses in the UAE
- Regulatory Risk: The UAE’s AML framework is robust, with stricter oversight and higher penalties.
- Financial Risk: Non-compliance can lead to substantial fines and operational restrictions.
- Reputational Risk: Failures in AML governance can damage credibility and relationships with banks or regulators.
- Operational Risk: Weak controls may result in business disruption or licensing issues.
How Money Laundering Works: The Three Stages
Stage | What Happens | Why It Matters |
Placement | Illicit funds are introduced into the financial system (e.g., deposits, business revenues) | Money enters legal channels. |
Layering | Funds are moved through multiple transactions to obscure origin | Harder to trace the source. |
Integration | Laundered funds are reintroduced as “clean” money through legitimate investments | Money appears legally obtained. |
UAE’s Legal & Institutional Framework
Key Legislation:
- Federal Decree‑Law No. 10 of 2025 covers money laundering, terrorism financing, and financing of illegal organizations.
- Executive Regulations and supervisory authorities’ rules further define compliance requirements.
Regulatory Bodies:
- Ministry of Economy (MoE): Supervises DNFBPs to ensure AML compliance.
- Financial Intelligence Unit (FIU): Investigates and freezes suspicious assets.
- Central Bank of the UAE: Enforces AML compliance, can impose fines, restrictions, or license revocation.
Penalties & Risks in the UAE
- Fines:
- Individuals: AED 100,000–AED 5 million, or equal to the criminal property’s value.
- Companies: Up to AED 100 million, depending on the offense and value of criminal property.
- Administrative Sanctions: Regulators can impose fines from AED 10,000 to AED 5 million per violation.
- Business Penalties: License revocations, operational restrictions, and removal of board members or management can apply.
- Asset Recovery: Courts may confiscate criminal property; contracts created to hide assets may be voided.
- Senior Management Risk: Executives may face personal liability for governance failures.
Compliance: What Businesses Should Do
- Customer Due Diligence (CDD) / Know Your Customer (KYC): Verify and understand customers and their sources of funds.
- Record-Keeping: Maintain structured, retrievable transaction logs and customer identification.
- Suspicious Transaction Reporting (STRs): Report any red-flag behavior to the FIU.
- Training: Educate employees on AML responsibilities and reporting procedures.
- Governance & Oversight: Ensure board-level engagement in AML risk management.
Common Money Laundering Methods
- Real estate purchases and sales integrate illicit capital.
- Shell companies hide ownership or the source of funds.
- Virtual assets like cryptocurrency complicate tracing.
- Trade-based laundering using inflated invoices or false documentation.
Challenges & Risks in Enforcement
- Digital assets and emerging technologies pose new AML challenges.
- Regulatory lag requires ongoing adaptation to maintain compliance.
- False positives in monitoring systems can strain operations.
- Senior management is now held accountable for AML governance.
Practical Tips for Businesses
- Implement strong internal controls: policies, audits, and training.
- Work with experts like Fintrack Tax Consultants.
- Report suspicious activity proactively.
- Use technology to monitor transactions and manage risk.
FAQ
Is money laundering still punishable by jail time in the UAE?
Yes. Under Federal Decree‑Law No. 10 of 2025, individuals convicted of money laundering can face imprisonment of 1 to 10 years.
How high can fines go under the new UAE AML law?
Very high. Legal entities (companies) may be fined up to AED 100 million, or an amount equivalent to the value of the criminal property involved, whichever is greater.
Can AML authorities in the UAE seize assets if someone is convicted of money laundering?
Yes. Upon conviction, the court can order confiscation of the criminal property, or alternatively, a fine equivalent to its value. Contracts that were designed to obstruct confiscation (if done knowingly) can also be declared void.
Are executives or managers personally liable under the new AML law?
Absolutely. Senior management and board members can face personal liability, including fines or imprisonment, if they knew of money laundering activity or failed in their governance duties.
What happens if a business does not report suspicious transactions?
Under the AML law, failing to report (or “tipping off” someone under investigation) is a serious offense. Penalties include imprisonment and heavy fines.
Are virtual-asset service providers (VASPs) subject to AML rules in the UAE?
Yes — the 2025 law brings VASPs under full AML/CFT/CPF regulation. They must do customer due diligence, monitor transactions, maintain records, and report suspicious activity. Unlicensed VASPs also face criminal penalties, including fines up to AED 10 million.
What role does the Financial Intelligence Unit (FIU) have under the new law?
The FIU (within the Central Bank structure) has expanded powers: they can freeze assets for up to 30 days (extendable) without prior notice and order transaction suspensions.
What are the administrative penalties for AML compliance failures?
Supervisory authorities (like the Ministry of Economy or Central Bank) can impose administrative fines ranging from AED 10,000 to AED 5 million. They may also suspend or revoke licenses or restrict business activities.
Can someone be punished for providing false beneficial ownership information?
Yes. Giving false or misleading beneficial ownership (BO) info is explicitly criminal under the 2025 law, with penalties including imprisonment and fines.
Do AML rules in the UAE apply to all businesses, or just banks?
They apply broadly. Both financial institutions and DNFBPs (Designated Non-Financial Businesses and Professions) — like real estate firms, company formation agents, and VASPs — fall under the law.
