Difc License Verification

[In Libman]

Memorandaof understanding recently entered into by the Dubai Land Department with the Dubai International Finance Centre Authority and Nasdaq Dubai, respectively, aim to facilitate institutional real estate investment in Dubai, and have implications for real estate funds domiciled in the DIFC.

In early May 2017, the Dubai International Finance Centre (DIFC) Authority, the governing body of the DIFC, and the Dubai Land Department (DLD) announced a memorandum of understanding (DIFC MoU) that sets out new rules and procedures to facilitate institutional investment in real estate in the Emirate of Dubai (Dubai) by DIFC entities.

The DLD also recently entered into a memorandum of understanding with Nasdaq Dubai (Nasdaq Dubai MoU) and, as a result, DIFC Real Estate Investment Trusts (REITs) and property funds that are listed on Nasdaq Dubai do not pay either of the above fees and are exempted from DLD fees on the purchase of properties in Dubai.

Although corporate ownership of Dubai real estate has been expressly permitted by the DLD for some time, it has required onerous verification of ultimate beneficial owners (including extensive notarization and translation requirements) as well as the use of corporate vehicles primarily established in the Jebel Ali free zone (JAFZA).

Each Eligible Entity registered as an owner of Dubai real estate will be noted on a separate register maintained by the Registrar. No direct transfer or new issue of shares or interests in such Eligible Entities will be registered by the Registrar unless and until the Registrar receives a no-objection certificate from the DLD. When notified of the proposed transfer, the Registrar will request such no-objection certificate from the DLD by supplying the DLD with a standard form and verification documents in respect of the proposed transferee.

The DIFC also has agreed to a special regime of fees in connection with new issues of shares or interests in Eligible Entities that are regulated as funds by the DFSA; a flat notification fee of AED10,000 will apply.[2] This is intended to take account of the one- to two-year closing period mechanism that is standard in closed-ended funds, so as not to unfairly penalize funds for this element of their structure. It should be noted that all real estate funds established in the DIFC must be closed-ended.

DIFC property fund managers will need to ensure that their fund documents allocate the notification fee to subsequent closers, and the transfer fee to transferees, so as not to penalize other investors in the fund.

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The United Arab Emirates (UAE) has become a global hub for business, finance, and trade, attracting investors and entrepreneurs from around the world. However, this also means that the UAE is vulnerable to financial crimes, such as money laundering and the financing of terrorism. To address these risks, the UAE has implemented comprehensive anti-money laundering (AML) and countering the financing of terrorism (CFT) laws and regulations.

Focusing on the DIFC, this guide aims to provide a comprehensive overview of the AML/CTF, KYC (Know your Customer), and KYB (Know your Business) requirements in the UAE, with a specific focus on the laws and jurisdiction zone in the Dubai International Financial Centre (DIFC). The DIFC is a leading international financial hub in the Middle East, Africa, and South Asia (MEASA) region, with a vibrant business ecosystem of over 36,000 professionals working across more than 4,300 active companies. The DIFC benefits from a robust independent judicial system and regulatory framework, a global financial exchange, inspiring architecture, and enabling support services.

This guide will cover the key aspects of AML/CTF, KYC, and KYB compliance in the UAE, including the legal and regulatory framework, risk assessment, customer due diligence, record-keeping, reporting suspicious activities, and training and awareness.

By following the guidance in this ultimate guide, businesses can ensure compliance with AML/CTF, KYC, and KYB requirements in the UAE, and safeguard themselves from financial crime risk. The guide will be a valuable resource for businesses of all sizes and industries operating in the UAE, including law firms, financial services, and property businesses, as well as individuals and professionals involved in compliance and regulatory affairs.

In addition to providing practical guidance for AML/CTF, KYC, and KYB compliance in the UAE, this guide will also explore how technology can help businesses streamline their processes and enhance their risk management capabilities.

With the increasing complexity and sophistication of financial crime, leveraging technology has become essential for businesses operating in the UAE, including those in the Dubai International Financial Centre (DIFC). By incorporating technology, businesses can improve their compliance, reduce risk, and safeguard the integrity of the financial system.

Anti-money laundering (AML) refers to a set of laws, regulations, and procedures designed to prevent the illegal acquisition, concealment, and use of funds obtained through criminal activities. AML laws aim to detect and prevent money laundering and other financial crimes, such as terrorist financing, by requiring financial institutions and businesses to identify, assess, and manage money laundering risks, verify the identity of their customers, and report suspicious transactions to the relevant authorities.

AML laws apply to a wide range of financial institutions and businesses in the UAE, including those operating in the Dubai International Financial Centre (DIFC), and failure to comply with these regulations can result in significant financial penalties and reputational damage.

The aim of CFT regulations is to detect, investigate and disrupt the flow of funds used to support terrorist activities, as well as to identify and seize assets used for this purpose. CFT laws in the UAE require financial institutions and businesses, including those operating in the Dubai International Financial Centre (DIFC), to implement measures to identify and manage the risk of financing terrorism, report suspicious transactions related to terrorist financing, and freeze terrorist assets. Non-compliance with CFT regulations can result in significant financial penalties and reputational damage.

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