In the UAE’s current regulatory landscape, acting as a third-party service provider comes with direct and independent AML responsibilities. Audit firms, accounting practices, tax advisors, corporate service providers, and consultants are no longer viewed as passive intermediaries. Regulators increasingly see them as gatekeepers to the financial system.

When firms act on behalf of clients—whether managing transactions, structuring businesses, handling real estate-related services, or facilitating payments—the AML risk does not sit only with the end client. It also sits with the professional firm enabling the activity.

This makes AML compliance for third-party service providers a critical risk area, particularly in sectors like real estate where transaction values are high and structures can be opaque.

Understanding Third-Party Service Provider Risk Under UAE AML Rules

A third-party service provider is any professional or firm that:

• Acts on behalf of a client in a transaction

• Facilitates payments, registrations, or structuring

• Represents clients before authorities or counterparties

• Provides ongoing administrative, accounting, or advisory support

In AML terms, this role creates heightened exposure because criminals often prefer to operate through trusted professionals rather than deal directly with institutions subject to strict controls.

The key regulatory principle is simple: outsourcing activity does not outsource AML responsibility.

Why Real Estate Transactions Attract Illicit Activity

Real estate remains one of the most vulnerable sectors globally and in the UAE. Criminals are drawn to property-related transactions for several structural reasons.

First, properties involve large values, allowing illicit actors to move substantial sums in a single deal. This makes real estate ideal for placement and layering stages of money laundering.

Second, real estate has historically been less regulated than banks. While this gap is closing rapidly in the UAE, legacy practices and uneven enforcement still exist, creating opportunities for misuse.

Third, ownership structures can be deliberately complex. Shell companies, nominees, and third-party buyers are commonly used to conceal the true source of funds or the real beneficial owner.

Finally, once funds are converted into property, tracing or recovering them becomes significantly harder. This does not just create financial crime risks—it distorts property markets, inflates prices, and harms communities by reducing housing affordability.

For third-party service providers involved in real estate transactions, these risks are magnified because they often sit between the client, the transaction, and the regulator.

AML Responsibility Does Not Transfer With Representation

One of the most common compliance misunderstandings is the belief that AML responsibility rests solely with:

• The end client

• The bank handling payments

• The real estate broker or developer

Under UAE AML laws, this assumption is incorrect. When a firm acts as a third party:

• It must conduct its own customer due diligence

• It must identify and verify ultimate beneficial ownership

• It must understand the purpose and nature of the transaction

• It must monitor the relationship on an ongoing basis

Reliance on another party’s checks without proper justification and documentation is a frequent regulatory finding during inspections.

The Risk-Based Approach (RBA) in Third-Party Arrangements

A risk-based approach (RBA) is the foundation of AML compliance in the UAE. Rather than applying identical checks to every engagement, firms are expected to focus attention where risk is highest.

According to guidance from the Financial Action Task Force, professionals must:

• Assess money laundering and terrorist financing risk

• Categorize clients, services, and transactions by risk level

• Apply enhanced measures for higher-risk scenarios

• Use simplified measures only where risk is demonstrably low

For third-party service providers, RBA is particularly important because risk depends not just on the client, but also on what the firm is doing for the client.

Key AML Obligations for Third-Party Service Providers

Independent KYC and Client Identification

Firms must verify the identity of their own client, even if the client has already been verified elsewhere. This includes confirming legal existence, authorized signatories, and beneficial owners.

Understanding the Scope of Representation

What exactly is the firm doing? Acting as a nominee, handling funds, or coordinating property transactions increases AML exposure and requires stronger controls.

Beneficial Ownership Verification

If the client is a company or trust, firms must identify the natural persons who ultimately own or control it. Third-party involvement does not remove this obligation.

Source of Funds and Source of Wealth Checks

When assisting with transactions, especially in real estate, firms must understand where the money originates. Cash-heavy activity, offshore transfers, or unexplained wealth require enhanced due diligence.

Ongoing Monitoring

AML obligations continue throughout the relationship. Changes in transaction size, frequency, geography, or client behavior must be reassessed.

Applying RBA to Real Estate-Related Third-Party Services

When third-party service providers support real estate transactions, regulators expect heightened scrutiny. Practical RBA measures include:

• Reviewing whether property values align with market norms

• Questioning unnecessarily complex deal structures

• Monitoring use of intermediaries or nominee arrangements

• Escalating transactions involving high-risk jurisdictions

• Documenting the rationale for all risk classifications

Where risks cannot be mitigated, firms are expected to decline or exit engagements, even if they are commercially attractive.

Supervisory Expectations in the UAE

AML supervision in the UAE is led by the Anti-Money Laundering and Combating the Financing of Terrorism Supervision Department, operating under the Central Bank of the UAE.

Since 2020, supervisory attention has expanded significantly beyond financial institutions to include DNFBPs and professional service providers. Regulators increasingly focus on:

• Third-party arrangements and delegation models

• Evidence of independent risk assessments

• Quality of ongoing monitoring

• Documentation supporting reliance on other parties

Where industries are still developing AML maturity, regulators apply closer monitoring until consistent compliance standards are achieved.

Special Attention for Weak or Emerging Markets

In rapidly growing or under-regulated real estate markets, third-party service providers face amplified risk. Supervisors pay particular attention to:

• New firms entering the market with inherited client relationships

• Professionals with limited AML training or awareness

• Regions with a history of weak enforcement

Without strong third-party controls, these markets can quickly become entry points for illicit funds.

Practical Steps to Strengthen AML Controls

Firms acting as third-party service providers can reduce AML exposure by implementing the following measures:

• Clear internal policies defining third-party risk

• Due diligence checklists tailored to service type

• Technology to flag unusual transactions or patterns

• Regular AML training for client-facing teams

• Defined escalation and reporting procedures for high-risk cases

Targeted support from experienced AML advisors in the UAE helps firms align these controls with regulatory expectations while maintaining operational efficiency.

Acting as a third-party service provider in the UAE carries real AML accountability. As regulators continue to raise standards, firms that clearly understand their obligations, apply a risk-based approach, and maintain strong oversight of real estate and other high-risk activities will be best positioned to protect both their clients and their own regulatory standing.