Related-party transactions are a normal part of business in the UAE. Group companies share resources, owners invest across entities, and family-run businesses operate through multiple vehicles. However, from an AML perspective, related-party transactions (RPTs) represent one of the highest-risk areas—especially in 2025, as regulators intensify scrutiny on transparency, governance, and financial integrity.

For UAE businesses, particularly DNFBPs and real estate-focused entities, weak controls around related-party dealings are increasingly linked to AML findings, penalties, and remediation orders. From an accountant’s standpoint, inaccurate recording, poor disclosure, or weak justification of such transactions significantly increases AML exposure.

This article explains the AML risks associated with related-party transactions, why real estate is especially vulnerable, how the risk-based approach (RBA) applies, and what UAE regulators expect businesses to demonstrate in 2025.

What Are Related-Party Transactions?

Related-party transactions occur when a business enters into financial dealings with:

• Owners, directors, or partners

• Group companies or subsidiaries

• Entities under common control

• Family members of key management

• Trusts or SPVs linked to the same beneficial owners

Examples include:

• Loans between group entities

• Property sales within a group

• Management fees or cost allocations

• Asset transfers at non-market values

While such transactions may be legitimate, they require heightened scrutiny due to their potential misuse.

Why Regulators Treat Related-Party Transactions as High AML Risk

From an AML perspective, related-party transactions raise concerns because they can be used to:

• Disguise the true source of funds

• Move money without clear economic rationale

• Inflate or suppress transaction values

• Layer transactions to obscure audit trails

In 2025, UAE regulators increasingly view unexplained or poorly documented related-party transactions as early indicators of money laundering risk, not just accounting issues.

Why Real Estate Is Especially Exposed

Real estate is consistently identified as a high-risk sector for AML globally and in the UAE.

Criminals prefer real estate because:

• High property values allow large sums to move in a single transaction

• Complex ownership structures can hide beneficial ownership

• Lower historic regulation than banking leaves governance gaps

• Asset conversion makes illicit funds harder to trace or seize

When real estate transactions occur between related parties, the risk multiplies. Property transfers within a group, undervalued sales, or circular payments can easily be used to move or disguise illicit funds if controls are weak.

The Accountant’s Role in Identifying AML Risk

Accountants are often the first line of defense when it comes to detecting AML risks in related-party transactions.

Red flags frequently identified during financial review include:

• Transactions without commercial justification

• Pricing that does not align with market values

• Round-tripping of funds between group entities

• Loans with no repayment terms or interest

• Repeated advances and write-offs

In 2025, regulators expect finance teams not only to record transactions, but to question and escalate anomalies.

Related-Party Transactions and the Risk-Based Approach

The risk-based approach (RBA) is central to managing AML exposure from related-party dealings.

According to guidance from the Financial Action Task Force (FATF), businesses must:

• Identify money laundering and terrorist financing risks

• Assess their likelihood and impact

• Apply enhanced controls where risk is higher

Related-party transactions are typically classified as higher risk, requiring:

• Enhanced due diligence

• Clear documentation of purpose

• Independent valuation or benchmarking

• Senior management review

Applying standard controls to high-risk related-party dealings is no longer acceptable in 2025.

Key AML Risks in Related-Party Transactions

1. Obscured Source of Funds

Related entities can be used to funnel funds from unknown or high-risk sources, making it difficult to trace the true origin of money.

2. Artificial Pricing

Under- or over-valued transactions—especially in real estate—can shift value without attracting immediate attention if not independently reviewed.

3. Layering Through Group Entities

Multiple intra-group transfers can be used to layer transactions, a classic money laundering technique.

4. Weak Documentation

Lack of contracts, valuations, or repayment terms is a common finding during AML inspections.

Supervisory Expectations in the UAE

AML/CFT supervision in the UAE is conducted by the Anti-Money Laundering and Combating the Financing of Terrorism Supervision Department (AMLD) under the Central Bank of the UAE (CBUAE).

Since 2020, regulators have:

• Increased focus on related-party dealings

• Challenged unexplained intra-group transactions

• Linked weak documentation to AML governance failures

• Required remediation for poor oversight

In 2025, inspectors frequently test whether companies can clearly explain the purpose, pricing, and funding source of related-party transactions.

Special Focus on Emerging and Weakly Regulated Markets

In developing real estate markets or fast-growing sectors, related-party risks are even higher.

Supervisors pay close attention to:

• Newly formed group structures

• Family-owned real estate businesses

• Jurisdictions with weaker enforcement

• Rapid asset transfers within groups

Without strong controls, these environments can become safe zones for illicit financial activity.

Practical Steps to Reduce AML Risk in Related-Party Transactions

From an accounting and compliance perspective, businesses should:

• Maintain a complete and updated related-party register

• Require written commercial justification for all RPTs

• Use independent valuations for property transactions

• Apply enhanced due diligence for high-risk dealings

• Ensure proper approval and documentation

• Integrate finance reviews with AML monitoring systems

Many UAE businesses also engage AML and accounting advisors to review related-party frameworks before regulatory inspections.

Why Strong RPT Controls Reduce AML Penalty Risk

Effective management of related-party transactions:

• Improves transparency and audit readiness

• Reduces likelihood of AML penalties

• Strengthens banking and investor confidence

• Demonstrates strong governance to regulators

In 2025, regulators increasingly treat poorly controlled related-party transactions as a governance red flag.

Related-party transactions are not inherently problematic—but poorly governed related-party transactions are among the fastest ways to increase AML exposure in the UAE.

From an accountant’s perspective, accurate recording, clear documentation, and commercial justification are essential to protecting businesses from regulatory risk. For real estate and other high-risk sectors, applying a risk-based approach to related-party dealings is no longer optional.

Companies that proactively strengthen oversight, integrate finance and AML controls, and challenge internal transactions with the same rigor as external ones will be far better positioned to meet UAE regulatory expectations in 2025 and beyond.