Five Payments Just Under the Threshold
A buyer agrees to purchase a AED 2.6 million apartment through a small licensed brokerage. He pays a AED 40,000 reservation fee in cash, then makes five separate cash payments of AED 50,000 over ten days, each time saying he wants to 'keep each payment simple'. The remaining AED 2.31 million is to come by bank transfer from a UAE company whose shareholder is the buyer's brother-in-law. The buyer refuses to provide ownership documents, source-of-funds evidence, or an explanation of the company's business, saying 'the broker does not need my private papers'. The agency's MLRO is the owner, who has never filed a report.
1. List the money-laundering red flags in this file and explain why each matters.
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Red flags include: (a) large cash payments in a market where bank transfer is normal; (b) five payments of AED 50,000, each deliberately below the AED 55,000 cash threshold - a classic structuring pattern; (c) a third-party company paying the balance, with a family relationship but no documented link to the purchase; (d) refusal to provide ownership, business or source-of-funds information; (e) a reservation paid in cash before any CDD file exists. Individually each may have an explanation; together they indicate possible layering of criminal proceeds. The broker cannot rely on the buyer's assurance that the money is 'family money'. Real estate agents are DNFBPs and must apply a risk-based approach; unusual cash and third-party funding require enhanced due diligence, not a shrug.
2. What must the brokerage do before it allows the transaction to proceed?
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Before any further step, the agency must complete customer due diligence: identify the buyer, the company and its beneficial owners, and establish source of funds and source of wealth. Because the cash total exceeds AED 55,000 and the pattern suggests structuring, enhanced due diligence is required and senior management must approve any continuation. The broker must not proceed while CDD is incomplete. A suspicious transaction report should be filed through goAML to the UAE FIU, promptly and without telling the buyer. Records must be kept for five years. The MLRO should document the reasoning, including why the transaction was suspicious and what was asked. If the buyer continues to refuse, the agency should decline the transaction and consider whether an existing relationship must be terminated.
3. Can the broker complete the purchase if the buyer still refuses to explain the company payment? Justify your answer.
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No. A broker cannot complete a AED 2.6 million purchase when the payer is an unexplained third party and the buyer refuses source-of-funds evidence. Completion would expose the agency to criminal and regulatory liability and could make the property tainted. The correct course is: issue a written request listing the exact documents required and a deadline; if it is not met, decline to act and return any funds only through the proper channel and with a clear audit trail; file the STR; and do not tip off the buyer or the company. The agency should also review why cash was accepted at reservation stage and tighten its onboarding so CDD starts before any money is received. 'The client refused' is a reason to stop, not a reason to close.