UAE’s Most Vulnerable Sectors for Money Laundering in 2025

The United Arab Emirates (UAE) operates as a commercial and financial center of the Middle East. It has achieved significant economic expansion in its real estate, together with other sectors such as gold and precious metal trades, banking services, virtual asset service providers, etc.

According to the Financial Action Task Force (FATF) mutual evaluation report from 2023, the UAE recognizes specific high-risk sectors where financial criminals exploit the high cash volumes, complex ownership structures, and cross-border transactions.

Understanding these high-risk areas in financial operations enables the development of advanced anti-money laundering (AML) compliance and strategies with strict regulatory requirements, which are continuously changing.

In 2024, the United Arab Emirates released its updated National Risk Assessment (NRA) as part of its broader 2024 -2027 anti-money laundering and counter-terrorism financing strategy.

The assessment identified major threats of trade-based money laundering, misuse of virtual assets, and rising cybercrime, which are particularly targeting financial institutions and infrastructure.

The high-risk sectors identified are real estate and financial institutions; meanwhile, pharmaceuticals and transport are lower risk.

Given below are some high-risk sectors for money laundering in the UAE as per the National Risk Assessment Report (NRA Report):

Real Estate

Real estate in the UAE is synonymous with luxury and international investments, but these very qualities have made it an attractive place for money launderers hiding their dirty money.

There are very few sectors that draw more attention than real estate. From luxury villas in Dubai to commercial towers in Abu Dhabi, the market is dynamic, fast-moving, and high-value.

Money launderers use these sectors to wash large volumes of illicit funds quickly and quietly.

Some of the potential red flags in real estate, which make it a prime money laundering vehicle, as per the NRA report:

• Large sums can be exchanged in a single transaction
• Transactions involving third parties not connected to the buyer
• Properties can be bought through intermediaries or shell companies
• Property values can be manipulated to suit illegal purposes
• Off-plan property investments, which can be inflated to hide illegal proceeds

It is considered a high-risk sector, as per the NRA Report, because real estate money laundering networks invest in properties to legitimize the origin of their illicit funds and integrate them into the formal economy..

They use real estate transactions to integrate illegal earnings into the legitimate financial system. While several controls are in place, real estate MLROs may lack the necessary tools or expertise to detect suspicious activities, particularly when buyers employ complex front structures and third-party agents.

Dealers in Precious Metals and Stones (DPMS)

The gold markets in Dubai are famous worldwide, but there are growing money laundering risks because precious metals and stones are the ideal tools for laundering, as they are high in value and easy to transport.

The major reason behind this sector being high risk is that a suitcase of gold can be worth millions and can cross borders with minimal scrutiny.

Whether it is gold bars, diamonds, or any other high-value stones or metal items, the DPMS sector poses a high money laundering risk in the UAE.

The ease with which these commodities are bought and sold usually involves cash and is conducted without complete verification of the buyer’s identity.

Why has the DPMS sector been considered medium to high-risk in the National Risk Assessment Report?

• DPMS transactions are usually conducted outside traditional financial systems.
• This sector is most vulnerable to smuggling and trade-based laundering.
• Cash-intensive operations usually make the process of tracing funds difficult.
• Underreporting of transactions allows illegal actors to hide the true value of deals.

The risk of money laundering is considered medium-high, considering Dubai’s position as a precious metals trading hub. The government is pushing for strict regulations, but there are still some gaps that exist.

To combat this, the UAE is requiring traders in precious metals and stones to report regularly in order to promote transparency and traceability.

Financial Institutions

Financial institutions in the UAE play a central role in economic activity because big banks, exchange houses, and investment firms form the core of the financial system.

The banking sector remains the most significant risk for money laundering because it handles billions in cross-border transfers, private banking, and trade finance. This strength is a double-edged sword, processing trillions in payments every year, leading to strict oversight.

The scale and speed of these transactions make them attractive to those who are trying to hide illicit funds discreetly.

Some of the major risk factors that give rise to money laundering in UAE’s financial institutions are:

• Exposure to high-risk clients, which includes non-residents and politically exposed persons (PEPs)
• Exposure to high-risk industries like real estate, virtual assets, and trade finance
• Increasing use of digital platforms, which criminals exploit to conceal illicit activities

Financial institutions fall in the category of medium-high risk. Regulatory authorities have responded effectively since 2021. The CBUAE has published over 85 AML-related circulars and guidances, including risk-based approaches, ongoing monitoring, and real-time reporting to the UAE Financial Intelligence Unit (FIU).

But there are some real challenges, which are balancing customer service with due diligence, especially in the cases of dealing with complex corporate accounts or foreign clients with accuracy.

Virtual Asset Service Providers (VASPs)

Cryptocurrencies and virtual asset tokens provide decentralization with anonymity, the best combination for tech-savvy investors and also money launderers who are looking to transfer value without traditional scrutiny. In this sector, the biggest risks of money laundering come from:

• Peer-to-peer transactions with no central monitoring
• Use of mixing services to obscure fund origins
• Hacking and fraud that generate illegal crypto income
• High use of decentralized finance platforms to launder money

As per an NRA report, the sector is also considered high-risk. Regulatory procedures within the country are shifting toward improvement, together with enhanced due diligence.

To avoid misuse, the UAE has implemented stronger regulations for VASPs, emphasizing compliance with global AML standards and enhanced transaction monitoring systems.

Designated Non-Financial Businesses and Professions (DNFBPs)

The DNFBPs sector in the UAE includes approximately 16,000 firms regulated by four supervisory authorities: the Ministry of Economy (MOEc), the Ministry of Justice, Dubai Financial Services Authority (DFSA), and ADGM Financial Services Regulatory Authority (FSRA).

Professional service providers who work as legal advisors, accountants, and company formation agents offer opportunities for money laundering system development.

These actors do not work directly with funds but help to develop such infrastructure that supports illegal monetary movements.

These professionals may assist in setting up companies, managing assets, or facilitating transactions without realizing they are being used to launder illicit funds.

Potential vulnerabilities:

• Individuals form shell companies along with trusts as methods to conceal their ownership stake.
• Legal and financial experts may not always recognize when customers seek to use their services to conceal or shift unlawful cash, especially if the transactions appear legitimate on the surface.
• Real estate agents are particularly vulnerable since they might be involved in property deals in which the source of funds is unknown.

As per the analysis of the NRA 2024, the DNFBP sector comes under Mixed (High to Medium-Low) depending on the industry. It is common for these professionals not to receive the same level of scrutiny as in financial institutions, which results in a lack of UAE money laundering regulations.

Insufficient training, together with inadequate awareness, makes these legal professionals vulnerable to becoming illegal crime facilitators.

The UAE is working to enhance the AML compliance of DNFBPs by ensuring they follow the same KYC and CDD requirements as financial institutions.

Hawala and Informal Transfer Networks

The Hawala money laundering method operates through the principles of trust instead of using written documentation or money transfers via a broker instead of formal banking networks.

The system exists beyond banking institutions while keeping transaction records obscure. The Hawala serves legitimate purposes, but money launderers use its secrecy invitingly. The potential risks of money laundering involved here are:

• No standard reporting or tracking of transactions.
• The system enables unlimited money transfers.
• Connections to regions with poor regulatory enforcement.
• Lack of regulations and using a broker network make it difficult to trace.
• Enables cross-border movement of illicit funds without involving banks or official institutions.

Hawala is identified as a high-risk sector as per the 2024 National Risk Assessment report. Controlling licensed hawala operators proves to be a difficult task. Fraudsters looking to launder money under law enforcement radar frequently seek the Hawala system because it operates informally.

Concluding Remarks

Money laundering (ML) affects all economic industries and business operations at every scale. The execution of ML and terrorist financing (TF) activities is constantly evolving and adapting to whatever regulatory gaps exist in any potential sector.

The UAE National Risk Assessment report shares the urgent demand to enhance the national efforts in relation to ML and TF through a risk-based approach.

As a strategic path forward, the report recommends enhancing regulatory oversight, improving inter-agency coordination, increasing sector-specific supervision, and raising awareness among reporting entities.

The prime areas that institutions have to address to improve risk management and subsequently reduce the current risks include identification of risks, internal control, compliance, and culture. Thus, only sustainable economic growth can exist, provided it is supported by transparency and integrity.