Why Transaction Monitoring Causes Confusion
Many real estate companies in the UAE struggle with understanding what “transaction monitoring” really means. The term sounds technical and often lacks clear explanation in day-to-day business operations.
Yet, under UAE AML regulations, transaction monitoring is a legal requirement — one that helps detect and prevent money laundering risks throughout the customer relationship, not just at onboarding.
What Is Transaction Monitoring?
Transaction monitoring is the ongoing process of reviewing customer transactions to detect unusual, suspicious, or high-risk activity that may be linked to money laundering or terrorist financing.
It forms part of the broader Customer Due Diligence (CDD) and Ongoing Monitoring obligations required by:
- Federal Decree-Law No. (20) of 2018
- Cabinet Decision No. (10) of 2019
- FIU UAE guidance on reporting and monitoring
Monitoring is not a one-time task. It should occur throughout the business relationship and adjust based on the customer’s risk profile and transaction behavior.
Which Real Estate Transactions Must Be Monitored?
In the context of real estate, transactions to monitor include:
- Property purchases and sales
- Large cash transactions
- Structured or split payments
- Third-party payments or unexplained proxies
- Escrow or trust account usage
- Deposits, withdrawals, booking fees, and down payments
- Cross-border transactions
- Transfers between related parties
Even transactions that appear routine can become suspicious when viewed in the context of the customer’s profile or when patterns emerge over time.
What Are You Monitoring For?
You’re looking for red flags or suspicious patterns, including:
- Activity inconsistent with the customer’s known income or behavior
- Unusually large or frequent transactions
- Payments made by unrelated third parties
- Use of corporate structures that obscure ownership
- Transactions involving high-risk countries or PEPs (Politically Exposed Persons)
- Repeated transaction reversals or cash withdrawals
- Urgency or pressure to complete deals quickly
These indicators do not always prove wrongdoing, but they warrant closer inspection and, if needed, internal escalation or reporting to the FIU.
Is Monitoring Manual or Automated?
The short answer: it depends on the size and maturity of your compliance function.
| Feature | Manual Monitoring | Automated or System-Aided Monitoring |
|---|---|---|
| Setup | No tech investment required | Requires tools or AML software |
| Review Method | Staff check transactions against red flags | Rule-based systems may flag unusual activity |
| Flexibility | Human judgment adaptable to context | Depends on system configuration |
| Speed & Scale | Slower, labor-intensive | Faster, scalable, but still needs oversight |
| Documentation | Manual logs or spreadsheets | Automatically stored logs and reports |
Many real estate companies start with manual methods but may adopt system-supported workflows as transaction volumes or regulatory expectations increase.
What Should an Effective Monitoring System Include?
Whether manual or automated, effective monitoring involves:
-
Clear Risk Rules
Define what constitutes unusual activity for your business context. -
Transaction Categorization
Classify transactions (e.g., deposit, withdrawal, booking fee, down payment) and track their direction (inbound/outbound). -
Remark or Notes Field
Record explanations, justifications, or context for each transaction. -
Link to Screening and Reporting
Ensure flagged transactions can be connected to internal screening and, if needed, to a SAR/STR submission. -
Reporting Tools
Use pivot tables, summaries, or dashboards to analyze transaction patterns across clients or time periods. -
Audit Trails
Maintain proper documentation for each review or escalation decision — this is key during FIU audits.
Monitoring is Mandatory, But It Can Be Practical
Transaction monitoring is not an abstract regulatory term — it's a practical, ongoing process that helps real estate companies in the UAE manage risk and comply with AML laws.
Whether you handle monitoring manually or with the aid of software, the most important part is to be consistent, proactive, and well-documented in how you review customer transactions.
If you're still unsure how to start or improve your monitoring process, consider reviewing your current risk assessment procedures — and aligning them with how transactions are recorded and reviewed.
Want to learn how other UAE real estate companies manage transaction monitoring? Explore our free compliance resources or request a quick consultation.