Dubai’s continued rise as a global business hub has transformed how high-value transactions are structured and secured. From multi-million-dirham real estate projects to large-scale commodity trades and digital asset transactions, the demand for reliable escrow services has never been greater.

In 2025, the emirate’s legal framework for escrow arrangements has become more sophisticated, emphasizing compliance, transparency, and consumer protection. Understanding Dubai’s escrow laws is crucial for businesses, investors, and individuals seeking to conduct risk-free and fully compliant transactions.

1. Real Estate Escrow Accounts: A Cornerstone of Market Confidence

Dubai’s Escrow Account Law (Law No. 8 of 2007) remains one of the most effective real estate regulations in the region. Enacted to regulate off-plan property transactions, it compels developers to deposit all buyer payments into escrow accounts that can only be used for construction and project-related costs.

This system, overseen by the Dubai Land Department (DLD) and the Real Estate Regulatory Agency (RERA), has brought remarkable transparency and accountability to Dubai’s booming real estate sector.

Regulatory Highlights

• Mandatory DLD Registration: Developers must register each project and open escrow accounts only with DLD-approved banks.
• Restricted Fund Usage: Withdrawals from these accounts are limited strictly to project construction expenses and verified development costs.
• Regular Audits: Developers are subject to periodic audits to confirm compliance with escrow fund allocation rules.
• Buyer Protection: The escrow framework protects purchasers’ payments, ensuring that developers cannot misuse funds or abandon incomplete projects.

As Dubai continues to attract international investors, compliance with escrow account rules remains a top priority for developers and escrow agents alike.

2. Expanding the Scope: Escrow in Commodities, M&A, and Crypto Transactions

While real estate enjoys a dedicated legal framework, the use of escrow arrangements has expanded well beyond property transactions. Sectors such as commodities trading, mergers and acquisitions (M&A), and cryptocurrency deals increasingly rely on escrow mechanisms to maintain transactional security.

Under the UAE Civil Code and the Commercial Transactions Law, parties can enter into private escrow agreements that define the rights, duties, and obligations of all stakeholders involved. These contractual escrow arrangements are particularly valuable for high-stakes transactions that involve multiple jurisdictions or counterparties with no prior commercial history.

Legal Considerations

• Customized Agreements: Each escrow contract should clearly specify deposit conditions, release criteria, and dispute resolution procedures.
• Neutral Custodians: Funds or assets are held by a neutral third party—usually a licensed escrow agent or law firm—until all contractual conditions are fulfilled.
• Cross-Border Flexibility: Escrow arrangements facilitate smooth international trade and investment deals while minimizing counterparty risk.

In recent years, Dr. Mohamed Alhammadi Advocates & Legal Consultants Office LLC has played a key role in structuring compliant escrow services for commodity transactions, cryptocurrency deals, and M&A settlements, ensuring that all parties are legally protected throughout the process.

3. Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) Obligations

Escrow services in Dubai fall under strict oversight due to the country’s ongoing efforts to prevent money laundering and financial crime. The Federal Decree-Law No. 20 of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism (AML/CTF Law) imposes rigorous compliance requirements on all entities offering escrow or fiduciary services.

Key Compliance Responsibilities for Escrow Agents

• Customer Due Diligence (CDD): Conducting thorough identity verification and risk assessment before accepting funds or digital assets.
• Suspicious Activity Reporting: Notifying the UAE Central Bank’s Financial Intelligence Unit (FIU) of any unusual or high-risk transactions.
• Record-Keeping: Maintaining comprehensive transaction records and identification documents for at least five years.
• Risk-Based Approach: Continuously evaluating the source of funds and counterparties’ backgrounds to detect potential red flags.

For cryptocurrency-related transactions, these obligations extend to Virtual Asset Service Providers (VASPs), who must comply with rules set by VARA (Virtual Assets Regulatory Authority) in Dubai and the Abu Dhabi Global Market (ADGM) for Abu Dhabi-based entities.

4. Licensing Requirements for Escrow Service Providers

Entities offering escrow services in Dubai must operate under proper authorization. Unauthorized escrow activity is strictly prohibited and may result in severe penalties or legal action.

• Real Estate Escrow: Developers must engage escrow agents approved by the DLD and RERA.
• Financial Escrow and Commodities: Licensed law firms or financial institutions must manage client funds under approved arrangements.
• Crypto Escrow: Firms handling cryptocurrency transactions must work with licensed and regulated institutions, ensuring compliance with VARA, DFSA, or SCA requirements, depending on the jurisdiction.

Proper licensing is not merely a procedural step; it is a fundamental safeguard that protects clients, investors, and businesses from fraud and operational risk.

5. The Role of Dr. Alhammadi Law Firm

Dr. Alhammadi Law Firm is recognized among the leading legal firms in Dubai and Abu Dhabi offering specialized escrow and paymaster services across multiple sectors.

Areas of Expertise

• Real Estate Escrow: Managing developer and buyer accounts under DLD regulations.
• Commodities and Precious Metals: Providing secure escrow structures for international commodities trades and gold transactions.
• Cryptocurrency Escrow: Facilitating compliant digital asset transfers through licensed exchanges and custodians, with optional insurance coverage for funds held on Fireblocks-secured platforms.
• Contract Drafting and Compliance: Preparing detailed escrow agreements that align with UAE law, clearly defining release conditions, and ensuring all AML and CTF obligations are met.
• Dispute Resolution: Representing clients in cases involving escrow misuse, non-performance, or regulatory breaches.

The firm’s lawyers bring extensive experience in coordinating with banks, regulators, and financial intermediaries to ensure every transaction is legally sound, transparent, and secure.

6. The Importance of Professional Legal Oversight

Attempting to manage complex escrow arrangements without expert guidance can expose parties to significant financial and legal risks. These risks include delayed fund releases, regulatory non-compliance, or potential exposure to fraud and money laundering investigations.

Working with a law firm experienced in escrow and financial compliance mitigates these risks and provides peace of mind. Professional oversight guarantees that funds are held in accordance with Dubai’s legal standards and released only once contractual obligations are fulfilled.

7. Conclusion

Dubai’s escrow laws continue to evolve to meet the growing sophistication of its economy. Whether in real estate, commodity trading, or cryptocurrency transactions, the emirate’s regulatory framework prioritizes transparency, accountability, and investor protection.

As escrow compliance becomes increasingly technical, businesses and investors are turning to legal experts to navigate this evolving environment. Dr. Mohamed Alhammadi Advocates & Legal Consultants Office LLC remains a trusted partner for clients seeking compliant, reliable, and secure escrow arrangements in Dubai and Abu Dhabi.

By combining in-depth knowledge of UAE law with a commitment to best practices in financial security, the firm continues to play a vital role in protecting clients’ interests and strengthening trust in the UAE’s global business ecosystem.

Dr. Mohamed Alhammadi Advocates & Legal Consultants Office LLC provides escrow and/or paymaster services only where such services are ancillary and wholly incidental to the provision of legal services.