Dubai’s rapid economic growth has led to the establishment of a well-regulated escrow system, ensuring financial security in sectors such as real estate, commodities, and high-value transactions. Below is an overview of the key regulations governing escrow services in Dubai, emphasizing compliance requirements and the importance of legal expertise.

1. Escrow in Real Estate: Law No. 8 of 2007

Dubai’s Escrow Account Law (Law No. 8 of 2007) regulates escrow arrangements for off-plan property sales, requiring developers to deposit buyer payments into a dedicated escrow account. These funds may only be accessed for project-related expenses, ensuring financial transparency and protecting buyers from fraud or project delays. The Dubai Land Department (DLD) oversees the implementation of this law.

2. Escrow for Commodities and High-Value Transactions

Escrow services in Dubai extend beyond real estate to cover commodities trading and large financial agreements. While there is no single law governing these transactions, they are regulated under the UAE Civil Code and the UAE Commercial Transactions Law.

Legal Provisions:

• Escrow agreements must be formalized through legally binding contracts outlining the responsibilities of each party, transaction milestones, and dispute resolution mechanisms.
• Certain escrow accounts may be subject to oversight by the Dubai Financial Services Authority (DFSA), particularly for entities operating within the Dubai International Financial Centre (DIFC).

3. Compliance with Anti-Money Laundering (AML) Laws

Escrow services in Dubai are subject to strict Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) regulations under Federal Decree-Law No. 20 of 2018 and its implementing provisions. These regulations aim to prevent illicit financial activities and protect the integrity of financial transactions.

Obligations for Escrow Agents and Institutions:

• Conducting thorough Customer Due Diligence (CDD) before onboarding clients.
• Reporting any suspicious transactions to the UAE Central Bank’s Financial Intelligence Unit (FIU).
• Maintaining transaction records for a minimum of five years.

Dr. Alhammadi Law Firm: A Trusted Partner in Escrow Services

Dr. Alhammadi Law Firm has extensive experience in managing escrow transactions in compliance with Dubai’s legal framework. The firm provides legal support for escrow services in real estate, commodities trading, and high-value transactions, ensuring regulatory adherence and financial security.

For cryptocurrency-related escrow transactions, the firm works exclusively with licensed financial institutions and assists clients in securing insurance solutions to protect escrowed funds against theft and cyber threats. Whether drafting legally sound escrow agreements or overseeing compliance requirements, Dr. Alhammadi Law Firm is a trusted name in handling complex escrow arrangements.

Why Legal Expertise is Essential in Escrow Transactions

Given Dubai’s intricate regulatory environment, engaging in escrow transactions without proper legal guidance can lead to risks such as contract disputes, financial losses, or regulatory penalties. Partnering with an experienced law firm provides the legal protection needed to navigate escrow services effectively.

For customized legal solutions in escrow transactions, Dr. Alhammadi Law Firm offers comprehensive expertise and a proven track record in managing property transactions, commodities trading, and high-value agreements.

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