UAE’s New Anti-Money Laundering Law Brings Risks for Businesses

The United Arab Emirates’ new anti-money laundering law and other recent tax changes will increase tax-related risks for businesses. As a result, businesses need to be aware of these risks and make plans for how to reduce them.

For many years, the UAE has been a low-tax, business-friendly jurisdiction. Tax risk was largely seen as a compliance issue, and few businesses inquired whether their business counterparts such as customers, suppliers, partners, complied with their taxes in the UAE, let alone in foreign countries.

That framework is now changing. The UAE’s new AML law reflects a broader global trend: Tax is no longer treated as a technical back-office issue. It’s now a core component of financial-crime enforcement.

For those doing business or holding assets in the UAE, this represents a fundamental shift in risk perception. The cost of getting tax wrong is no longer limited to penalties or interest. In the new landscape, tax mistakes can trigger criminal scrutiny, AML investigations, and reputational harm.

Recent Regulatory Changes

With the entry into force of the UAE’s new AML law in late 2025, tax moved decisively into the realm of financial crime. The reason is simple but far-reaching: Direct and indirect tax evasion is now expressly included as a predicate offense for money laundering.

This means that tax evasion, whether committed in the UAE or abroad, could give rise to a money laundering offense in the UAE.

If funds originate from tax evasion—whether corporate tax, value-added tax, or other taxes—any subsequent use, transfer, concealment, or investment of those funds may qualify as money laundering. In other words, tax evasion is no longer just a tax problem; it can be the starting point of an AML financial-crime case.

In practical terms, this means that tax issues can now trigger AML investigations, criminal exposure, asset freezes, and reputational damage—consequences that go far beyond a standard tax reassessment or administrative penalty.

This shift aligns the UAE with international standards set by bodies such as the Financial Action Task Force. Globally, there has been a clear move to treat serious tax crimes as a gateway offense for money laundering, on the basis that illicit tax savings are economically equivalent to other criminal proceeds.

Three additional points are worth noting under the new AML law:

• Money laundering charges don’t necessarily require a prior conviction for tax evasion. Authorities may rely on circumstantial evidence suggesting that funds derive from tax-related offenses. This lowers the threshold for enforcement and expands the discretion of investigators.
• A money laundering offense may be committed if the person knew about the illicit nature of the funds, or “it would have been reasonable for them to have known based on the factual and objective circumstances” (objective test).
• AML compliance is no longer the exclusive concern of banks and financial institutions. Designated non-financial businesses and professions, or DNFBPs, including corporate service providers, accountants, auditors, lawyers, real estate professionals, and dealers in high-value goods—fall within the scope of the AML Law.

Recent tax changes also impact the above. After the introduction of a 9% corporate tax in 2023 and the subsequent increase to 15% global minimum tax for large companies in 2025, UAE businesses face a greater compliance burden and higher scrutiny from the tax authorities.

Legal Implications

For businesses and individuals, these changes mean that tax positions once considered aggressive but manageable now carry heightened risk. An arrangement that is later recharacterized by the tax authority could, in extreme cases, be framed as tax evasion—with the resulting funds falling within the AML net.

High-net-worth individuals are also affected. Undeclared income, poorly documented offshore structures, or inconsistencies between residency claims and tax filings may now attract attention beyond the tax sphere. Even in a low-tax environment, opacity is becoming a liability rather than a feature.

DNFBPs are highly affected. Professionals who assist with structuring, accounting, transacting, etc. may be required to ask deeper questions about the tax position underlying the funds involved. Suspicious transaction reports, historically focused on classic money-laundering red flags, increasingly may involve tax-related concerns. If they aren’t diligent when onboarding customers or reporting to the authorities, these professionals could be at risk.

Penalties are substantive, may affect legal entities and managers, and can reach up to 10 years’ imprisonment and the higher of up to 10 million UAE Dirham ($2.7 million) or the value of the property used in the crime.

Reducing Risk

The message isn’t that tax planning is over—but that it must now be defensible, transparent, and well-documented.

Businesses should:

• Review tax positions through the lens of AML risk.
• Ensure consistency between financial reporting, tax filings, and economic reality.
• Update AML policies to include tax-evasion indicators.
• Train compliance teams to recognize tax-related red flags.
• Review and strengthen their know-your-customer and due diligence procedures.

Individuals should:

• Regularize historic tax issues where possible.
• Ensure asset structures are aligned with actual residency and substance.
• Be prepared to explain the tax origin of funds used in major transactions.

The inclusion of tax evasion as a predicate offense marks a turning point. The UAE remains an attractive jurisdiction, but one where tax compliance and AML compliance are now inseparable—and where careful planning has never mattered more.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Xavier Segui is a partner at NAX Law.

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