UAE AML Law Raises Tax Compliance Risks

Tax evasion now treated as a money laundering predicate offense

The United Arab Emirates’ new anti-money laundering law, which entered into force in late 2025, significantly reshapes the country’s risk landscape for businesses and investors. The most consequential change is the explicit inclusion of direct and indirect tax evasion as a predicate offense for money laundering.

Under the new framework, funds derived from tax evasion—whether corporate tax, VAT, or other tax liabilities—may trigger money laundering exposure if subsequently used, transferred, concealed, or invested. Importantly, this applies to tax offenses committed both within and outside the UAE.

Alignment with global enforcement standards

The reform coincides with broader tax developments in the UAE, including the introduction of a 9 percent corporate tax in 2023 and the 15 percent global minimum tax for large multinational groups implemented in 2025. Together, these changes increase scrutiny of tax compliance and financial transparency.

Authorities do not necessarily require a prior conviction for tax evasion to pursue money laundering charges. Circumstantial evidence suggesting that funds originated from tax-related misconduct may be sufficient. Liability may arise if a person knew, or reasonably should have known, about the illicit origin of funds based on objective circumstances.

This approach aligns the UAE with international standards promoted by the Financial Action Task Force, which recognizes serious tax crimes as predicate offenses for money laundering.

Expanded obligations for non-financial professionals

The scope of AML compliance now clearly extends beyond banks and financial institutions. Designated non-financial businesses and professions, including corporate service providers, accountants, auditors, lawyers, real estate agents, and high-value goods dealers, are subject to enhanced due diligence and reporting obligations.

Failure to comply may result in severe penalties, including imprisonment of up to 10 years and fines reaching 10 million UAE dirhams or the value of the property involved.

Implications for corporations and high-net-worth individuals

For corporations, tax strategies previously viewed as aggressive but manageable may now carry elevated criminal risk if recharacterized as tax evasion. The integration of tax offenses into the AML framework transforms tax compliance into a core financial crime exposure.

High-net-worth individuals are similarly affected. Undeclared income, opaque offshore structures, and inconsistencies between residency claims and tax filings may attract regulatory scrutiny extending beyond administrative tax enforcement.

Risk mitigation in the new compliance environment

In this environment, tax planning remains possible but must be transparent, defensible, and well-documented. Businesses are expected to integrate tax risk into AML compliance frameworks, ensure consistency between accounting records and tax filings, and strengthen know-your-customer and due diligence procedures.

As International Investment experts report, the inclusion of tax evasion as a predicate offense marks a structural shift in the UAE’s regulatory framework. While the country remains an attractive business hub, it is increasingly characterized by heightened compliance expectations, where tax transparency and AML compliance are inseparable elements of investment security and reputational resilience.