AML/CFT Solutions for Real Estate Agencies’ Compliance Management

We offer a comprehensive set of anti-money laundering (AML), counter-terrorist financing (CFT), and fraud prevention solutions for real estate agents’ anti-money laundering compliance that are tailored to applicable AML/CTF (aka CTF) laws, regulations, AML/CTF supervisors' guidance for the real estate sector, sector-specific red flags and indicators, to help your business meet applicable obligations that cover real estate agents’ money laundering and terrorist financing risk mitigation, the detection and handling of other types of financial crime.

We have designed our AML solutions to help you navigate the complexities of real estate agencies’ AML requirements in a commercially oriented and goal-focused manner, providing effective AML/CTF support for all aspects of real estate agencies’ AML compliance, including but not limited to:

• Business Profile and Strategic Factors:
• Your commercial objectives
• Your products
• The size and structure of your business
• Your available AML/CTF compliance technology and resourcing
• Your risk appetite for AML/CTF-related risks
• Your governance framework and reporting lines
• Your client demographics
•  Your countries of operation
• Operational AML/CTF Compliance Requirements:

• Money laundering and terrorist financing (ML/TF) risk assessment
• AML risk management
• Customer due diligence (CDD) and Know Your Customer (KYC) obligations for real estate agents
• Enhanced customer due diligence
• Ongoing customer due diligence and transaction monitoring
• PEP identification and sanctions compliance
• Staff vetting and AML/CTF training
• Ad-hoc and periodic reporting
• Other obligations relating to real estate agents' anti-money laundering, counter-terrorist financing and sanctions compliance, as well as financial crimes prevention

Which Types of Real Estate Agencies Do We Support?

Focusing on money laundering (ML), terrorism financing (TF) mitigation, and fraud prevention, our Real Estate Agencies' AML solutions cover the following types of real estate service providers and institutions that are deemed to be AML/CTF designated service providers (aka “reporting entities”):

• Residential Real Estate Agencies
• Commercial Real Estate Agencies
• Real Estate Real estate agencies
• Property Management Firms
• Real Estate Developers
• Vacation Rental Management Companies
• Other entities providing AML/CFT-regulated real estate services

 

 

What Jurisdictions Do Our Real Estate Agencies’ AML Solutions Cover?

• United Kingdom: Real estate agencies’ AML obligations in the United Kingdom are governed by the Money Laundering Regulations 2017, last amended in 2020, with HM Revenue and Customs (HMRC) responsible for AML compliance supervision of real estate businesses.
• European Union: Real estate agencies’ AML compliance within the European Union is based on the Sixth Anti-Money Laundering Directive (AMLD6), and supervision is conducted by the National Competent Authorities in each EU member state.
• New Zealand: Real estate agencies’ AML in New Zealand is regulated under the Anti-Money Laundering and Countering Financing of Terrorism Act (AML/CFT) 2009, overseen by the Department of Internal Affairs (DIA) since January 2019.

Real estate agents, along with trust and company formation service providers, lawyers, and accountants, are often considered “gatekeepers” in real estate AML compliance. These professionals can be used by money launderers to acquire real estate with illicit funds, channel criminal proceeds into the financial system, and conceal true ownership of properties. Consequently, real estate agents have AML obligations in some jurisdictions, while in others, they are either partially covered or face pending discussions about being included under AML/CTF laws.

For example:

• United States: Real estate agencies’ AML requirements apply to specific transactions, such as large cash deals. While a full AML program is not mandatory, regulatory scrutiny of the sector is growing, with potential new regulations anticipated.
• Australia: Real estate agencies are currently not considered reporting entities under the AML/CTF Act 2006. However, there are ongoing discussions about extending AML/CFT obligations to cover the real estate sector.
• Singapore: Real estate agencies in Singapore are not directly subject to AML/CFT regulations under the Monetary Authority of Singapore (MAS). However, they must comply with financial crime laws, including the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act and the Terrorism (Suppression of Financing) Act 2002 (TSOFA), which contain provisions against money laundering and terrorist financing but do not impose specific AML/CFT obligations such as customer due diligence or reporting.

 

Real Estate Agencies’ AML Advisory and Support

Our AML/CFT advisory services for real estate agencies include, but are not limited to, the following:

• Detailed AML/CTF compliance advice: Tailored to the AML requirements for real estate agents for different processes, including but not limited to customer due diligence (CDD), transaction risk scoring, transaction monitoring, customer onboarding and know-your-customer (KYC) analysis, and other AML processes. Also tailored to the specific money laundering and terrorist financing (ML/TF) risks involved in these processes, helping you with effective ML/TF risk management.
• Real estate agencies' fraud risk management advice: Advising on measures, controls, and processes for detecting, preventing, and responding to different types of fraud, scams, and other types of financial crime relevant to real estate agencies. Also, tailored to real estate agencies’ fraud environment, risk management practices, and stakeholders' expectations and obligations (banks, regulators, insurers, shareholders, etc.).
• Banking relationships advice: Advising real estate agencies on AML/CTF issues related to maintaining and expanding their banking relationships, complying with banks' AML/CTF risk appetite standards, recall procedures and expectations, and other operational requirements.
• Operational AML/CTF advice: Advising support and KYC teams on day-to-day onboarding, support queue management processes, allocating AML/CFT resources effectively, and making operational improvements to enhance overall customer experience and AML compliance efficiency.
• Specific matter advice (difficult clients, high ML/TF risk matters, customer due diligence for high-net-worth clients, complex transactions and more): Advising on handling specific AML/CTF issues related to clients and complex and unusual transactions, including assessing the adequacy of Sources of Wealth (SOW) or Source of Funds (SOF) information and documentation for specific enhanced due diligence (EDD) cases.
• Peer benchmarking and best practices: Helping real estate agencies compare their AML/CFT practices with industry standards, AML/CTF supervisor guidance, and internationally recognised best practices set up by international organisations like the Financial Action Task Force (FATF) for complying with real estate agencies’ AML/CFT obligations.
• Government agencies liaison advice: Advising senior management and compliance teams on handling relationships with external bodies, including AML/CTF supervisors and law enforcement agencies, such as the FIU or its local equivalents.
• AML/CFT audit advice: Advising senior management and compliance teams on matters related to the statutory AML/CFT audits, including auditors' guidelines, requirements, AML/CFT audit process, and obligations related to the audit's outcome, tailored to both generic real estate agents’ anti-money laundering compliance obligations and your specific situation.
• AML/CFT remediation advice: We help real estate agencies to effectively navigate situations involving an AML/CFT breach, warning, or investigation. The cost of non-compliance can result in significant regulatory fines and penalties, as well as irreparable reputational damage. Therefore, when you are on your supervisor's radar, it’s essential to have AML/CFT advisors who know how to set things right and effectively engage with AML/CFT supervisors and other stakeholders. For more details, please visit our Remediation Solutions page.
• Further information: You can visit our AML advisory page for an extensive list of AML/CFT advisory services we offer to support real estate agencies' anti-money laundering compliance, as well as AML/CFT compliance for other types of financial institutions and businesses subject to the AML/CFT regime.

AML/CFT Training and Capacity Building

We offer the following set of AML/CFT training and education solutions tailored to the real estate agencies’ AML/CFT compliance requirements:

• Customised AML/CFT Training Solutions: Specialised AML training sessions for various teams, including management, compliance, operations, sales, and customer relations, focusing on the real estate agencies’ AML requirements, AML/CFT awareness, best practices, and ML/TF red flags.
• Up-to-date Regulatory AML Updates: Keeping your compliance officers, managers, and teams updated with changes in the real estate agencies’ AML requirements, AML regulations and guidance.
• Workshops on Emerging Trends and Red Flags: Advising on new AML trends, red flags, and typologies relevant to real estate money laundering, terrorist financing, fraud, and other types of financial crime.
• Practical Workshops: Interactive workshops for effective and goal-oriented AML/CTF compliance, capacity planning, and resource allocation, covering:

• KYC procedures for real estate agencies
• KYB analysis and ML/TF risk assessment application to specific clients, transactions and situations
• The real estate money laundering risks, common money laundering schemes and terrorist financing methods
• Improvements in clients' onboarding and transaction monitoring procedures
• Reg-tech for AML compliance
• Internal and external AML/CTF reporting
• Related risk and compliance issues, including financial crime prevention
• Application of the risk-based approach to real estate money laundering, fraud risks, and terrorism financing
• Suspicious matter reporting guidelines
• The implementation of customer identification programs and KYC procedures
• Strategic and operational ML/TF risk management
• Other obligations related to the AML requirements for real estate agents

• Practical Compliance Applications: Ensuring the practical application of training, focusing on real-world real estate money laundering, terrorist financing, and common real estate agencies’ fraud scenarios, as well as specific challenges related to the real estate agencies’ AML/CTF compliance that your business is likely to face.
• Further information: You can visit our AML training solutions page for an extensive list of AML/CFT training solutions we offer to real estate agencies and other businesses subject to AML/CFT regulations.

 

Comprehensive AML/CFT Managed Solution for Real Estate Agencies

Our real estate agencies’ AML/CFT compliance management solutions include but are not limited to:

• AML/CFT Compliance Leadership: We act as your dedicated AML/CFT compliance officers (aka “Money Laundering Reporting Officers” or (MLROs)) and as compliance managers, fully managing AML/CFT compliance and handling the real estate agents’ anti-money laundering obligations for your business.
• Real Estate Agencies' Anti-Money Laundering Risk Management: Conducting detailed assessments to identify ML/TF risks, assess their inherent impact and likelihood of occurrence for your business, evaluate the effectiveness of mitigations and controls in place, and formulate residual risk ratings.
• Managing Client Onboarding Process and Customer Due Diligence: Implementing robust Know Your Customer (KYC), Know Your Business (KYB), customer due diligence (CDD), and enhanced due diligence (EDD) processes, for all types of clients, including higher ML/TF risk clients.
• PEP and Sanctions Screening: Managing thorough compliance with AML surveillance requirements by screening against global sanctions and politically exposed persons (PEPs) lists. This covers both initial and ongoing screening, as well as escalation processes for true positives.
• UBO Verification Streamlining: Verification of beneficial ownership in line with the AML requirements for real estate agents, identifying and assessing individuals who hold ultimate control over assets. This includes initial and ongoing checks, with procedures to address discrepancies and high-risk cases as they arise.
• AML Transaction Monitoring: Developing and implementing a set of business-specific ML/TF alerts and red flags to detect and report suspicious transactions, helping you comply with the AML requirements for real estate agents in a commercially efficient manner without making AML/CFT compliance a business hindering factor.
• Transaction Monitoring and Real Estate Agencies’ Fraud Prevention Solution: Related to the above, we also help with the implementation of fraud alerts and red flags to detect, prevent, and respond to fraudulent transactions and activities.
• AML/CFT Tech Handling: Leading the alignment of AML/CFT technology implementation with your business processes and AML/CFT objectives. This also includes reviewing AML/CFT technology against the AML requirements for real estate agents and your core policies and procedures.
• AML/CTF and Data Sharing: Handling information requests from law enforcement agencies, AML/CTF supervisors, and other relevant AML/CTF-designated entities—such as your banking partners, FX platforms, liquidity providers, finance providers, etc.—to help you manage your AML/CTF compliance-related communications.
• Internal AML/CFT Reporting Solutions: Facilitating structured reporting workflows for your board and its delegate committees, with a specific focus on AML/CFT compliance. This includes:

• preparing and presenting comprehensive AML/CFT performance metrics
• providing insights into AML/CFT compliance effectiveness
• reporting on the effectiveness of internal controls and mitigations for your general AML/CFT obligations and the sector-specific Real estate money laundering risks
• identifying areas for improvement

Our AML/CFT compliance reports cover:

• your ongoing compliance status in relation to the AML requirements for real estate agents
• ongoing progress against your organisation-wide AML/CFT compliance calendar
• alignment of your business's AML/CFT performance with specific project goals and relevant KPIs
• other factors to ensure that the management function is well-informed and aligned with the AML/CFT compliance requirements for real estate agencies.

• Real Estate Agencies’ AML/CFT Compliance and Externally Reportable Matters: Implementing effective external reporting procedures to help you comply with Real estate agents’ anti-money laundering requirements for reporting captured activities and transactions. This includes managing externally reportable matters covered by the following report types: Suspicious Activity Reports (SARs), Suspicious Matter Reports (SMRs), Suspicious Transaction Reports (STRs), Prescribed Transaction Reports (PTRs), Threshold Transaction Reports (TTRs), and their equivalents.
• Periodic AML/CFT Reporting: Organising and overseeing the preparation, data storage, and effective submission of required periodic reports to your AML/CTF supervisors, helping you comply with AML requirements for real estate agents for statutory reporting.
• Real Estate Agencies’ Fraud Prevention Management: Implementing targeted fraud prevention measures, enhancing internal controls, and helping you comply with internal policies and external regulations. We work to mitigate fraud risks without disrupting business processes, aligning fraud prevention efforts with your broader compliance objectives.

 

KYB Solutions for Real Estate Agents’ Anti-Money Laundering Compliance

We offer a range of KYB solutions to help you effectively comply with the real estate agencies’ AML requirements. These include:

• Establishing ML/TF risk scoring models and parameters for different risk categories: We establish criteria to assess the ML/TF risk levels of your client base by identifying key risk factors based on their business nature, activities, jurisdictions, and other relevant characteristics and develop a risk scoring model to classify clients into different ML/TF risk categories such as low, medium, and high risk.
• Implementing a Customised KYB Process: We can help you roll out the KYB process across all departments to help your teams become sufficiently trained and equipped to handle clients' ML/TF risk effectively when it comes to verification, monitoring, ongoing due diligence, and other processes.
• KYB Technology and Automation: We select and evaluate technologies that can automate various parts of the KYB process, such as data collection, risk scoring, sanctions screening solutions, and ongoing monitoring.
• KYB-Related Escalation Process: We can develop and implement a clear escalation procedure for handling high-risk clients or irregularities, including the triggers for escalation, the actions required at each step, and the responsibilities for resolving these issues.

 

 

Core Real Policies and Procedures for Real Estate Agencies’ AML/CFT Compliance

We develop, enhance, and implement a set of core policies, manuals, frameworks, and procedures for effective real estate agencies’ AML/CFT compliance management, including the following:

• Real estate agencies’ AML/CFT Framework Development: Covering specific AML requirements for real estate agents and obligations under national AML/CTF laws and regulations, any applicable AML/CFT guidance, your risk appetite, your existing human and technology resources, your business structure, your history of AML/CFT compliance, and your current and future business goals.
• AML/CTF Risk Assessments: Focused on the AML requirements for real estate agents for risk management as they relate to specific ML/TF risks faced by your business in terms of its size, products, client types, jurisdictions of operation, delivery channels, and the financial institutions it interacts with when delivering its services. Also covering the assessment of the effectiveness of existing controls and mitigations in place to determine the residual risk rating for both general ML/TF risks relevant to the most designated service providers/AML/CFT reporting entities and industry-specific ML/TF risks faced by real estate agencies as these apply to your business operations. Visit our AML/CTF Risk Assessment page for more information.
• Comprehensive AML/CTF Programs (aka "AML/CFT Programme" in some jurisdictions): When it comes to real estate agents’ anti-money laundering compliance, your AML/CFT program is a core document that details how your business complies with various compulsory AML/CFT obligations, covering:

• the initial and ongoing CDD and EDD processes
• verification methods and requirements for identity, address, and source of funds
• internal and external reporting
• ongoing due diligence
• transaction monitoring
• employee vetting and training
• PEP and sanctions screening, and more

Our real estate agencies’ AML solution is about grounding your AML/CTF program in reality and developing it based on your circumstances, including:

• your AML/CFT Risk Assessment
• your available ML/TF systems and controls
• your available resources
• your compliance budget
• your AML/CTF compliance team's experience and size
• your stakeholders' interests
• your available AML technology and other relevant factors
• Further Information: Visit our AML/CTF Programs page for more information

• Real estate agencies’ AML/CTF Procedures for Effective AML Compliance: Effective procedures are another core pillar of real estate agencies’ AML/CTF compliance. This is why our solutions cover the development and enhancement of a detailed set of AML/CTF procedures and protocols to meet the distinct needs of your business, with a focus on effective AML risk management across various business processes and AML requirements for real estate agents as they apply to each step of your customer journey.
• AML Manuals and Guidelines: These are more detailed, practical resources that support the procedures by providing step-by-step instructions, specific reference points, and standards. Depending on your business size and complexity, we develop and enhance internal manuals and guidelines necessary for effective and efficient AML/CTF compliance. These include AML Operating Manuals, guiding materials, and guidelines that outline what to do for each process, step, or decision within your procedures.
• ML/TF Controls Mapping: Implementing controls based on your documented risks is another cornerstone of real estate agencies' anti-money laundering compliance. We help you develop, map, and assess your internal ML/TF controls and improve their effectiveness to ensure compliance with real estate agencies’ AML requirements, address specific financial crime, money laundering, and terrorist financing trends, and respond to any findings from internal and external AML/CFT auditors and supervisors.
• AML Red Flag Identification and Response Protocols: This is another area where a well-written AML policy or program must face the reality of operational speed, the workload across different teams, available tools, client base size, and other factors. That is why another part of our real estate agencies’ AML/CFT solution is to focus on developing clear guidelines for identifying and responding to red flags indicative of fraud, money laundering, or terrorist financing activities, enabling you to take timely and appropriate action in different circumstances.
• AML/CTF Policy Update: Assisting with the review and enhancement of your core AML/CTF documents and operational procedures to reflect changes in your AML policies, including those caused by:
• updates in the AML/CTF laws, real estate agencies’ AML regulations or AML supervisors’ sector guidance

• internal changes in your business structure, size, and resources
• the launch of new products or expansion to new jurisdictions
• changes in your risk appetite
• changes in related obligations, such as privacy laws, information sharing, real estate agencies’ fraud prevention requirements, and more
• AML/CFT issues identified during internal or external reviews or audits
• other relevant factors

 

AML/CFT Technology Integration Support

Streamlining AML Compliance: Our real estate agencies’ solutions include needs assessment and assistance in selecting and integrating appropriate AML technologies for efficient real estate agencies' anti-money laundering compliance management. This includes AML compliance technologies and tools that cover:

• Customer Due Diligence Automation
• E-KYC and Online Identity Verification
• Customer Onboarding Streamlining
• PEP and Sanctions Screening
• Ultimate Beneficial Owner (UBO) identification,
• KYB Solutions and AML/CFT Risk Management
• AML Alert Management
• Ongoing Due Diligence Obligations Management
• Internal AML/CFT Reporting
• AML/CFT Incident Management
• Exception Escalation and Management
• Real Estate Agencies' AML/CFT Obligations for External Reporting
• AML/CFT Management Automation: Including automated response workflows, and AI technology
• Customisable AML/CFT measures specific to onboarding and monitoring of your high ML/TF risk clients
• Real Estate Agencies' AML/CFT obligations for Record-Keeping
• Transaction Monitoring and Surveillance: Including transaction monitoring tools to automate detection and response to real estate agents’ money laundering and terrorist financing red flags
• Effective CRM for handling Real Estate Agencies' AML requirements

 

 

 

Real Estate Agencies’ AML/CFT Audit Solutions

Having over ten years of AML/CFT compliance experience, ranging from AML/CFT framework and controls development and testing to successful AML/CFT management and issues resolution for various reporting entities, gives us the necessary expertise and qualifications to be your AML/CFT auditors.

We offer two comprehensive AML/CFT audit options to review your compliance with real estate agents’ anti-money laundering obligations. These options are:

Statutory AML/CTF Audit Option: A comprehensive review of your existing AML/CTF framework to assess whether your business complies with AML/CTF standards and applicable obligations. We independently test your compliance with both local AML/CTF obligations and specific real estate agencies’ AML requirements. These often include but are not limited to:

• adherence to your AML/CTF risk assessment and operational AML/CFT procedures, including the existence of controls and mitigations to address money laundering and terrorist financing risks identified in your risk assessment
• compliance with your core AML/CFT documents, including sample testing
• your CDD requirements
• your staff vetting requirements
• your AML/CFT management processes
• your client onboarding and offboarding processes
• your EDD requirements, including source of wealth (SOW) and source of funds (SOF) requirements and application of the risk-based approach to different ML/TF risk levels
• your transaction monitoring process, covering large, complex, and unusual transactions and patterns
• your ODD processes
• your record-keeping process
• your suspicious matter reporting process (also known as "suspicious activity" or "suspicious transaction" reporting in some jurisdictions)
• your other reportable transactions process (typically covering cash and cross-border transactions)
• the way you detect and address material changes in client relationships
• your initial and ongoing screening process
• and other obligations for real estate agencies’ AML/CFT compliance

Assurance Levels: Our statutory AML/CFT audit options are available as both:

• A limited assurance audit
• A reasonable assurance audit

Further Information: Please visit our AML/CFT Audit page for more information.

Internal AML/CFT Audit Option: Apart from an independent statutory audit, we also offer an internal AML audit option to prepare real estate agencies for an external audit by an independent auditor, an AML/CTF supervisor's review, or a review by another significant business stakeholder, such as a banking partner or an equity purchaser. This option is also suitable for significant business events like reorganisation or expansion.

Here, we go beyond merely meeting AML requirements for real estate agents and focus on evaluating the effectiveness of your AML/CFT controls and ML/TF risk management processes for alignment with:

• the ML/TF risks faced by your business, including your Know Your Business (KYB) analysis
• real estate agents’ anti-money laundering compliance obligations
• your current and future goals
• your business model
• your current and prospective client inflow
• the specific AML/CFT compliance areas or requirements (this process can be tailored to address particular AML issues or compliance areas, ensuring a targeted approach to real estate agents’ anti-money laundering compliance)

We help you not only identify any gaps and weaknesses but also provide insights on how to enhance your controls and respond to these in a commercially oriented manner for smarter AML/CFT compliance. Please visit our Internal AML/CFT Review Solution page for more information.

 

AML/CFT audit-related solutions:

• Post-Audit Remediation Support: We assist with the implementation of post-audit remediation actions, addressing and resolving any identified AML/CFT issues.
• AML/CFT Attestation Support: Our real estate agencies’ AML solutions include helping you prepare the required attestations for your AML/CFT supervisor and other stakeholders. This involves confirming that all necessary remedial actions have been completed and that adequate AML/CFT compliance measures have been put in place.
• Post-Audit Stakeholders' Liaison: We manage your communications with national AML/CTF supervisors, banks, auditors, insurers, and other stakeholders, ensuring smooth progress in reporting on the status and completion of your post-audit action plan.

 

 

Broader Risk & Compliance Solutions for Real estate agencies

Your AML/CFT compliance is generally more effective when the right hand knows what the left hand is doing, and at the very least, they do not interfere with each other. Incorporating your controls and procedures for compliance with the AML requirements for real estate agents into an overall risk and compliance management framework efficiently can increase your overall risk compliance effectiveness. This is where our experience can help you. Apart from AML/CFT compliance solutions for real estate agencies, we include the following risk and compliance solutions:

• Compliance Advisory and Management: A comprehensive set of solutions for second-line compliance management, including both compliance advisory and compliance management options.
• Third-line Compliance Assurance: A range of third-line compliance defence solutions covering compliance assurance program development and implementation, internal controls design, and controls testing solutions
• ISO Standards Compliance: A range of solutions for compliance with the International Organization for Standardization (ISO) standards, helping you prepare for ISO certification.
• FATCA and CRS Compliance: A comprehensive set of solutions for complying with the Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS) requirements, including tax residency verification, ongoing due diligence, reporting, and record-keeping.
• Privacy Law Compliance: A range of solutions covering development, implementation, and testing of data privacy controls, procedures, and tools required to meet the applicable obligations under the Privacy Act, the GDPR, ISO 27701, etc.

 

 

Common Money Laundering Risks for Real Estate Agencies

Real estate money laundering risk types can be broadly classified into five categories:

• Product types (services offered)
• Delivery methods
• Customer types
• The institutions involved in delivering your services
• Jurisdictions of operation

Given the variety of products offered by different businesses, as well as their different business structures and operations, the examples below of money laundering risks faced by real estate agencies represent only a sample and are not exhaustive.

 

 

Product-Related Risks and Real Estate AML Compliance

Some of the product-related ML/TF risks relevant to real estate agencies’ AML compliance include:

• Property Flipping Without Monitoring: Repeated buying and selling of properties without adequate monitoring may allow funds to be laundered by artificially inflating property values and disguising illicit money.
• Luxury Property Transactions Without Enhanced Due Diligence (EDD): High-value properties targeted by high-net-worth individuals may be used to layer or integrate illicit funds if EDD measures are not applied.
• Cross-Border Property Investments Without Jurisdictional Due Diligence: Real estate investments involving multiple jurisdictions without thorough due diligence.
• Development Projects Without Financial Oversight: Large development projects lacking detailed oversight and transparency in funding sources.
• High-Value Property Transactions Without Source of Funds Verification: Properties purchased in cash or with large, one-time payments without verifying the source of funds.
• Real Estate Investment Schemes Without Detailed Ownership Disclosures: Investment structures, such as property development partnerships, may obscure beneficial ownership and provide opportunities for money laundering if ownership is not transparently disclosed.
• Off-Plan Sales with Limited Oversight: Sales of properties before they are constructed (off-plan sales), without sufficient monitoring of payment sources.
• Frequent Resale or “Flipping” of Properties Without Proper Monitoring: Repeated buying and selling of properties in short periods, if not monitored.
• Manipulation of Property Valuations: Lack of mechanisms to detect under- or over-valuations in property transactions facilitates money laundering through misrepresentation of property values.
• Commercial or Rental Properties as Income Laundering Fronts: Properties generating rental or commercial income can provide a cover for integrating illicit funds, especially when ownership structures obscure the true source of funds.

 

 

Jurisdictional Risks and Real Estate AML Compliance

Some of the jurisdictional risks relevant to real estate money laundering include:

• Transactions Involving High-Risk Jurisdictions Without Enhanced Due Diligence (EDD): Accepting clients or funds from high-risk jurisdictions, without implementing EDD measures.
• Funds Originating from Jurisdictions with Lax AML Regulations Without Monitoring: Funds transferred from jurisdictions with weaker AML regulations, if not closely monitored.
• Non-Resident Clients Without Additional Verification: Non-resident clients purchasing properties without screening and appropriate levels of due diligence.

 

Delivery Method Risks and Real Estate AML Compliance

Some of the service delivery method-related ML/TF risks relevant to real estate agencies’ AML compliance include:

• Remote Transactions Without Identity Verification: Remote property purchases, if not subject to robust identity verification, can make it easier for illicit actors to enter the real estate market. Specifically, it is without controls for linking documents supplied to the identity of a customer or dealing with a third party that acts on behalf of a buyer/seller.
• Payments Through Complex Financial Instruments Without Due Diligence: Use of complex financial products (e.g., trust accounts or escrow) for property payments without proper due diligence on the SOW.
• Cash Payments Without Transaction Limits: Lack of controls for cash payments for property purchases.

 

 

Customer Type Risks and Real Estate AML Compliance

Some of the customer type-related ML/TF risks relevant to real estate money laundering prevention include:

• Inadequate Verification of Source of Funds for High-Value Purchases: Absence of effective controls to verify the origin of funds used in high-value property transactions exposes real estate agencies to ML/TF risks.
• Weak Enhanced Due Diligence for Politically Exposed Persons (PEPs): Insufficient EDD measures for PEPs, particularly those from high-corruption-risk jurisdictions, increases vulnerabilities to laundering proceeds of corruption.
• Lack of Comprehensive Background Checks for Foreign Investors: Failure to conduct thorough and consistent background checks on overseas buyers, especially from jurisdictions with weak AML/CFT measures, increases exposure to ML/TF activities.
• Absence of Controls Over Beneficial Ownership Transparency: Weak mechanisms to identify the ultimate beneficial owners of corporate entities purchasing properties can obscure the source of funds and facilitate laundering activities.
• Insufficient Monitoring of High-Value Transaction Patterns by High-Net-Worth Individuals (HNWIs): Failure to assess and monitor frequent, high-value property transactions by HNWIs can enable the layering of illicit funds.
• Weak Scrutiny for Non-Resident Buyers from High-Risk Jurisdictions: Lack of enhanced scrutiny for non-resident buyers, particularly those from high-risk jurisdictions, creates vulnerabilities in verifying the legitimacy of funds used in real estate transactions.
• Lack of Controls Over Clients Using Intermediaries: Failure to implement controls to verify the identities and roles of intermediaries acting on behalf of clients may obscure the true source of funds and facilitate ML/TF activities.

 

Institutional Risks and Real Estate AML Compliance

Some of the institutional ML/TF risks relevant to consumer real estate agents' anti-money laundering compliance include:

• Insufficient Oversight of Third-Party Service Providers: Weak monitoring or reliance on service providers, such as escrow agents, lawyers, or accountants, who lack robust AML/CFT controls, increases vulnerabilities to illicit fund flows.
• Inadequate Collaboration with Financial Institutions on Payment Transparency: Limited communication or information-sharing protocols with banks or payment processors restrict the ability of real estate agencies to gain insights into potentially suspicious payment patterns or the true origin and destination of funds. For example, the lack of mechanisms to verify transaction details, such as the beneficiaries or originators of payments processed through non-traditional payment channels, creates blind spots in identifying ML/TF risks, particularly for international payments.

 

 

Standard Anti-Money Laundering Requirements for Real Estate Agents

Given the variety of AML requirements for real estate agents, this list is not exhaustive:

• Conducting customer due diligence, including appropriate KYC checks: Ensuring verification of customers’ identities, as well as identities of beneficial owners of customers that are legal entities.
• Conducting transaction monitoring:  Monitoring deposits, withdrawals, and other transactions to identify and report suspicious transactions and patterns. However, this largely depends on specific business models and national AML/CFT laws.
• ODD requirements: Conducting ongoing customer due diligence, which is generally based on the customers' ML/TF risk profiles and ML/TF risk categories, as well as changes in their activities, behaviours, or risk factors.
• Staff Vetting: Performing comprehensive background checks and ongoing vetting of staff to maintain high standards of integrity and awareness.
• Reporting Certain Non-Suspicious Transactions: Obligation to report cross-border or cash transactions over a certain threshold, as per the local AML/CFT regulations, in a timely manner. However, if the transaction is processed through a local bank or another reporting entity, reporting requirements may depend on the local AML/CFT regulatory interpretation.
• Compliance with the regulatory obligations: Including registering with your local AML/CTF supervisor, appointing an AML/CTF officer or an MLRO, answering requests for information from the police, regulators and your AML/CTF supervisor, filing an annual report and more.
• Regular Staff Training: Providing continuous training to ensure employees are aware of AML/CFT protocols and can recognise red flags.
• Timely Reporting of Suspicious Transactions: Ensuring that suspicious transactions and activities are reported to the relevant authority (either your local AML/CFT supervisor or a financial intelligence unit (FIU)) within the required deadlines.
• ML/TF Risk Assessments: Conducting regular assessments of ML/TF risks faced by your business is a part of AML risk management for the real estate agents.
• Independent AML/CFT Audits and Real Estate Agencies: Organising periodic independent reviews of the AML/CFT program, other core documents, and components of your AML/CFT framework to assess their existence, compliance, application, and, where applicable, effectiveness, depending on local AML/CFT audit guidance.
• Applying EDD measures: Conducting enhanced due diligence on certain customers and certain transaction types.
• Establishing Clear AML/CFT Policies and Procedures: Creating documented guidelines for staff to follow.
• Monitoring PEPs and Sanctioned Entities: Implementing measures for additional scrutiny of politically exposed persons and entities on sanction lists.
• Screening Against Watchlists: Regular checks of clients against domestic and international watchlists.
• Ensuring Proper Record-Keeping: Maintaining detailed and accurate records of client information and transactions in compliance with AML/CFT regulations.

 

Common Real Estate AML/CFT Issues

This is not an exhaustive list and could include:

 

During Customer Onboarding

• Inadequate Enhanced Due Diligence for High-Risk Clients: Weak processes for conducting enhanced due diligence (EDD) on clients from high-risk jurisdictions or politically exposed persons (PEPs) increase vulnerabilities to ML/TF risks.
• Weak Identification of Beneficial Ownership: Lack of mechanisms to verify and link beneficial owners to corporate entities purchasing properties creates risks of concealing illicit funds.
• Failure to Verify Source of Wealth and Funds: Insufficient verification of the origin of funds used for property purchases leaves gaps in identifying potential money laundering activities.
• Limited Scrutiny of Third-Party Payments: Lack of controls to assess payments made by third parties on behalf of customers increases the risk of obscuring the true origin of funds.

 

After Customer Onboarding

• Insufficient Monitoring of Transaction Patterns: Weak transaction monitoring systems fail to detect unusual patterns, such as rapid resales or use of third-party intermediaries, which may indicate layering or integration of illicit funds.
• Failure to Update Customer Risk Profiles: Absence of procedures to reassess and update customer risk profiles based on their ongoing activities or changes in ownership creates gaps in ongoing due diligence.
• Missed Suspicious Activity Reports (SARs): Lack of follow-up on red flags or missed filing of SARs for suspicious transactions increases exposure to regulatory breaches.
• Weak Record-Keeping Practices: Inadequate maintenance of transaction records, ownership details, and client communications reduces the agency's ability to meet AML/CFT regulatory requirements.

 

Common AML/CTF Red Flags for Real Estate Agencies

The Financial Action Task Force (FATF) and various national AML/CTF supervisors outline the following non-exhaustive list of ML/TF red flags for real estate agencies:

• Inadequate Beneficial Ownership Verification: Weak controls to identify the true beneficial owners in transactions involving trusts, corporate entities, or offshore buyers.
• Frequent Property Flipping Without Clear Economic Rationale: Repeated buying and selling of properties in short timeframes, particularly when values are artificially inflated or deflated.
• High-Value Transactions Without Source of Funds Verification: Property purchases involving cash or large one-off payments without adequate controls to verify the legitimacy of funds, especially from high-risk jurisdictions.
• Use of Shell Companies or Trusts to Obscure Ownership: Transactions involving entities with complex ownership structures or nominees, designed to obscure the ultimate beneficial owner.
• Unexplained Third-Party Involvement in Payments: Payments made by unrelated third parties or from accounts with no apparent connection to the client, creating opacity in the transaction trail.
• Transactions Involving Politically Exposed Persons (PEPs) Without Enhanced Due Diligence: Property transactions linked to PEPs or their close associates without sufficient scrutiny or due diligence measures.
• International Transactions from High-Risk Jurisdictions: Cross-border property deals involving funds or payments to jurisdictions with weak AML/CFT controls.
• Discrepancies in Property Valuation or Purpose: Transactions where property valuations deviate significantly from market norms or when the stated purpose of the property does not align with transaction details.
• Lack of Comprehensive Client Documentation: Incomplete, inconsistent, or falsified identification and financial records provided during the onboarding or transaction process.
• Unusual Use of Complex Payment Structures: Use of escrow accounts, multiple intermediaries, or layering payment methods that obscure the source and flow of funds.