Real estate agents are at risk of being exploited by criminals to launder money. They’re among several professions whose members may be affected by proposed changes to the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act.
Criminals often use real estate to convert the money they make from illegal activities into legitimate assets.
Introducing AML/CFT measures will deter criminals from using your services and help detect them if they do.
Importantly, it will also strengthen the overall AML/CFT system. For example, real estate agents may detect ‘red flags’ that banks and other financial service providers who interact with the same clients might not pick up, because you may have more information about the people and funds involved.
The greater the AML/CFT risks your business faces, the more you’ll have to do to manage these risks. A small firm with long-term local clients will likely have fewer obligations under the AML/CFT Act than a large firm with clients around the world.
What will I have to do to comply with the AML/CFT Act?
Initially, you’ll have to:
designate someone in your business as an AML/CFT compliance officer
assess and document the money laundering and terrorist financing risks your business may face
establish an AML/CFT compliance programme setting out how you’ll detect and manage these risks.
On an ongoing basis, you’ll have to:
verify the identity of new clients and people who pay cash deposits of $10,000 or more (see question 1 above). In some circumstances (such as if they represent a company or trust), you may also need to ask for information about where money came from and the other people involved. For more information about verifying customers’ identities, see: Information for customers about AML/CFT laws
submit a Prescribed Transaction Report to the Police Financial Intelligence Unit (FIU) if a client wants to conduct a transaction in cash that is more than $10,000
monitor customers’ accounts to identify potential warning signs of money laundering and terrorist financing. You must report any suspicious transactions or activity to the FIU. For more information, see: Reporting suspicious activities
regularly review your risk assessment and compliance programme
have your risk assessment and compliance programme audited every 2 years
submit an annual report to the Department of Internal Affairs, which will supervise your sector.
It’s proposed that the Department of Internal Affairs (DIA) will supervise real estate agents, as well as other sectors that Phase 2 of the Act will apply to. It will help you comply with the law and enforce it when needed. Some of the things DIA will do include:
helping you understand how criminals could use your services to launder money or finance terrorism
providing support and guidance to help you identify money laundering ‘red flags’ and to comply with AML/CFT laws
investigating and taking action if you don’t meet your obligations.