Introduction
Real estate has long been a magnet for illicit finance. Its high value, perceived stability, and ability to disguise ownership make it a favoured vehicle for laundering illicit wealth. The UKโs National Risk Assessment (2025)[i] highlights that property transactions feature across all major money laundering typologies and predicate offenses, including corruption, fraud, modern slavery, and sanctions evasion.
A similar dynamic is unfolding in parts of Africa, where an unprecedented real estate boom driven by strong supply-side policies and surging demand, is reshaping skylines and economies. Yet, while this boom signals progress and ambition, it is also creating a fast-moving environment where regulatory oversight struggles to keep pace.
The Supply-Side Push
Across the continent, governments are actively promoting tourism, culture, and real estate development to attract foreign investment. High-profile initiatives like Ghanaโs Beyond the Return, Nigeriaโs Eko Atlantic City, and Senegalโs Diamniadio Lake City reflect this drive to modernize and globalize African cities.
While these projects stimulate legitimate growth, they also create vulnerabilities. Without stronger regulations to match the pace of development, unscrupulous investors can exploit loopholes and weak controls within the property market turning opportunity into risk.
The Demand-Side Pressure
Rising urbanization, a growing affluent class, and a returning diaspora are fuelling an unprecedented appetite for property in cities like Abuja, Lagos, Accra, and Nairobi. Real estate is viewed as both a safe investment and a symbol of status, driving luxury developments and soaring prices.
However, the rapid expansion of this high-value market has outpaced the ability of regulators to enforce effective oversight. Left unchecked, the same forces propelling growth could transform the sector into a major conduit for illicit financial flows.
Dynamics of Vulnerability, Exploitation, and Facilitation
The infiltration of illicit funds into Africaโs real estate sector is not an isolated problem, it is systemic. It thrives in the nexus of geographic, transactional, and customer vulnerabilities.
Geographic Vulnerabilities
In much of Africa, mechanisms meant to ensure transparency often create hiding spaces. Fragmented corporate records, weak or absent public beneficial ownership registers, and outdated land registries, often manual or operating under conflicting legal frameworks, provide fertile ground for abuse. These systemic gaps allow corrupt actors and their enablers to hide behind nominees, shell companies, and complex ownership chains, effectively concealing the true beneficial owners of property.
In Nigeria, for example, the EFCC has investigated cases where public officials used proxies to acquire high-value properties in Abuja and Lagos. One former minister [ii]allegedly acquired 17 properties worth over โฆ2 billion through shell companies registered under false names.
While some progress has been made with South Africa, Nigeria, Ghana, and Sierra Leone establishing beneficial ownership registers and strengthening DNFBP obligations, enforcement remains inconsistent. Many jurisdictions still do not mandate legal professionals to oversee property transactions, real estate transactions occur privately, with limited oversight from legal professionals. Without regular monitoring and meaningful enforcement, these reforms risk becoming symbolic rather than transformative.
Transactional Vulnerabilities
Across Africa, traditional cash-based practices continue to heighten risks in real estate transactions. Properties are often purchased with large, unexplained cash payments, leaving little trace for regulators. For instance, in Ghana, the OSPโs investigation into former Minister Cecilia Dapaah[iii] in 2023 and the case involving Kwabena Adu Boahene[iv], a former Director-General of the National Signals Bureau, illustrate how large sums of unexplained cash from theft or alleged corruption can be laundered through the acquisition of property assets.
At the same time, Africaโs retail sector is experiencing a surge in cryptocurrency use, led by countries such as South Africa and Nigeria. This digital shift is spilling into real estate, offering faster, borderless transactions and innovative tools like property tokenization, expanding access and promising transparency through blockchain. Yet, this innovation frontier is also a compliance minefield.
The very qualities that make crypto appealing, its speed and pseudo-anonymity, create major AML blind spots. In regions with no or weak digital currency regulation and limited real estate oversight, these gaps can easily be exploited. The anonymity of digital wallets makes it difficult to verify whether an investorโs financial profile aligns with high-value property purchases, potentially creating fertile ground for cross-border illicit financial flows.
The age-old problem of over-invoicing for property to “clean” illicit funds becomes harder to trace when paired with crypto. The technological leap in Africaโs real estate sector is exciting, but it is also widening the gap between financial innovation and regulatory oversight, heightening the risk of financial crime within the sector.
Customer-Related Vulnerabilities
Beyond systems and technology, human factors remain the weakest link. In many jurisdictions, lawyer-client confidentiality and professional privilege can be misused to shield illicit wealth. A lawyer may facilitate a transaction without verifying the true owner, granting legitimacy to criminal proceeds once the property is registered.
Again, Politically Exposed Persons (PEPs) can easily leverage their influence to obstruct investigations and manipulate controls. A common tactic is using a proxy or shell company to purchase high-value assets like luxury real estate.
This cycle is self-perpetuating, widespread corruption means enforcement agencies often lack the resources or the political will to take on the powerful. When the value of a property far outstrips a buyer’s declared income, it should raise flags; too often in these environments, no questions will be asked. The very professionals supposed to facilitate legitimate transactions have become the weak link in the AML chain. Strengthening this โhuman firewallโ through ethics, enforcement, and a culture of accountability is essential to safeguarding the sector.
Behind the Boom: Regulatory Challenges
FATF mutual evaluations have consistently shown that just a few jurisdictions are fully compliant with the recommendations specific for DNFBPs, particularly, Recommendations 22 and 28, which deal with CDD, reporting requirements, and the oversight of DNFBPs. The DNFBPs-which include real estate agents, lawyers, and accountants-are particularly susceptible to abuse by criminals. This risk is particularly acute in regions like Africa, where many DNFBPs are not formal businesses but individual practitioners operating in a cash-based, trust-driven ecosystem.
The vibrant informality of Africa’s economies is both its lifeblood and one of the toughest challenges to regulating its DNFBP sector. DNFBP populations in general are vast, fragmented, and often unregistered, thereby making effective supervision almost impossible at the grassroots level. Practitioners on the ground usually have limited awareness of ML/TF risks. Even when they are aware of ML/TF risks, AML/CFT is seen as less important; their priority is to get the next commission, and complex AML forms are a bureaucratic hindrance rather than a moral imperative. When regulators do finally reach out, they are often confronted with hesitation and ignorance because quite simply, there is no culture of compliance. We cannot fight illicit finance by ignoring this reality. The solution isn’t just more rules; it is about building bridges, simplifying obligations, and showing these everyday entrepreneurs that they too are vital frontline defenders of their own economy.
At a time when housing and infrastructure are meant to power Africa’s legitimate growth story, the real estate sector stands out as both an economic driver and a growing risk frontier. In Nigeria, the sector contributed 5.2% to GDP[v] in the first quarter of 2024, while in Rwanda, it added 6.0% in Q1 2023[vi]. Yet beneath these promising numbers lies a troubling paradox: the same sector fuelling development is increasingly being exploited as a conduit for illicit finance. This paradox exposes one of the glaring vulnerabilities of the continent-DNFBPs: lawyers, real estate agents, and accountants who assist in high-value transactions. Where weak oversight meets complex deals, it is precisely these professionals, whose role is to enable legitimate commerce, who may become the unwitting enablers of financial crime. Building a compliance-aware DNFBP sector is therefore not just a regulatory goal, it is an economic imperative.
Practical Strategies for Closing Implementation Gaps
Regulatory Fragmentation: Many African countries have DNFBP laws but face fragmentation due to a lack of well-resourced supervisors with enforcement power. Regulators must shift from passive oversight to proactive supervision and invest in this GDP-critical sector.
Limited Capacity and Resources: Supervisory bodies often focus on traditional finance, leaving DNFBPs underregulated. Strengthening compliance requires targeted training, risk-based toolkits, and typology sharing, particularly around crypto, shell companies, and high-value real estate.
Enforcement Gaps: Weak or delayed sanctions undermine deterrence. Authorities should apply risk-based enforcement, prioritizing luxury property transactions and ensuring timely, meaningful penalties to reinforce accountability.
Cross-Border and International Linkages: Given the cross-border nature of property investment, practitioners must apply enhanced due diligence for offshore entities and Politically Exposed Persons (PEPs) while strengthening collaboration between Financial Intelligence Units (FIUs) and regional AML networks.
Conclusion
Securing Africaโs real estate boom demands more than new laws, it requires political will, resources, and a partnership with DNFBPs themselves. The property, legal, and professional services sectors must see AML not as a regulatory checkbox, but as a cornerstone of sustainable economic growth.
Africaโs real estate story can continue to be one of transformation, but only if the same ambition driving its skylines is matched by integrity in its financial foundations.
How We Can Help
Is AML compliance a source of uncertainty for your real estate business? Let us help you turn compliance from a burden into a strategic advantage.
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Contact: info@opselcompliance.com Tel +447950377849
This article was written by Nana Mantey, Founder & AML/Financial Crime Consultant at Opsel
References
[ii] https://www.icirnigeria.org/efcc-charges-emefiele-with-stealing-fraudulent-acquisition-of-753-unit-abuja-mansion/
[iii] https://www.bbc.co.uk/news/world-africa-66291294
[iv] https://citinewsroom.com/2025/03/list-of-properties-allegedly-acquired-by-adu-boahene-and-his-wife/
[v] https://www.nigerianstat.gov.ng/
[vi] https://estateintel.com/insights/rwandas-gdp-and-real-estate-sector-grow-by-over-9-0-in-q12023?utm
