Money laundering is the generic term used to describe the process by which criminals disguise the original source of the proceeds of crime by finding ways to integrate it into the formal economy or the financial system to make it appear legitimate. Criminals use several means or methods to launder money. One of the methods by which individuals, especially corrupt politicians or kleptocrats launder money is buying property asset using the proceeds of crime, letting it or selling it on, giving the criminal an apparently legitimate source of funds.
As of consequence, the real estate practitioners are likely to handle proceeds of crime and may also have knowledge of parties to real estate transactions or how a property asset is funded. Thus, real estate practitioners have been identified as vulnerable to money laundering and terrorism financing (ML/TF) risk and are required to perform the same regulatory functions as financial institutions, mandating them to implement a risk-based anti-money laundering, and countering the financing of terrorism (AML/CFT) programme.
Under the UK Proceeds of Crime Act 2002, the primary money laundering offences apply to everyone, and you commit an offence if you know or suspect that the property is criminal property, and it is also an offence to fail to report suspicious activity and tip off any person that you have made such a report. This applies to all employees of businesses in the regulated sector, including the real estate sector businesses.
Again, under Ghana’s Anti-Money Laundering Act, 2008 (Act 749), First Schedule, Section 21, (X) K); real estate brokers and real estate agents are recognised as accountable institutions. Real estate businesses are part of Designated Non-Financial Businesses and Professions (DNFBP) with reporting obligations. Based on the Anti-Money Laundering Act, 2008 (Act 749), a real estate company or agent has reporting obligation if the real estate business receives funds in the course of its business to settle real estate transactions.
What this means is that real estate professionals must monitor their clients and their activities and report any suspicious activity. To be able to perform this function effectively and also to meet their obligations,they must undertake risk assessment, customer due diligence (CDD) and identifying beneficial ownership, reporting suspicious activity, record keeping and staff awareness and training measures.
The International AML standard setter, the Financial Action Task Force (FATF) provides guidance and information on industry best practices to assist jurisdictions in their implementation of specific AML/CFT regulations and legislations. FATF updates it guidance to ensure that current guidance reflects the evolving nature of AML/CFT risk within that particular sector to help practitioners in the sector to implement effective AML programmes.
In an effort to strengthen the implementation of AML/CFT regimes in the real estate sector, FATF is currently consulting all interested stakeholders in advance of finalising the FATF Risk-Based Guidance to the Real Estate Sector. It is welcoming views from practitioners, experts and those involved in the broader real estate business and interested non-profit sector organisations to provide additional strategies and tools to inform and contribute towards a more effective AML/CFT system implementation within the real estate sector. Click here to learn more about the consultation and how you can submit your comments.
If you are a real estate practitioner and you require assistance with designing and implementing AML/CFT programme or AML/CFT training for your staff contact us today. You can rely on our team for practical AML/CFT consultancy advice, training, and ongoing support. Contact: info@opselcompliance.com or via our contact page