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Brokers and real estate agents are covered under DNFBPs when they engage in activities related to the sale and purchase of real estate on behalf of customers. They are required to fulfill the requisite obligation under the AML/CFT Law by implementing an appropriate AML/CFT governance frame work which appropriately identifies the risk and recommend adequate measure to mitigate the same.

The ultimate objective of these measures is to ensure there is a true essence in these transactions including the ownership and movement of assets in the real estate sector and not being exploited for ML/FT.

Common Risk Factors/ methodologies in real estate sector:

Sanction list customer/intermediaries:

Real estate agents and brokers should ensure that they have in place a process for screening customers and prospective customers against Sanctions Lists and to obtain any negative information about their customers or prospective customers.

Third party intermediaries/Proxies:

A common practice observed in real estate sector is hiding the true ownership through the use of third party intermediaries/proxies. So real estate agents and brokers should particulary establish and validate the identity of the beneficial owner.

Fraudulent/Forged Documents:

In cases where Real estate agents and brokers act in fiduciary, trustee or any other representative capacity in relation to the execution of a real estate transaction, they should pay additional attention in relation to the authenticity of such instruments or documents.

How customers can misuse Real estate agents and brokers?

  • Misusing real estate agents to get introduced to financial institutions.
  • Family members used as a face for purchasing property.
  • Transferring substantial cash to charitable organization with an instruction to advance the same for the purchase of real estate.
  • Use of Smurfing, Cash, and Cashier’s Cheques to conceal the illicit source of funds for the purchase of real estate.
  • Use of Individuals and Companies to Conceal the Source of Illicit Funds.
  • Multiple purchases or sales of property.

Compliance Requirements for Real estate agents and brokers under AML/CFT:

  • Understanding and identifying ML/FT risk exposure
  • Implementing Customer Due Diligence Measures to understand the beneficial owner, applicability of sanction list, PEPs or association with them.
  • Continuous monitoring of transactions
  • Implementing adequate policies, procedures and controls.
  • Reporting suspicious transactions to Financial Intelligence Units(FIUs)

What Elevate can do for you?

  • Preparing customer specific policies, procedures and controls.
  • Training and creating awareness among the employees in KYC, screening and risk profiling.
  • Preparing AML/CFT risk assessment reports.