AML Compliance Program for Real Estates

Creating an effective AML (Anti-Money Laundering) Compliance Program for a real estate business is crucial, as real estate transactions can be a target for money laundering due to the large sums of money involved. Below is a structured AML compliance framework tailored for real estate professionals, agents, brokers, and developers.

AML Compliance Program for Real Estate

Risk Assessment

Evaluate the risk level of your business activities, customers, geography, and transaction types.

Key areas to assess:

• Type of clients (e.g., shell companies, foreign clients)
• Property types and locations
• Payment methods (e.g., large cash payments, third-party financing)
• Cross-border transactions

AML Policies and Procedures

Develop internal controls and procedures designed to detect and report suspicious activities.

Include:

• Client due diligence (CDD) and enhanced due diligence (EDD)
• Monitoring of transactions for red flags
• Record-keeping policies
• Suspicious Activity Report (SAR) protocols

Customer Due Diligence (CDD)

Verify and maintain records of client identity and source of funds.

For individuals:

• Government-issued ID
• Proof of address
• Occupation and source of income

For entities:

• Registration documents
• Ownership structure (beneficial ownership)
• Authorized signatories

Use EDD for high-risk clients (e.g., politically exposed persons, cash buyers, foreign clients).

Ongoing Monitoring

Monitor transactions and client relationships to identify unusual patterns.

Red flags:

• Sudden changes in buying behavior
• Use of shell companies or trusts
• Over- or under-valued property sales
• Payments from unrelated third parties

Record Keeping

Maintain records for at least 5 years (depending on jurisdiction).

Keep:

• Identification documents
• Transaction records
• Communication with clients
• Suspicious activity reports filed

Training and Awareness

Provide regular AML training for employees, agents, and third-party partners.

Training topics:

• Identifying suspicious transactions
• How to report internally
• Legal responsibilities and penalties

Independent Audit

Conduct periodic independent audits of the AML program to assess effectiveness and compliance.

Reporting

Establish procedures for reporting suspicious activity to the relevant Financial Intelligence Unit (FIU) in your country (e.g., FinCEN in the U.S., AUSTRAC in Australia, or FINTRAC in Canada).