In its mission to bring confidence to the real estate industry through ethics and self-regulation for the benefit of society, RICS has identified money laundering as one of the key areas of risk for the reputation of the real estate industry worldwide.
Money laundering and terrorism financing are among the European Commission's priorities and one of the most important areas of concern at national level by governments and regulatory authorities across Europe and beyond.
Within the European Union, to prevent the use of the financial system for money laundering or terrorist financing, the EU Anti-Money Laundering Directive (AML) - Directive 2015/849/EU - seeks to protect credit and financial institutions against these risks. In force since May 2015, it applies to all financial institutions, as well as an array of other actors, including auditors, notaries, real estate agents and casinos. It has further developed a preventive system whereby these entities and professionals are under an obligation (known as 'customer due diligence') to check the identity of their customers, ensure ongoing monitoring, identify beneficial ownership and politically exposed persons (PEPs), as well as provide third-party equivalence.
The real estate sector is directly concerned by the rules against money laundering which oblige real estate professionals to be alert to potential criminal activity and impose reporting requirements.
French real estate professionals and their support in alerting authorities
In France, TRACFIN, the national Financial Intelligence Unit in charge on anti-money laundering, has contributed to a unique publication entitled “The real estate toward money laundering and terrorism financing” launched by RICS in France at a conference on this topic at SIMI in Paris on 7 December 2017.
The aim of this unique publication authored by Maurice Feferman MRICS, Director of the real estate legal department of SwissLife Reim and Yehudi Pelosi, lawyer at the Paris Bar, is to highlight the important role that property professionals play in mapping and reporting against suspicious money laundering practices and offer the best guide to professionals in the sector on how to handle the situation.
The publication outlines that according to French law*, not only real estate agents but other legal persons or individuals carrying out, controlling or giving advice on the acquisition, sale or rental of real estate assets are obliged to inform the local authority.
Although the level of sanctions increases and they are expected to be reinforced in France in 2018, statistics show that the level of reporting coming from the real estate sector to TRACFIN is still very low, compared to other sectors, with only 84 declarations from real estate agents in 2016 out of 64,815 in total, while notaries for example reported 1,044 the same year.
Meanwhile, in the last 12 months, more than one million of real estate transactions in France could be a potential risk to be reported to the national authority.
The French intelligence unit welcomes RICS' initiative to inspire confidence in the property industry by raising awareness and sharing advice and best practice among built environment professionals on how to cope with money laundering, with this unique publication. The publication has received the support of the Société Generale bank, the Swiss Life REIM insurance company (France) and the Chamber of Paris Notaries.
Your feedback is needed
To ensure that professionals are aware of the reputational risk that this issue represents and operate to the highest standards, RICS is gathering feedback from experts based in different countries, before adopting a professional standard on Anti-Money Laundering (AML). Its long-term goal is to ensure consistency in the approach to fighting corruption in the property market worldwide.
Please share with us how real estate professionals are involved in anti-money laundering in your market.
The topic covered by the French press
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