“If you think compliance is expensive, try non-compliance”
Paul McNulty - former U.S. Deputy Attorney General
In line with the Prevention of Money Laundering and Funding of Terrorism Regulations (PMLTFR), real estate agents are subject persons as they provide relevant activity services. This means that real estate agents must adhere to AML/CFT obligations in terms of conducting risk assessments to identify and mitigate the ML /FT risks they are exposed to.
AML challenges in Real Estate
By law, every subject person shall have in place risk assessments that consider the risk factors, particularly those relating to the customers, countries or geographical areas, products, services, transactions, and delivery channels. The most common weakness faced by real estate agents, when it comes to AML/CFT compliance, is the limited resources and knowledge at their disposal and that is required to implement a robust AML/CFT framework.
Failing to comply with these requirements can lead to significant administrative penalties, as has been recently imposed by the FIAU. In 2021, the FIAU imposed a fine in the amount of €36,689 to a real estate agent that failed to properly implement Customer Due Diligence (CDD) measures and Politically Exposed Persons (PEP) screening procedures.
This particular real estate agent also failed to conduct the required Customer risk assessment (CRA) and Business risk assessment (BRA). While certain subject persons, such as large financial institutions, may have the financial capacity to bear non-compliance costs, others might not present the same resiliency. When it comes to sole practitioners and agents, administrative penalties do not have to be particularly substantial to disrupt one's course of business or challenge one's financial stability.
How can BDO help you comply with your AML CFT obligations?
BDO Malta is equipped with a team of experts in the area who may assist real estate agents with the:
- Setting up of the required AML CFT and Customer Acceptance Policies and Procedures
- Delivery of AML CFT training
- Delivery of specific training for MLROs
- Provision of customer screening solutions
- Provision of compliance support
BDO Malta’s Risk Advisory Team may also assist real estate agents in:
- Developing the Business Risk Assessment (BRA) methodology
- Developing the Customer Risk Assessment (CRA) methodology
- Assisting with the completion and/or revision of the BRA on an annual basis
- Assisting with the completion of the annual Risk Evaluation Questionnaire (REQ)
Want to know more?