Africa-Press – Namibia. VERNON PILLAY
PROPERTY practitioners in South Africa have been identified as being potentially vulnerable to money-laundering and terrorist financing (TF) activities.
This was revealed by the Financial Intelligence Centre (FIC) in their recent assessment of the inherent money-laundering and terrorist financing risks impacting the real estate sector, according to James George, a compliance manager at Compli-Serve SA.
George says that while further consulting within the real estate sector will still take place, the report rounds up the risks to be aware of for real estate agents and those working in the sector.
“The FIC has stressed the urgency in taking effective anti-money laundering (AML) measures in real estate, wherever possible.”
Property investment is typically a stable asset and because of this, it can attract criminals as, well as reputable buyers.
George notes that the FIC said that laundering money through property transactions easily integrates illicit funds into the legal economy, while providing a safe investment, making it all the more popular.
“It can even open opportunities for criminals to enjoy an income from an illicit property investment, where the reason they came to own the property is not common knowledge or just plain dodgy.”
“Locally, property transactions tend to come with a paper trail including banks, estate agencies and attorneys through conveyancing. This process often excludes estate agents from receiving the funds or registering the property themselves and this can also mean some due diligence on the origin of funds falls by the wayside.”
Unfortunate trends include criminals using opaque financing or cash in a property purchase, using false documentation, or working with suspicious companies that make it difficult to ascertain who the true owner is in a transaction.
George says criminals may even pay higher rent for a property intended for illegal activities (potentially unknown by the owner).
The overvaluing or undervaluing of property prices is another concern.
Money laundering can effectively create distortions in property prices within a suburb or area because of criminals being willing to pay more than market value to quickly finalise a transaction.
“If a property is of high-value or overpriced and is paid for in cash, it may warrant a second look at the origin of the funds, to be sure that the transaction is legitimate,” George concludes.
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