Impacts of AML Tranche 2 on the real estate market
Impacts of AML Tranche 2 on the Real Estate Market Australia’s real estate market can be attractive to money laundering (ML) and terrorist financing (TF) criminal individuals and syndicates due to its ability to provide anonymity, store large sums of money, and bypass many traditional due diligence processes. Real estate agents can be unwittingly used by criminals to enable money laundering in various ways.
The Anti-Money Laundering (AML) regulations in Australia require that any properties worth more than AUD5 million, or those with combined values over AUD8.1 million which were restrained between 2012 and 2013 by the Australian Federal Police be reported to the relevant financial institutions and/or other relevant authorities as per their respective AML/CTF obligations. These regulations are potentially subject to significant change in the near future. While the industry already has a level of compliance in place, this is likely to need to be very significantly increased.
What could AML tranche2 regulations mean?
Once the regulation has been finalized, real estate agents should be fully prepared for new AML policies and procedures. The key is to remain ahead of the problem. As a real estate agent or a real estate company, your responsibility is to stay updated with the revised compliance needs. If you are a real estate agent or run a real estate company, you should be aware of the compliance needs discussed below.
Expected Compliance Responsibilities
Real estate professionals should conduct an ML/TF risk assessment in accordance with FATF’s (The Financial Action Task Force is the global money laundering and terrorist financing watchdog.) Guidance for Real Estate Agents, as this will enable them to identify the specific risks that should be monitored and managed. The assessment should consider all aspects of their operations, including clients, properties, financial transactions and other related activities. Additionally, processes and controls must be established and monitored to ensure compliance with anti-money laundering laws.
AML compliance process and controls , also known as anti-money-laundering practises, are centred on carrying out anti-money-laundering processes that deter and stop potential offenders from engaging in money-laundering fraud or crime. This makes it impossible for crooks to conceal the money’s dubious source in any kind of transaction.
Finally, an appropriate training programme must be implemented so that real estate professionals understand the scope of their responsibilities when it comes to identifying and mitigating ML/TF risks.
Overall, the key FATF recommendations applicable to real estate agents include:
Customer Due Diligence what will be new?
To ensure a robust Customer Due Diligence system, the firm will assess each client’s risk profile in accordance with industry standards. Based on the findings, appropriate due diligence processes will be developed for each client and transaction.
The process must include,
- Steps to accurately identify and verify the identity of clients as well as
- Methods for obtaining pertinent information regarding the client’s business, nature of transactions, and circumstances.
- Make sure that the due diligence measures utilised are adequate and reasonable given the risks posed by each client and transaction.
Licensed Real Estate agents must comply with the FATF guidelines, which states that in order to prevent money laundering and terrorist financing (ML/TF), additional information needs to be gathered, such as a client’s motive for making a transaction or purchasing property. To ensure proper due diligence, consultation, documentation and careful monitoring of each step of the business relationship should be carried out proactively by these professionals. Furthermore, all required checks should be made according to the regulations set forth by FATF (2008).
Real Estate agents must exercise due diligence to obtain sufficient and accurate information from customers, particularly information relating to the beneficial owners. If Real Estate agents are unable to acquire all the required data, they should promptly report any suspicious activity to the relevant government body. Failure to do so could lead to serious penalties as set by the Australian Government in 2023 and beyond .
Additional CDD means more compliance work and workforce
As mandated by both the Financial Action Task Force (FATF) and the Australian Transaction Reports and Analysis Centre (AUSTRAC), businesses must implement appropriate customer due diligence (CDD) measures based on their size, operations, and risk assessments. In accordance with FATF’s 2008 RBA Guide for Real Estate Agents, customer verifications should be proportional to the risk posed by the customer and designed to uncover any control structures. Where risks are low, simplified, or reduced controls may be used instead. Companies will need trained staff and other resources to implement CDD. An experienced contingent or permanent workforce by Momenta is the right solution.
Implementing AML/CFT compliance with Momenta’s Contingent Workforce
When it comes to AML/CFT compliance, contingent or permanent workforce makes sure no stone is left unturned. Hiring a specialist team can make a vital difference in understanding the weaknesses of your risk assessment in a highly pressured regulatory environment. Furthermore, they will work with your compliance team to resolve existing problems.
Momenta has successfully built the contingent and permanent workforce of multiple companies across industries worldwide, If your business has been impacted by additional regulatory or compliance pressures and needs additional staffing support in your claims handling and risk/compliance departments, speak to us to see how we can help in supplying experienced and effective members to your team.
Using the expertise of specialist resourcing can offer breathing space in terms of resolving any issues their AML controls may have. Setting up the right teams to ensure any gaps are found will be key for firms this year as regulators place more pressure on financial service participants to strengthen current compliance systems and controls.
Organisations like Momenta Group are addressing genuine issues in AML/CFT based on 30 years of experience collaborating with small and large companies. The solution to common compliance concerns is an experienced workforce. Momenta is ready to provide a small or large contingent or permanent team to companies regardless of size. We offer skilled and experienced industry experts with in-depth knowledge about the continuously changing requirements of various sectors.
If your business has been impacted by additional regulatory or compliance pressures and needs additional staffing support in your claims handling and risk/compliance departments, speak to us to see how we can help in supplying experienced and effective members to your team.
“AML (Anti Money Laundering) Compliance & Requirements.” AML (Anti Money Laundering) Compliance & Requirements, 5 Aug. 2022, www.electronicid.eu/en/blog/post/aml-anti-money-laundering-compliance-kyc/en. Accessed 6 Jan. 2023.
(2020, August 14). AML/CTF Program Overview. Retrieved from AUSTRAC: https://www.austrac.gov.au/business/how-comply-guidance-and-resources/amlctf-programs/amlctf-programs-overview
(2008). RBA Guidance for Real Estate Agents. FATF
Momenta Group. “What Will AML Tranche 2 Mean for Your Business.” Momenta, 6 Oct. 2022, momentagroup.com/what-will-aml-tranche-2-mean-for-your-business/. Accessed 3 Jan. 2023.
“Risk-Based Approach Guidance for the Real Estate Sector.” Www.fatf-Gafi.org, 26 July 2022, www.fatf-gafi.org/en/publications/Fatfrecommendations/Guidance-rba-real-estate-sector.html. Accessed 7 Dec. 2022.