Money laundering risk flagged

Thursday 13 February 2014

New legislation may make criminals more likely to launder money through property transactions, real estate agents have been warned.

By The Landlord

In its latest newsletter, the Real Estate Agents Authority said that property had previously been considered a complicated way to launder money.

But the new anti-money laundering legislation had meant that the easier methods had been restricted a lot, and criminals might turn to real estate instead.

“Although international obligations require real estate agents and lawyers to comply with the same rules, in New Zealand these businesses remain temporarily exempt from the extensive new regulations. Ironically, this means that real estate agents and lawyers may not always know what to look for, at the very time that criminals' interest in misusing their services as a 'washing machine' has increased.”

But anyone who is found to have helped a criminal launder money, even inadvertently could be fined up to $20,000. Companies can be fined $100,000. There is also the threat of two years' jail.

“It doesn't matter that agents are temporarily exempt from the more extensive rules that now apply to banks, the touchstone for ‘reasonable grounds’ is agents' current legal obligations. In the circumstances prescribed by the legislation, real estate agents are required by law to identify and report suspicious transactions. Not knowing that the obligations exist, or what they are, and not knowing what to look for, or not looking, is no defence,” agents have been told.

The Authority offered tips such as watching out for people using disproportionate amounts of cash, not viewing the property and offering prices that don’t reflect the market.

It said real estate would appeal to people wanting to launder money because it was capable of creating additional “clean” profits, such as rental income and capital gains.

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