Anti-Money Laundering: How real estate practitioners can avoid illicit funds
Recently, the Anti-Money Laundering (AML) Bill was passed into an Act and a major part of its focus is real estate which is perceived a soft target for money laundering by criminally minded persons.
The Act is aimed to ensure that illicit funds are not allowed to get into the financial systems or into the economy. It does not encourage criminals to continue to perpetuate their crimes wherever they may be.
As a response to the passage of the Act, the International Real Estate Federation (FIABCI) Nigerian Chapter, organized an interactive session to examine the implications of the Act for real estate practitioners.
Kayode Adeluola, a Senior Advocate of Nigeria (SAN), who was the guest speaker at the event, noted that one of the easiest ways by which illicit funds got into the financial system was through real estate.
He explained that a lot of people who commit crime such as banditry, kidnapping, drugs peddling etc, usually do not have an idea of how to spend their ‘income’ and so the easiest way is to buy real estate.
“They do that because real estate doesn’t have a name that shows on it unless you put it; so they can use pseudo names. They can also use companies that are incorporated for that purpose,” he said.
“What I am saying is that practitioners of real estate must always ensure that they don’t allow themselves to be used for that purpose. They must know the customers they are dealing with and try as much as possible to know the source of their income.
“This is because the money laundering law expects that you should avoid retaining, acquiring or using funds from illegal transactions,” he advised.
The senior advocate advised further that real estate practitioner should do their own due diligence, suggesting that where they have done their duties and still not sure, they should inform the law enforcement agents and keep documents of transactions for, at least, five years.
“I also advise that they should have an indemnity form that clients should sign which states that the law mandates them to report transactions of a certain nature to law enforcement agencies so that those clients who are not coming forth with clean funds will either leave or comply with the law,” he said.
In spite of everything, Adeluola did not see the AML Act as a big win for the anti-corruption war in the country, saying, “it will only be a big win if all of us are participating in ensuring it’s enforced.
“Already we have in our laws provisions that encourage proper workability of businesses, ensuring that the methods and systems put in place guarantee an environment one can feel safe in. And when I say safe, I mean not only in security but also in the money you are investing,” he explained.
According to him, aside from the inflation which affects everyone, property prices keep increasing because there is a lot of illicit funds getting into real estate and that’s why we all must ensure that money laundering shouldn’t thrive.
Adeniji Adele, FIABCI-Nigeria President, disclosed that they chose that topic because there are so many policies on real estate because all eyes are on the players of the game because people think that illicit money finds its way into the market.
“We need to update our knowledge and sensitize our members and let the people outside our circle know that real estate practitioners are honourable people who follow the rules diligently; they know their customers and ensure that the money used to buy properties are genuine money,” he said.
“The act has just been enacted, so it is good for our people not to be caught unaware; This is part of education and networking for our members to know what is happening so that if anybody runs foul of it, there will be no excuse for ignorance,” he added.