• Real Estate Residential

    Some services provided by real estate agents and the residential real estate sector are attractive to criminals wanting to launder the proceeds of crime and to finance terrorism.

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Real Estate Residential

What are the ML/TF Risks?

Real estate can be an attractive channel for criminals wanting to launder illicit funds for a number of reasons.

Criminals can purchase a property using large sums of cash, live in the property, renovate the property (using illicit cash) to improve its value and sell the property at a later date for a capital gain.

The ultimate beneficial ownership of real estate can also be easily concealed.

The Money Laundering and Terrorist Financing (ML/TF) risks associated with real estate include:

  • The ultimate beneficial ownership of real estate can be easily concealed;
  • The use of third parties to buy and sell properties;
  • The use of loans and mortgage (for example, criminals take out a mortgage to buy a property and pay back the mortgage using lump sum cash payments);
  • Manipulating property values (that is, criminals buy and sell real estate at a price above or below market value);
  • Structuring cash deposits to buy real estate;
  • The use of complex company structures and multiple accounts to disguise the real purpose of a property transaction and disguise its true ownership;
  • Buying and leasing properties, but providing the tenant with illicit funds to pay the rents; and
  • Buying a property using illicit funds with the intention of conducting further criminal activity at the property, and using illicit funds to renovate properties.

Real estate agents must ensure the organisation conducts a comprehensive ML/TF risk assessment to identify, assess, mitigate and manage ML/TF risk exposures as a critical first step in complying with AML/CFT laws.

What are the AML/CFT obligations?

In developing responses to obligations under AML/CFT laws and regulations the following steps must be undertaken:

  • Conduct a Money Laundering and Terrorism Financing Risk Assessment;
  • Develop an AML Program that is proportionate to ML/TF Risks;
  • Establish effective Board and Senior Management oversight of the AML/CFT Program;
  • Appoint an AML Compliance Officer;
  • Establish a Customer Due Diligence (CDD) Program including collection and verification of know your customer (KYC) information including Enhanced and Ongoing CDD controls;
  • Implement a ML/TF Risk Awareness Training Program for staff;
  • Implement a monitoring program to identify unusual and possibly suspicious customer activity, transactions and behaviour;
  • Establish a process to report suspicions and other activity specified by AML/CFT law and regulation;
  • Establish Record-keeping controls; and
  • Maintain the ML/TF Risk Assessment and the AML Program as the business and risks change.

How can AML Accelerate help?

AML Accelerate, drawing on unparalleled expertise and real-world experience, has developed an AML/CFT Program Manual for the residential real estate industry.

Our solutions deliver all the foundational AML/CFT materials including a ML/TF Risk Assessment, an AML/CFT Program, CDD Standards, and an AML Operating Manual, which you can tailor to your specific needs, ensuring your AML/CFT controls are commensurate with your business.

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