SUNBIZ

Cases Identified Linking Real Estate Activity To Money Laundering

The Real Estate Licencing Board (REALB) has identified previous case studies in Fiji showing real estate activity is being used for money laundering and related predicate. Fiji Financial Intelligence Unit
26 Jul 2016 10:19
Cases Identified Linking Real Estate Activity To Money Laundering
Matt Myers, the Deputy Chairperson of REALB (seated left) with Abdul Hassan, the Chairman of REALB at the National Workshop at Novotel, Lami yesterday. Photo: PAULINI RATULAILAI
The Real Estate Licencing Board (REALB) has identified previous case studies in Fiji showing real estate activity is being used for money laundering and related predicate.

Fiji Financial Intelligence Unit Director, Razim Buksh, emphasised real estate activity here has been used for financial crimes such as unexplained wealth and tax evasion.

He was speaking to real estate industry stakeholders during the 2016 REALB National Workshop at the Novotel Suva Lami Bay yesterday.

But, he noted anti-money laundering laws such as the Financial Transactions Reporting Act safeguards the real estate sector from financial criminal activities linked to money laundering.

Therefore, he said, this does make this sector now difficult and unattractive for criminals and the money obtained from criminal and illegitimate sources.

“It was somewhat easy to launder money through real estate than other formal and traditional institutions (commercial banks and finance companies),” Mr Buksh said.

“This was because the apparent inadequacy in regulatory control, oversight and governance of this sector.

“The sector is in direct contact with buyers and sellers, generally they know their clients better than the other parties in the transactions.

“Therefore, they are well placed to detect suspicious activity or identify red flag indicators.”

 

Raising Awareness

Recognising the threat Fiji is under, Mr Buksh stressed the Financial Intelligence Unit will work closely with REALB and the real estate agents to combat this.

They are looking at jointly creating awareness of the anti-money laundering requirements and to facilitate compliance.

“Fiji’s real estate sector is of special importance to the economy, in particular, to the financial system,” Mr Buksh said.

“A safe and sound financial system contributes to the growth and health of the economy.

“Laws and regulatory measures must also ensure financial transaction transparency and scrutiny.

“A real estate agent or company must comply with the Financial Transactions Reporting Act, FTR Regulations, FIU Guidelines and FIU Directives when involved in a transaction for a client/customer in relation to the buying or selling of real estate.”

 

Money Laundering:

It is a complex process of making illegally gained assets (dirty money) appear legitimate.  The objective of laundering dirty money is to disguise the true origin of the assets and to prevent the construction of an audit trail leading back to the proceeds of the original crime and its perpetrators.

 

Why the Real Estate Sector was Attractive for Money Laundering:

  • Ability to buy real estate using cash.
  • Ability to disguise the person that ultimately owns the real estate.
  • Relative stability and reliability of real estate investment (compared to other investment options).
  • Ability to renovate & improve real estate, thereby increasing value of investment.
  • Lifestyle reason (enjoy proceeds of crime).

 

7 key requirements for the Real Estate sector under the FTR Act:

  • Know your clients: real estate agents must identify their clients and verify client’s identity using reliable supporting ID documents.
  • Establish Source of Funds
  • Monitor Client Transactions
  • Report Suspicious Clients and their Transactions to the FIU
  • Report Cash Transactions of $10,000 and above to the FIU:
  • Record Keeping: real estate agents must maintain proper records of client’s identity and financial transaction information.
  • Appoint AML Compliance Officer: all real estate companies need to appoint a AML Compliance Officer.

 

 

 

 

 

Fijisun E-edition
Advertise with fijisun
Subscribe-to-Newspaper
Fiji Sun Instagram
Fiji Plus
Subscribe-to-Newspaper
error: