Background
In short, money laundering means someone is trying to turn money or other assets that come from criminal activities, into assets that can be displayed openly, such as property or real estate. The most common cases of money laundering entail money from drug offenses, robberies, fraud and tax offenses etc.
As authorities worldwide tighten their grip on money laundering, legal compliance is getting increasingly demanding for businesses affected by laws and regulations. One of the industries recently under AML scrutiny is real estate brokerage, where in Sweden it has been found that only a handful of cases of suspected money laundering gets reported every year. In fact, no cases of suspected money laundering was reported by the industry until 2008, and since then only four cases a year on average has been reported to the authorities in Sweden. These numbers are alarming, especially considering roughly 150.000 real estate sales are made every year in the small European country.
Recent studies shows that Swedish real estate agents tend to claim that responsibility for AML compliance lies with the banks. However according to Sweden's anti money laundering act, this is not accurate. Interestingly enough the responsibility of AML compliance lies with the individual broker, unlike for example financial institutions where responsibility lies with the company.
What are real estate agents obligated to do?
Real estate agents are not in any way obligated to find criminals and intervene against their crimes. However they do need to establish a few things before a sale, to minimize risk of being used in a money laundering-situation. Among other things real estate agents need to:
- Perform a general risk assessment of all business operations in relation to money laundering and terrorist financing, as well as establishing a protocol for risk management.
- Document protocol, routines and guidelines for processes involving "knowing your customer", monitoring customer data, reporting suspicious activities and GDPR management.
- Identifying and establishing good customer knowledge and information (KYC).
- Establish a specific risk assessment for each individual customer (customer risk profile).
- Monitor ongoing assignments and single transactions to discover divergent activities. If necessary, brokers also need to perform a more thorough audit of activities or circumstances that could indicate money laundering and/or terrorist financing.
- Report suspected cases of money laundering and/or terrorist financing to police (Finanspolisen).
- Save documents and information regarding KYC, monitoring and reporting for at least five (5) years.
What happens if they don't?
If you fail to comply with the current laws and regulations a penalty may be invoked. Penalties vary between fines and disciplinary actions to having your license revoked. Furthermore you can be sentenced to even greater fines or time in prison in accordance with the law. And again, worth noting that this is on an individual level, unlike other industries where the company ultimately are responsible.
Staying compliant is easier than you think
Through our platform "Roaring Web" you can easily manage both collecting and verifying data as well as monitoring customer data changes over time. For example, you can collect and verify a preset KYC-report in less than a minute, saving both time and money. When your KYC-report is finished you can set up datasets to monitor through our monitoring service, also easily performed through our web platform. Read more about our services here!
Read more on what is required from an AML perspective as an agent: Fastighetsmäklarinspektionen
