Real estate is a popular choice for investment, but it also attracts criminals who use real estate in their illicit activities or to launder their criminal profits. It allows criminals networks to thrive and grow using the profits of their illegal activities, which impacts society and undermines the rule of law.
In some countries, these practices also contribute to driving up the prices of real estate, making housing inaccessible to many as well as further incentivizing the criminal activity.
FATF assessments show that the real estate sector often has poor understanding of these risks and regularly fails to mitigate them. The revised Risk-Based Approach Guidance for the Real Estate Sector highlights the importance for the sector to increase its understanding of the money laundering and terrorist financing risks it faces. Vulnerabilities include exploitation by politically exposed persons, the purchase of luxury real estate, the use of virtual assets, the use of anonymous companies and gatekeepers as instruments to launder the proceeds of crime.
The sector needs to take appropriate measures to adequately mitigate these risks. This includes effective customer due diligence measures, such as access to information about the true, beneficial owner(s) of the real estate transaction.
Through training, outreach sessions and regular supervisory efforts, supervisory authorities need to increase their understanding of risks that the real estate sector faces and ensure that they are adequately addressed.
Stakeholders should work together to prevent criminals from abusing the real estate sector and market, including through cross-border cooperation and action.
The FATF has updated its guidance for a risk-based approach for the real estate sector with input from the private sector, including through a public consultation in March-April 2022.
July 26, 2022 Published by The Financial Action Task Force. (Download Report PDF)