3.1.3 Key Considerations for the Real Estate Sector

يسري تنفيذه من تاريخ 16/6/2021

Beyond the general considerations discussed above, in assessing the risk of a customer who is a participant in the real estate sector, LFIs should consider:

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Controls Risk: In the case of transactions or customers related to the real estate sector, an assessment of controls risk should also include the regulations governing the real estate sector as a whole, and not just regulations governing the sector participants (real estate agents and brokers). LFIs should assess whether regulations governing property transactions are likely to make the sector more or less attractive to illicit actors. As discussed above in section 2.2.2, these may include the openness to foreigners, the widespread use of cash and shell companies, and the intensity of scrutiny of real estate transactions.

In many cases neither party to a real-estate related-transaction will be a business or individual whose primary activity is related to the real estate sector (e.g., the sale of a private home). In such cases, in addition to the risk of the specific customer involved, LFIs should consider aspects of the transaction itself, including:

	•	The jurisdiction in which the real property that is the subject of the transaction is located;
	•	The jurisdiction in which the customer's counterparty is located;
	•	If the LFI's customer is the purchaser, whether the purchase price is consistent with the purchaser's known means and income;
	•	Whether the purchase price is generally consistent with the market price for roughly similar properties;
	•	Whether all parties to the transaction are resident in jurisdictions other than the jurisdiction in which the property is located;
	•	Whether the seller of the property has owned it only for a short period of time;
	•	Whether shell companies or other legal structures are involved in the purchase in such a way as to obscure the true owner of the property; and
	•	Whether the parties to the transaction appear to be related (e.g. are represented by the same law firm or real estate broker, share corporate directors, or share an address), but the relationship between them is unclear.