Ministry of Commerce Updates Anti-Money Laundering Indicators in the Real Estate Brokerage Sector
- Dealing with high-risk countries and using unregulated intermediaries are indicators of suspicion.
- Warning against purchasing real estate under nominee names or through intermediaries to conceal the beneficial owner.
The Ministry of Commerce and Industry has updated the reporting guide for suspicious cases of money laundering or terrorist financing in the real estate brokerage sector, aiming to enhance brokers’ compliance with anti-money laundering (AML) and counter-terrorist financing (CFT) requirements, and to improve the efficiency of monitoring suspicious transactions and activities based on a risk-based approach.
The guide, prepared by the Anti-Money Laundering and Counter-Terrorist Financing Administration under the directorship of Marwa Al-Juaidan, includes a wide range of suspicious indicators that help real estate brokers detect unusual activities, assess risks, take necessary actions, and report them when suspicion arises.
The guide clarified that the most prominent indicators related to customers include “secrecy or evasion regarding the source of funds, providing incorrect or incomplete information, unjustified urgency to complete the transaction without inspecting the property, a mismatch between the customer’s declared financial status and the property’s value, the use of forged or altered identity documents, or refusal to provide due diligence information, as well as terminating the transaction as soon as there is a request to disclose the source of funds or the beneficial owner.”
Regarding the beneficial owner, the guide warned against purchasing real estate under nominee names or through intermediaries to conceal the true owner, or using complex or multi-layered ownership structures without a clear commercial justification, or making repeated changes to the ownership structure before or after completing the transaction.
It pointed out that the participation of newly established companies or entities unrelated to the real estate sector in high-value real estate transactions, or the use of multiple companies with shared ownership to conduct a series of transactions, are indicators that warrant further scrutiny.
The guide also addressed suspicious indicators related to the source of funds, such as financing payments from unrelated third parties, transferring proceeds to other parties, funds arriving from multiple sources or countries without clear justification, or depositing large amounts shortly before executing the transaction without the ability to verify their source.
In terms of real estate transactions, the guide considered that repeatedly buying and selling the same property within a short period, reselling it immediately without commercial justification, undocumented side payments, executing transactions at prices significantly below or above market value, or sudden changes in the buyer’s identity, all represent indicators that require verification and reporting when grounds for suspicion exist.
The guide also alerted to the risks of using intermediaries who are not subject to adequate AML supervision, receiving instructions from persons other than the customer or the beneficial owner, as well as dealing with parties or accounts in high-risk countries or those known for weak AML systems.
