FATF annual report: real estate professionals have poor awareness of the hazards of money laundering

FATF has just released its annual report for the previous two years, which highlights the accomplishments made by the organization under its previous leader, Dr. Marcus Pleyer.

The report describes how the Paris-based task force has tightened Beneficial Ownership requirements to stop criminals from using shell corporations and other legal entities to launder their dirty money.

In today's report, the issue of money laundering is underlined in the real estate sector. However, according to the Financial Action Task Force, the risk of money laundering and financial crime is poorly understood in the industry.

"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," according to FATF.

The use of often high-end real estate by criminals as a means of money laundering is something that estate agents and notaries are crucial in preventing.

The fourth round of mutual evaluations, however, unexpectedly revealed "that the sector generally has a poor understanding of the risks they face."

Following a public consultation in April 2022, FATF published final guidelines to assist those working in the real estate industry in putting risk-based controls in place to stop money laundering and terrorist financing.

The guidance will assist private sector players and their supervisors in better comprehending the sector's ML/TF risks and in developing practical mitigation strategies.

The FATF also says that information exchange requires a greater use of technology. "Technology can help detect suspicious activities, analyse financial intelligence, and better understand money laundering and terrorist financing risks, especially through information sharing, while respecting high standards of data protection and privacy,"  according to Dr. Pleyer.

According to the analysis, environmental crime can bring in up to $281 billion annually for criminal companies. The report notes that "Crimes such as illegal logging, illegal mining, and waste trafficking, have far-reaching implications for societies and communities around the world, affecting ecosystems, impacting climate change, and causing damage to public health and safety."

The FATF has since improved its guidelines and now anticipates that nations will incorporate illegal cash flows from environmental crimes into their national risk assessments and foster collaboration between environmental protection agencies and AML actors.

Other topics covered include: 

- Updated guidance detailing how virtual assets and virtual asset service providers should comply with the FATF Recommendations.

- A report and webinar on migrant smuggling described the most popular ways to transfer and launder the proceeds of the crime.

- The FATF strategic review's conclusion. After adopting a new set of guidelines for the upcoming cycle of mutual assessments that would make them more timely, risk-based, and results-oriented, the agency published its historic report on the level of effectiveness and global compliance with the FATF Standards.

By fLEXI tEAM