Anti-Money Laundering Law extends to Real Estate Agents

Venkat Raman

Real Estate Agents in New Zealand must comply with the provisions of Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) Act and follow a more stringent regime of code of conduct and discipline.

The AML/CFT (Definitions) Amendment Regulations 2018 came into force on January 1, 2019, which, among other things, provide definition of a customer (client) and the timing of customer due diligence.

The Act coverage

The Statute however applied only to Real Estate Agents who come under the definition of “designated non-financial business or profession,” in so far as they carry out “covered activities,” including real estate agency work and/or managing client funds, accounts, securities or other assets.

Supervised by the Department of Internal Affairs, Real Estate Agents are now expected to know their relevant risks, how to apply the Act to their business and comply with the legal requirements.

Justice Ministry clarifies

A Justice Ministry notification said that Real Estate Agents are at risk of being exploited by criminals to launder money.

“They are among several professions whose members may be affected by changes to the AML/CFT Act. Real Estate Agents must comply with the Act if they (a) represent a client who is selling or buying real estate and (b) accept a deposit in cash of $10,000 or more from someone who is buying real estate. Criminals often use real estate to convert the money they make from illegal activities into legitimate assets,” it said.

The notification said that introducing AML/CFT measures will deter criminals from using the services of Real Estate Agents and help detect them if they do.

“Importantly, it will also strengthen the overall AML/CFT system. For example, a real estate agent may detect ‘red flags’ that might not be picked up by banks or other financial service providers who interact with the same customers. That is because Real Estate Agents may have more information about the people or funds involved in a particular transaction.”

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