Real Estate Agents and Money Laundering: 3 Things You Need to Know

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Real Estate Agents and Money Laundering: 3 Things You Need to Know

Real estate fraud is rampant. Real estate agents often engage in money laundering. It is a serious problem, and the industry must change to deal with this.

Real Estate and Money Laundering

Real estate transactions are ideal for people who want to avoid paying taxes. That is because there are many loopholes that people can use. So, it is not surprising that real estate agents are prime culprits when it comes to money laundering transactions.

Britain is, arguably, one of the worst places for this trend. Many agencies received bans because they failed to adhere to AML regulations.

Real Estate Agents Will Soon Become Compliance Officers

In many places across the globe, real estate agents ask buyers for AML documentation. It means that the onus will be on these agents to get proof of earnings and identity verification. Unfortunately, this will have adverse implications for the property market. When real estate agents ask invasive questions, customers might hesitate to make real estate purchases.

Foreign investment is a prime area for money laundering fraud. However, the introduction of new technologies should help to cut down on international real estate money laundering.

Real Estate Money Laundering Is Difficult to Catch

There are many ways to launder money using real estate transactions. For example, it is easy to disguise the ownership of any property. You can find another person or company to hold it as a proxy. Additionally, as the property goes up in value, the gains can be withheld from the taxman. Moreover, you can purchase property in cash; this leaves no trail.

It is challenging for departments to catch real estate agents who are engaged in money laundering. Resources are scarce, and there are a lot of properties on the market. These properties frequently change hands. Thus, the real estate industry needs an online property tracking system so that the sale of a transaction automatically updates the ownership status. Blockchain technology provides the capability to perform this function.