Real Estate Sector: A Risk-Based Approach to Combat Money Laundering and Terrorist Financing

Money laundering and terrorist financing through the real estate sector is a growing concern. Criminals are using property deals to hide their illegal earnings or move funds without raising suspicion.

It’s not just about losing money; it’s about losing trust and fairness in the system. But there is a way forward. A risk-based approach (RBA), supported by smart policies and proper checks, can help tackle this threat head-on.

Jitendra Chartered Accountants (JCA), one of the top AML consultants in UAE, can help you implement risk-based policies and properly comply with AML/CFT regulations.

Why is Real Estate Targeted? 

Criminals prefer real estate for a few reasons. First, properties are high in value. That means they can shift large sums of money in a single deal. Second, real estate is less regulated than banks. This makes it easier to hide the true source of funds or the real owner behind shell companies or third-party buyers. Third, once money is locked into property, it becomes harder to trace or seize.

In some countries, this activity has already pushed property prices out of reach for average citizens. The crime doesn’t just stay on paper. It changes cities, hurts communities, and undermines the law.

What is a Risk-Based Approach?

A risk-based approach (RBA) means focusing resources where they are needed most. Instead of applying the same rules to every deal, real estate professionals and regulators identify which transactions are more likely to involve illegal activity. These get more attention.

According to FATF guidelines, every country should require real estate agents, brokers, and related professionals to assess the level of money laundering or terrorist financing risk in their work. High-risk cases should face stronger checks. Lower-risk cases can follow standard procedures. AML consultants in Dubai can help you in implementing a risk-based approach in your business.

Key Steps for Real Estate Professionals

To follow an RBA, real estate professionals need to take several steps:

• KYC or Know Your Customer: Always verify the identity of both the buyer and the seller. This includes identifying the actual person who owns the money, even if someone else is doing the transaction.
• Understand the Deal: Look at why the client is buying or selling. Is the deal unusually complex? Is the price too high or too low for the market? These are warning signs.
• Follow the Money: Try to find out where the client’s funds come from. Are they using cash? Are there transfers from offshore accounts? These should trigger extra checks.
• Monitor Ongoing Relationships: If a real estate agent works regularly with a client, they should keep an eye on changing behavior or transaction patterns.
• Hire AML consultants in UAE: AML consultants can better guide you through AML/CFT regulations and help you comply with them.

Supervisors and Regulators Must Step Up

Real estate agents can’t fight this alone. Supervisory bodies need to play their part by offering training and support. They should also make sure that professionals understand the rules and have systems in place to follow them. In the UAE, the main supervising authority for AML/CFT compliance is the AMLD (Anti-Money Laundering and Combating the Financing of Terrorism Supervision Department). AMLD was set in place by the CBUAE (Central Bank of the UAE) and has been handling AML/CFT compliance since 2020. Constant efforts can be seen by the AMLD in implementing strong policies and control over money laundering and terrorism financing in almost all target business sectors.

Where the sector is still growing or underdeveloped, extra attention is needed. Authorities must build the capacity of local real estate players to handle AML/CFT responsibilities effectively. Until the industry matures, strict monitoring is essential.

A Special Focus on Weak or Emerging Markets

In some places, real estate markets are still growing or are not yet well-regulated. These areas need extra care. Supervisors should pay close attention to:

• New agencies or professionals entering the market.
• Sectors with little or no AML/CFT awareness.
• Regions with a history of weak law enforcement.

These steps help prevent new markets from becoming safe zones for criminals.

Practical Steps for Implementation

Here are a few ways to improve risk control in real estate:

• Create clear checklists for due diligence.
• Use technology to flag risky deals or buyers.
• Train employees regularly.
• Set internal rules for higher-risk cases.
• Monitor transactions continuously, not just once.
• Take assistance from AML advisors in UAE.

Each real estate company should have its own policies based on the risks it faces. One-size-fits-all solutions won’t work. A smart, risk-based system can adapt to local needs while keeping criminals out. Expert AML agents like JCA can help.

How can Jitendra Chartered Accountants Help?

Real estate is attractive to criminals, but it doesn’t have to be an easy target. With the right consultation and compliance, the sector can protect itself and society from serious harm. A risk-based approach is not just a legal requirement; it’s a practical way to make real estate safer, more trustworthy, and less vulnerable to abuse. Learn more from our expert professionals at JCA. We help businesses comply and stay ahead always.