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CDD for real estate agents

Since the introduction of the Fourth Money Laundering Directive estate agents are required to have a Customer Due Diligence policy. This means, among other things, that agents are obliged to conduct a client survey to determine whom they do business with, and what risks are associated with that.

AMLD and real estate agents

The AMLD is the Anti‑Money Laundering Directive. The law is intended to combat terrorist financing and money laundering. As agent or mediator your work is covered by the AMLD if you mediate in the establishment, or conclusion, regarding immovable property or the rights associated with immovable property. The AMLD asks you to do a thorough investigation into the person you do business with: the client research. The core elements of the AMLD are the client research, the possession of a written risk assessment policy, the obligation to report, and the retention obligation.

For which real estates agents does the Anti‑Money Laundering Directive 5 apply?

Any broker who mediates in the purchase or sale of immovable property is obliged to carry out a client research with each commission. This applies to both the client and to the other party with whom the final agreement is concluded. The main reason for this investigation is to prevent money from being laundered or the financing of terrorist activities. If there is a risk that you are doing business with an unreliable party, you must report this to the authorities as a broker.

Client research for real estate agents

According to the AMLD a client research consists of several steps. 

1.

2.

3.

4.

The first step is to identify the client and to record identifying data. The client is the natural person, legal person or company who commissions you as agent for the purchase or sale of a property.

The second step consists of verifying the identity of the client, during which the broker checks whether the client data corresponds to a valid ID according to the AMLD. The AMLD allows for making a copy of the ID, this is not in violation of privacy laws. Under the AMLD, the data of the client research should be kept for 5 years.

The third step is only necessary when the estate agent is in business with a corperation. The estate agent has to determine whom is the Ultimate Beneficial Owner (UBO), the person with the ultimate ownership or the ultimate control. This can be through stock, voting right, ownership interest or other means.
The fourth step consists of checking whether the person with whom the broker does business is listed in the PEP list or any other sanction list.

The measures towards PEP's are preventive in nature. This means that a PEP is not necessarily involved in criminal activity. Rejecting a business relationship, only because a client or UBO is a PEP, does not correspond to the principles of the AMLD.

The outcome of the client research may show that there is an unacceptable risk in doing business with the client, which prevents you from carrying out the service and requires you to refuse, or terminate, the business relationship. The Dutch tax authorities posted a risk matrix for agents on their website, in which several examples are included that indicate medium, high, or unacceptable risk. For example: if a client wishes to remain anonymous, or provides false identity information, this leads to an unacceptable risk. As an agent, you are not allowed to service this client. Or when a buyer wants to purchase a property without reservation of financing, this poses a mediocre risk. In this case you must carry out additional research into the background of the buyer(s) and possibly into the financing of the purchase. Depending on this outcome, you may be required file a report with the authorities.

In the end it is important that, as a broker, you have carried out a thorough investigation in which you have recorded the steps you have taken to ensure honest business. The supervision of compliance with the AMLD by brokers, intermediaries and valuers is exercised by a separate part of the Dutch Tax Administration: "the Bureau Supervision AMLD."

The CDD On Demand solutions for real estate agents

With the CDD On Demand solutions any real estate agent can easily and quickly screen a client. The CDD On Demand solutions screens a client on the following points:

UBO check voor Makelaars

In addition the CDD On Demand solution also allows you to perform a UBO check (only available for Dutch companies) that attempts to find out who the UBO of a company is. If your client is not a natural person, you are obliged to determine who the Ultimate Beneficial Owner(s) with an interest rate of >25% in the client are. The audit via SCOPE CDD On Demand automatically requests these records from the Dutch Chamber of Commerce. These extracts are analyzed to map the involved individuals and businesses. Using the mapped data an attempt is made to determine the individual(s) that should be classified as the UBO(s).