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?
Client research for real estate agents
According to the AML, a customer due diligence research consists of the following steps:
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.
Based on the results from the previous steps, you make a risk assessment of the client.
It is imperative that you monitor your clients and that you periodically repeat your client research, to make sure that your risk assessment is up to date.
Notable events such as unusual transactions should be reported to the appropriate regulator.
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 along the following lists:
UBO check for real estate agents
In addition, SCOPE CDD On Demand 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).