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80% OF CASH LAUNDERED VIA REAL ESTATE - FIU

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EZULWINI – At least 80 per cent of money laundered in the country is from the real estate and property owners.

This was revealed by the Eswatini Financial Intelligence Unit (FIU) during a sensitisation meeting of real estate agents on the anti-money laundering and Financing of Terrorism Act of 2011. So serious is the threat that Eswatini risks being grey-listed among countries that are not doing enough to prevent money laundering. If a country is put on the grey list, it means it has an urgency to draw up water-tight anti-money laundering regulations, failing which, it could be prone to financial sanctions.

The Financial Acting Task Force (FATF) ranked the country among countries that are high risk of money laundering. The unit scored the country 6.61 out of 10. This comes 11 years after the country passed the money laundering and finance of terrorism Act, but there had been absence of regulations to operationalise the Act in some industries in the country.

In an effort to prevent the country from being blacklisted by the FATF, the Ministry of Housing and Urban Development, as well as the Eswatini FIU brought together real estate agents to deliberate on how the Anti-Money laundering and Financing of Terrorism Act can be operationalised in real estate. This comes after findings that 80 per cent of money laundered in the country was from the real estate and properties.

Agents

This was revealed by the Eswatini FIU Head of Compliance, Calvin Dlamini, during the sensitisation meeting with real estate agents that was held at the Royal Villas in Ezulwini. During the meeting, the agents were given pointers on how they could spot people who were laundering money through the buying of property. Senior compliance officer Bongani Mdluli mentioned that agents could identify a person who was laundering  money through the buying of property by drawing up a client’s profile to see if it matched the size of the property they wanted to purchase. The agents were also warned against people who would offer to buy properties using high amounts of hard cash.

Mdluli said they noted that people used money that they earned from illegal activities to buy properties and later sold them. For that reason, this act brought unfair competition in the sector and the entire economy, since most of this money was not taxed. The officers urged the agents to always raise the alarm whenever they suspected that a buyer may be involved in money laundering and was using properties to clean the money. In the process of selling properties, the agents were urged to conduct screening of their customers, which included a requirement of national identity cards for emaSwati, passports for foreigners, sources of income and proof of income. Mdluli said the law required that real estate agents kept records for up to five years. This would assist them in that, after one of their customers had been charged under the law, they would be able to prove that they did due diligence and complied with the Act.

Fine

If an estate agent fails to comply with the law after the regulations have been issued, they would be liable to up to E30 000 fine for individual and E100 000 for companies, or worse face deregistration. To prevent falling into this ditch, the unit urged real estate agents to appoint compliance officers in their businesses, who would work hand-in-hand with the FIU to monitor money laundering activities in the sector. Dlamini said this would prevent the firms form finding themselves in the ‘crossfire’.

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