Agency says dirty cash crackdown ‘feels Orwellian’
New rules to stop money laundering have hit the real estate industry, which is considered a high-risk sector, according to the Ministry of Justice.
Savills’ managing director in Christchurch, Jonathan Lyttle, said the change ‘‘feels a little Orwellian’’ and some clients were unhappy about it.
The rules took effect this month, and later this year will apply to companies selling jewellery and cars, to prevent criminals turning dirty money into clean money.
A giveaway in the real estate sector might be when a property is bought sight unseen, with cash, or in the name of someone else, a police document advises.
Real estate firms have taken on extra staff or will use the services of third parties. One such company, AML Solutions, charges for an app and a subscription fee.
Businesses must provide formal verification of a client’s identity, and in some cases a detailed assessment of the transaction.
People using trusts must reveal specifically where the money for a purchase is coming from.
‘‘Every time an agent represents a client in a transaction – no matter how well they know the client or how many times they have acted for them in the past – they must request documents confirming the client’s identity and, in some cases, verify that the source of their funds is legitimate,’’ Lyttle said.
‘‘If the client can’t provide the documents, it’s likely that their agent won’t be able to act for them. Clients will need to be prepared for a much more stringent review of their assets.’’
Real estate agencies might have to overhaul their technology systems to deal with the additional requesting, processing and secure storing of confidential client information. They must appoint an antimoney laundering compliance officer, report to the Department of Internal Affairs, and meet regular audits, Lyttle said.
Bayleys’ group general manager for compliance, Caroline Williams, said clients will be required to show a passport, firearms licence, or driver’s licence along with another document such as a bank statement, plus a document showing their residential address such as a power bill.
She said Bayleys’ sales teams had been trained on the intricacies of the new requirements so they could minimise delays.
According to the Ministry of Justice, every year about $1.35 billion from the proceeds of fraud and illegal drugs is laundered through New Zealand businesses.