AML legislation cost real estate profession in excess of 20M
The cost of implementing the Anti-Money Laundering legislation this year has cost the real estate profession in excess of $20 million according to new research* undertaken by the Real Estate Institute of New Zealand (REINZ).
From 1 January this year, all real estate agencies became reporting entities and were required to undertake the following actions:
Verify vendors’ identity by
collecting identity documentation, and in some cases,
financial information – this is known as Customer Due
Report suspicious transactions to the Police Financial Intelligence Unit e.g. if a purchaser wants to pay their deposit with large amounts of cash
Have written compliance programmes including an assessment of the particular agency’s risk of encountering money laundering
Ensure that all their agents are trained in AML
File annual reports to the Department of Internal Affairs (DIA), and
Be independently audited every two years.
Bindi Norwell, Chief Executive at REINZ says: “The AML legislation has required a significant level of upskilling across the industry as well as the implementation of new systems and processes and in many cases hiring new people as compliance officers; all of which comes at a cost.
“Conservative estimates are that it’s cost the profession in excess of $20 million to implement the systems and processes to meet the AML legislation, most of which has been absorbed internally rather than being passed on,” she continues.
“Additionally, it’s likely to cost the industry in excess of $25 million each year to manage compliance on an ongoing basis. As a result, REINZ will be looking at ways to reduce duplication across difference industries and thereby help improve efficiencies for our members,” points out Norwell.
“While meeting the AML legislation has come at a significant cost to the industry, estimates suggest that more than $1.35 billion of illicit funds are laundered every year in New Zealand, so it’s essential that real estate agents play their part in protecting the country against money laundering,” continues Norwell.
“This year has
seen the real estate profession join a growing list of
industries required to comply with AML legislation. The
thinking is that the more industries that are involved, the
less chances there are for illegal activity to slip through
the cracks and that by having a ‘herd immunity approach’
that the overall AML/CFT system is strengthened as agents
might be able to pick up on ‘red flags’ that could be
missed by other providers interacting with the same
customers due to the close relationship agents form with
people,” concludes Norwell.