The real estate industry is now in its second calendar-year of having to comply with this Act. Various industries and professions have been rolled out in terms of compliance requirements. For example Lawyers began vetting their clients as from 1 July 2018, Real Estate Agents is from 1 January 2019.
Thankfully we are only required to complete the AML requirements for our vendor clients, not necessary for our purchasers. (The purchaser’s lawyer will need to complete AML before they can act for them in the property or business transaction.) This legislation is quite an imposition on industry, bringing with it a great deal of additional paperwork and expense. Some of the larger real estate companies are entirely outsourcing the work, which we are also considering.
The Act is administered by the Department of Internal Affairs who will audit all businesses at least two yearly. We wish they would spend some money on publicity around this Act because we find that mostly our clients are taken by surprise when we start asking for information. How deep we need to dig depends on the ownership structure for the property or business. Where a trust is involved, usually more parties need to be verified, but the most difficult part is that we are required to obtain verification of the source of wealth or funds for the trust. Many of our clients are understandably not comfortable in providing this information, nor can they fathom why it would be required.
A situation we would like to see addressed is the amount of duplication involved. For example, should you wish to sell your business, and invest through a financial planner, you would have us, potentially your lawyer and your financial advisor all having to carry out Customer Due Diligence around your identity.
We know that other professions are also vexed by the onerous requirements of this legislation and inefficiencies in its implementation. We hope that as time goes by the authorities will see common sense and streamline the situation to reduce the level of frustration.
Kelvyn Coffey
Principal
© 2020
