13 real estate dealers suspended for failure to complete risk-assessment survey

Some thirteen real estate dealers have been suspended by the Real Estate Board for failure to complete and submit the board’s Anti-Money Laundering Risk Assessment Survey questionnaire. The names of the 13 dealers are listed on the board’s website, and clients are urged not to conduct business with them until they are reinstated. The suspended dealers still have an opportunity to regularise their operations by completing the survey, which is also posted on the board’s website. The agency first asked dealers to complete the risk assessment survey via the dissemination of an email on August 18 last year, with an August deadline that was extended to September 11. On May 6, 2021, a subsequent notice was sent to 99 dealers who had failed to respond to the earlier notices. In that correspondence, dealers were given a deadline of June 5 to submit same. Section 38 of the Real Estate (Dealers and Developers) Act gives the board’s inspectors the power to require “the holder of a licence issued ... to supply in writing, such information as relates to the applicant’s practice of real estate business”.

RISK FACTORS

The survey takes a risk-based approach by identifying factors in dealers’ operations, or that of their clients, which would put the dealer at a heighten risk for being used for money laundering or terrorism financing. These include, but are not limited to: unnecessarily complex transactions or opaque beneficial ownership clients, transactions that are unusually large and complex, or lack an obvious economic or lawful purpose. It might also be based on the fact that the transactions include politically exposed persons, such as politicians or someone holding a prominent public position.

As at March 2021, a total of 98 per cent of dealers responded and were therefore considered fully compliant. The remaining two per cent were considered non-compliant, ultimately resulting in their suspension.

The real estate sector has drawn increased scrutiny since February 2020, when Jamaica was among seven new countries placed on a ‘grey list’ by the Financial Action Task Force (FATF) for gaps or failures in stemming the financing of terrorist groups or money laundering. At the time of the announcement, the FATF indicated that Jamaica would be among those countries which would be subjected to increased monitoring. As a result, Jamaica agreed to take the necessary corrective measures to address these deficiencies within a given time frame.

Failure to show sufficient and acceptable efforts to do so, via adequate reporting or due diligence mechanisms, will have negative implications on the country’s reputation in the business/banking sector with reference to money laundering. The board is required to contribute to Jamaica’s National Risk Assessment with respect to remedial action taken in the real estate sector.

The board was designated the ‘competent authority’ under the Proceeds of Crime (Designated Non-Financial Institution) (Real Estate Dealers) Order, which came into effect on April 1, 2014. This was one of five orders covering non-financial businesses and professions which were identified as being vulnerable to money-laundering or terrorism-financing activity.

On Monday, August 30, dealers started what will ultimately be a series of training workshops by the board to address issues uncovered in the evaluation of the survey, as well as provide an update on general anti-money-laundering reporting requirements and guidelines.