RBA Guidance for Real Estate Agents.pdf - FATF

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effectiveness of monitoring training will therefore be important to the successful delivery of proportionatesupervisory/monitoring actions.102. Training should aim to allow designated competent authorities/SRO staff to form soundcomparative judgements about AML/CFT systems and controls. It is important in conducting assessmentsthat designated competent authorities and SROs have the ability to make judgements regardingmanagement controls in light of the risks assumed by real estate agents and their firms and consideringavailable industry practices. Designated competent authorities and SROs might also find it useful toundertake comparative assessments so as to form judgements as to the relative strengths and weaknesses ofdifferent firms or business arrangements.103. The training should include instructing designated competent authorities and SROs about how toevaluate whether senior management has implemented adequate risk management measures, and determineif the necessary procedures and controls are in place. The training should also include reference to specificguidance, where available. Designated competent authorities and SROs also should be satisfied thatsufficient resources are in place to ensure the implementation of effective risk management.104. To fulfil these responsibilities, training should enable designated competent authorities’ andSROs’ monitoring staff to adequately assess:i. The quality of internal procedures, including ongoing employee training programmes andinternal audit, compliance and risk management functions.ii. Whether or not the risk management policies and processes are appropriate in light of the realestate agents’ risk profile, and are periodically adjusted in light of changing risk profiles.iii. The participation of senior management to confirm that they have undertaken adequate riskmanagement, and that the necessary procedures and controls are in place.19
SECTION THREE:GUIDANCE FOR REAL ESTATE AGENTSON IMPLEMENTING A RISK-BASED APPROACHChapter One: Risk Categories105. In order to implement a reasonable risk-based approach, real estate agents should identify thecriteria to assess potential money laundering and terrorist financing risks. Identification of the moneylaundering and terrorist financing risks, to the extent that such terrorist financing risk can be identified, ofcustomers or categories of customers, and transactions will allow real estate agents to determine andimplement proportionate measures and controls to mitigate these risks.106. Money laundering and terrorist financing risks may be measured using various categories.Application of risk categories provides strategy for managing potential risks by enabling real estate agentsto subject customers to proportionate controls and oversight. The most commonly used risk categories are:country or geographic risk, customer risk, and transaction risk. The weight given to each category(individually or in combination) in assessing the overall risk of potential money laundering and terroristfinancing may vary from one real estate agent to another, depending upon their respective circumstances.Consequently, real estate agents will have to make their own determination regarding risk weighting.Parameters set by law or regulation may limit a real estate agent’s discretion.107. While there is no agreed upon set of risk categories for real estate agents, the examples providedherein are the most commonly identified risk categories. There is no one single methodology to apply theserisk categories, and the application of these risk categories is intended to provide a strategy for managingpotential risks. The following risk categories can indicate a higher risk of money laundering or terroristfinancing, dependent upon all of the surrounding circumstances, taking into account the norms of themarket at any given time.Country/geographic risk108. Potential elements contributing to risk include:• Location of property(s) in relation to the buyer. Different countries pose different levels and typesof risks pertaining to cross border, non-face to face transactions, e.g. some countries have higher orlower levels of criminality and/or regulation.• Location of the buyer and seller.109. There is no universally agreed definition by either competent authorities, SROs, or real estateagents that prescribes whether a particular country or geographic area represents a higher risk. Countryrisk, in conjunction with other risk factors, provides useful information as to potential money launderingand terrorist financing risks. Factors that may result in a determination that a country poses a higher riskinclude:20
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