Whilst the risks of bribery and corruption, money laundering and terrorist financing cut across the real estate industry, regardless of geography or industry specialism, RICS published a global professional statement to further tackle this problem within the property industry.
RICS have been working with industry and Governments to address this issue and this statement will become mandatory on 1 September 2019.
Nigel Sellars, RICS, comments “The statement contents sets out the obligations for RICS professionals and regulated firms to minimise their exposure to anti-money laundering, bribery and corruption risks, including how to guard against these financial crimes in their day-to-day business operations. Mandatory for all sectors across all disciplines, It provides a clear description of how to manage the risks, and it sets out professional and ethical behaviour, providing practitioners and firms with clear and consistent principles on what constitutes a breach of conduct. “
Through an extensive global consultation, RICS engaged professionals and industry stakeholders including Transparency International and Financial Action Task Force (FATF) to specifically address the risks posed by bribery and corruption, money laundering and terrorist financing.
According to Transparency International in its foreword in the professional statement, there are structural weaknesses in anti-money laundering legal frameworks and, in many countries public authorities do not have sufficient means for oversight and supervision. Hence, proactive steps taken by the real estate profession to strengthen standards, such as this new RICS professional statement are welcome steps in the right direction.
Kinga Barchoń MRICS
Partner, Real Estate Team Leader, Commercial Disputes Team Leader, PwC:
The purchase of property has the potential to be used by organised criminals to launder the proceeds of criminal activity. This is due to the significant amounts of criminal funds which can be "cleaned" in a single transaction. It is therefore critical that all professionals working in the sector are acutely aware of the issues and appropriately trained to identify and report any suspicions of money laundering.
The problem is increasing. Based on the PwC “Global Economic Crime and Fraud Survey 2018”, 54% of respondents involved in money movement (and/or any of the following lines of business: financial institutions, mutual funds, money service businesses, broker dealers, insurance companies, or dealers in precious metals, stones or jewels) indicated they had experienced an Anti-Money Laundering (AML) regulatory enforcement or inspection in the last two years (up by 4 percentage points from 2016). And an identical proportion (54%) expect recent changes in the geopolitical regulatory environment to have a greater impact on their organisations over the next two years.
The profession needs to work with governments, supervisors and law enforcement agencies to ensure our industry is viewed by criminals as a hostile destination for money laundering. As the profession’s regulatory, RICS takes robust action against those who fail to act with integrity, as well as reporting such issues to law enforcement agencies.
This is not only in the interest of the public, but also in the interest of professionals, who want to ensure that the reputation of their profession is maintained. Therefore, it is important that the profession takes a leading role in ensuring that business interactions with the built environment are transparent and serve the public good.
More and more regulations are being introduced by regulators every year. They affect not only FS-industry players, but also span across other sectors. As PwC we have been helping our clients combat financial crime and meeting regulatory demands by delivering both advisory and operational support service.”