Implementation of Effective & Pragmatic Solutions
In light of these red flags, Peter Brooke discussed cost-effective methods for firms to integrate best practices, alongside better knowledge on Money Laundering (ML) key identifiers, without overhauling their entire compliance program. Companies can get bogged down by the perceived burden of data collection for checks when attention should primarily be paid to the overall risk assessment procedure. Agencies could then apply a risk-based approach to determine the appropriate level of controls for their business.
Participants of the real estate industry should consider a pragmatic methodology in finding out where the risks lie, to then implement controls based on the nuanced risk-based approach prescribed by the MLRs. This could involve either Simplified or Enhanced Due Diligence, depending on specific KYC needs. An enterprise may very well have overly robust risk assessment procedures, yet some will have virtually negligible risks of money laundering that do not require highly sophisticated compliance frameworks – the MLRs account for these differences through the risk- based approach, making AML checks a relatively simple exercise if there are low risks presented (e.g. not requiring Enhanced Due Diligence).
AML is indeed difficult and presents unique challenges. There are actionable takeaways to immediately improve safeguards, avoid penalties, and stay one step ahead of regulators. The importance of adequate checks must be explained by compliance teams to the front lines which would allow businesses to benefit from thorough and efficient checks. Competitors are in a race to do the same, so getting these checks in place will keep firms ahead of the AML curve, both financially and competitively. The key practical solution is for compliance departments to work together with front line to discern proportionate AML policies that will pass auditing.
Our Anti-Financial Crime practice comprises of seasoned practitioners with extensive global experience across a wide variety of jurisdictions. If you would value an exploratory conversation with us to discuss how real estate agencies can implement more effective solutions to manage risks associated with financial crime and money laundering please email Peter Brooke at email@example.com.