Cash Transactions
- Large Cash Payments: Significant cash payments that surpass industry norms, particularly for luxury real estate, can indicate an attempt to avoid detection.
- Untraceable Cash Payments: Payments made with cash or other untraceable instruments, bypassing traditional banking systems.
- Structured Payments: Breaking down large transactions into smaller, less suspicious amounts to avoid detection.
Unusual Payment Structures
- Complex Purchase Structures: Involvement of multiple intermediaries or shell companies to obscure the true ownership of the property.
- Third-party Entities: Utilization of nominee buyers or other third-party entities to hide the actual owner.
- Unusual Financing Arrangements: Use of non-standard financing arrangements, such as high-interest private loans.
- Layered Transactions: Multiple layers of transactions to obscure the original source of funds.
Suspicious Buyer Behavior
- Rapid Property Flipping: Quick buying and selling of properties, particularly with significant value increases, often termed as flipping.
- High-risk Foreign Buyers: Buyers originating from countries with a high risk of money laundering or corruption.
- Reluctance to Provide Identification: Hesitance or refusal to provide clear identification or the source of funds.
- Eagerness to Close Quickly: Lack of genuine interest in the property itself but an unusual urgency to complete the transaction.
- Multiple Properties Purchase: Buyers purchasing multiple properties without a clear investment rationale.
- Unexplained Source of Wealth: The buyer cannot provide a clear and legitimate source of their wealth.
Suspicious Property Details
- Inconsistent Valuations: Property valuations that are significantly lower or higher than the market value without clear justification.
- Unjustified Wealth: The buyer’s apparent wealth does not match their business activities or income levels.
- Overvalued or Undervalued Transactions: Properties being bought or sold at prices that deviate from market norms.
- Unusual Property Features: Properties with unusual features or in unusual locations that do not match the buyer’s profile.
- Frequent Transfers: Properties that are frequently transferred without a clear commercial rationale.
Suspicious Fund Sources
- Transfers from High-risk Jurisdictions: Large fund transfers originating from countries with weak anti-money laundering (AML) or counter-financing of terrorism (CFT) regulations.
- Offshore Accounts: Use of offshore accounts or jurisdictions known for lax financial regulations.
- Unexplained Fund Origins: Funds used for the purchase have unclear or suspicious origins.
- Frequent Cross-border Transfers: Regular cross-border fund transfers that do not align with the buyer’s stated business activities.
- Unusual Loan Structures: Use of loans from non-traditional lenders or without clear terms.
Suspicious Documents
- Forged or Altered Documents: Presentation of fake or manipulated documents such as IDs, bank statements, or property records.
- Incomplete Documentation: Submitting incomplete or inconsistent documentation during the transaction process.
- Non-standard Identification: Use of non-standard forms of identification or multiple IDs.
- Inconsistencies in Documents: Documents that contain discrepancies or inconsistencies that raise suspicion.
Unusual Business Activities
- Incongruent Business Activity: Purchasers whose business activities do not logically support the real estate investment (e.g., non-profits buying investment properties).
- Frequent Ownership Changes: Properties with frequent changes in ownership, especially in a short period.
- Unregulated Intermediaries: Use of intermediaries who are not subject to adequate AML/CFT laws.
- Business Activities in High-risk Sectors: Buyers involved in sectors with high risks of money laundering, such as precious metals, art, and antiques.
- Use of New or Shell Companies: Purchases made by recently formed or shell companies with no clear business purpose.
Additional Red Flags
- High-risk Business Sectors: Buyers involved in sectors known for high levels of cash transactions or financial secrecy (e.g., gambling, cryptocurrency).
- Property Not Used: Purchased properties remain unoccupied or underutilized without a clear reason.
- Overseas Payments: Payments made from foreign accounts, especially from jurisdictions with high levels of financial secrecy.
- Layering Transactions: Structuring transactions in a way to obscure the trail of money, often through multiple smaller transactions.
- Reluctance for Due Diligence: Resistance to standard due diligence procedures or provision of minimal information.
- Use of Professional Facilitators: Involvement of accountants, lawyers, or other professionals to facilitate complex transactions.
- Sudden Payment of Mortgages: Paying off large mortgages or loans suddenly and without a clear source of funds.
- Back-to-back Property Sales: Properties sold back-to-back between related parties or in quick succession without a clear commercial rationale.
- High-value Cash Deposits: Making high-value cash deposits just below the reporting threshold.
- Anonymous Ownership: The buyer insists on maintaining anonymity or uses proxies.
- Investment in High-value Properties: Investment in high-value properties in prime locations without a clear business rationale.
Use of Trusts: Utilization of trusts that obscure the true ownership of the property.