Real estate is a high-risk sector for money laundering: large values, time-pressured closings, cross-border parties, and layered ownership through SPVs or trusts. Agents, brokers, notaries, and lawyers are therefore expected to perform robust anti-money laundering (AML) screening before completion. This guide explains how to apply PEP and sanctions checks effectively and how to document results so they stand up to audit.
1) Why property transactions attract AML scrutiny
Real estate can convert illicit funds into apparently legitimate assets. Common typologies include using shell companies, relatives as stand-ins, and complex financing that obscures the source of funds. International frameworks require customer due diligence (CDD) and, for higher-risk cases, enhanced due diligence (EDD) to reduce these risks.
2) Who to screen in a transaction
- Buyers and sellers — both natural persons and legal entities.
- Ultimate beneficial owners (UBOs) — individuals who ultimately control an entity or benefit from the deal.
- Directors and signatories — people authorized to act on behalf of a company client.
- Connected parties — guarantors, introducers, and relatives if they provide funds or influence control.
3) What to check: PEP, sanctions, adverse media
- Politically Exposed Persons (PEPs) — current or former public office holders and, typically, their relatives and close associates. PEP involvement usually triggers EDD.
- Sanctions lists — ensure coverage of major regimes (e.g., UN, EU, US/OFAC, UK) and any relevant national authorities. Confirm matches on multiple identifiers, not name alone.
- Adverse media — credible negative news related to corruption, fraud, tax offenses, trafficking, or other financial crime indicators warrants closer review.
4) Reducing false positives in name screening
Names vary across languages and scripts. To avoid noise, collect additional identifiers (date of birth, nationality, company number) and search known aliases or transliterations. Weight evidence consistently: a match on full name + DOB is stronger than name only; a match on name alone should be treated as a potential hit until verified. Keep a short note explaining why a potential hit was dismissed or confirmed.
5) When to escalate to Enhanced Due Diligence (EDD)
Apply EDD when a sanctions or PEP match is confirmed, when high-risk jurisdictions are involved, when ownership is opaque, or when funds flow through unusual channels. EDD measures can include: obtaining source-of-funds/source-of-wealth evidence, senior management approval, external document verification, and increasing the frequency of monitoring during the transaction lifecycle.
6) File hygiene: evidence, retention, and audit trail
- Capture evidence — save screening reports, timestamps, and the decision rationale.
- Record negative results — “no match found” is valuable evidence that checks were performed.
- Retention — align with local rules; store in a retrievable format attached to the matter file.
- Re-screen or monitor — for higher-risk clients, set re-checks on a defined cadence or enable ongoing monitoring.
7) Tooling to simplify the process
StartKYC supports real estate professionals with a pay-as-you-go AML screening platform focused on PEP, sanctions, adverse media, and regulatory enforcement content. Backed by Tier-1 data and already used by thousands of clients, it provides instant reports you can file, optional 12-month monitoring at the same cost as a one-off search, bulk import via CSV or API, and multi-user access at no additional cost — all with responsive customer service to help resolve complex cases.
By integrating structured screening into everyday workflows — scoping parties correctly, checking the right lists, documenting decisions, and monitoring where appropriate — real estate firms can close transactions confidently while meeting AML obligations without unnecessary friction.