CEPI and CEI Publish a Joint Position on the Proposed Fourth Anti-Money Laundering Directive

On 5 February 2013 the European Commission published a proposal for the revision of the current Third Anti-Money Laundering Directive. This is a very important piece of legislation for the real estate sector. After careful consideration and discussion CEPI and CEI have now published their joint position on the proposal. We support the fight against money laundering but take this opportunity to highlight some points of particular concern to the real estate sector.

In our position we focus on a number of points including in particular:

1. The current Third Directive already includes estate agents amongst the obliged entities. The proposal further includes letting agents. We ask that this deleted because letting agents exist as separate entities only in a few Member States and the level of the risk in the sector does not justify the additional administrative costs.

2. The current Directive includes an exemption for activity on an occasional or limited basis. We ask that this be reinstated and made available to estate agents.

3. It is very important to be certain of the parties to be checked in a real estate transaction. We need to be able to identify an estate agent’s customer. We believe that the best way of doing this is by looking at who actually pays the estate agent.

4. The rules on simplified due diligence must be clear and the requirements imposed on obliged entities concerning the identification of low risk transactions must be reasonable.

5. The proposal extends the definition of politically exposed persons (PEPs). We think that there is a particular concern here in the establishment of the source of wealth of foreign PEPs.

6. The rules on the prohibition of disclosure must be clear and estate agents should be able to make use of the limited right of disclosure afforded to other obliged entities.

7. It needs to be made clearer how third party reliance can be made to work better in the real estate sector.

8. We welcome the greater clarity on the identification of beneficial owners in the proposal but are concerned that this information must be available to obliged entities without disproportionate cost.

9. We ask that national authorities give clear guidance on the timing of transactions in the event of reporting.

10. The sanctions available to the authorities under the terms of the proposal are harsher than in the current Directive. It is important that the sanctions are not disproportionate to the risk in a particular sector and do not present an unreasonable burden for SMEs.