CASH DEMANDING SELLERS RUN THE RISK OF BEING IMPLICATED IN MONEY LAUNDERING

Property sellers who demand cash run the risk of being implicated in money laundering crimes

because proceeds from crime that perpetrators would want to “clean” are usually in the form of large amounts of cash. Real estate sellers can be found guilty of money laundering if they knew or suspected that the money paid by a buyer was “proceeds of crime” at the time of receipt according to the Money Laundering And Proceeds of Crime Act. On 12 January 2014 The Sunday Mail reported that President Mugabe invoked the Presidential Powers ( Temporary Measures) through Statutory Instrument 2 of 2014 and increased “penalties for serious offenders from US$600 to a punitive US500 000 ” - the penalties may include imprisonment of up to 25 years. 

Money laundering a serious problem in Zimbabwe!

The word “laundering” means cleaning or washing, so money laundering refers to efforts of cleaning proceeds of crime usually called “dirty money ” in order to conceal its origins from the detection of law enforcement. According to Wikipedia “ Money obtained from certain crimes such as extortion, insider trading, drug trafficking, and illegal gambling is “dirty” and needs to be cleaned to appear to have been derived from legal activities so that banks and other financial institutions will deal with it without suspicion.” In Zimbabwe this crime is serious because according to the RBZ’s Bank Use Promotion and Suppression of Money Laundering Unit 471 suspicious cases have been reported in the second half of 2016 alone and the authorities expressed concern over the none compliance of other responsible players like estate agents, The Herald reported on 24 April 2017.

Real estate money laundering risk factors or red flags.

Geographic location. This involves selling property in a jurisdiction with poor regulation and high corruption so sellers should be extra alert of money laundering. The institution of an ultimatum for returning externalized funds by the head of state President Mnangagwa and reports like the one given above are  evidence  good enough to show that our country qualify to be considered under the geographic location red flag.

The customer. This involves unusual titling of property under third parties and the use of legal entities like shelve companies that obscure the identity of who owns or control them.

The transaction. This involves many other things but the most common is when the buyer brings hard cash for payment of property. In Zimbabwe this was very common during the “ngoda” (diamond) rush of 2006.

Real estate money laundering risk mitigation tips.

Customer due diligence.

As a seller or selling agent of property you should know your customer by doing some kind of due diligence that involves knowledge of the customer’s business and circumstance. At a stage of first contact like property viewing its usually best to be asking such questions. This of course is in addition to the furnishing of national identity information from such documents like passports, ID, driver’s license etc. Take measures to verify identity of owners where legal entities like a company are involved.

I guess there isn’t a better approach to mitigate against the money laundering pitfall than for oneself to start with a thorough study of the Money Laundering And Proceeds of Crime Act . The few solutions proffered by the author of this article cannot in any way be comprehensive enough to cover diverse circumstances readers face. Readers are intelligent enough to read this piece of legislation and thereafter craft appropriate solutions that suit them.  I therefore, strongly recommend that you study the Act on your own. For a free PDF copy please send your email and request through the LETS TALK ! pop up. I will email the Act to you as an attachment. Thanks.

DISCLAIMER

This article is made available for educational purposes only as well as to give you general information and a general understanding of real estate investing, not to provide specific advice. The article should not be used as a substitute for competent advice from licensed practitioners.