Are real estate agents subject to “ AML-CFT ” obligations? Yes. Real estate agents and property managers have been among the professionals subject to these obligations since Ordinance No. 2009-104 of January 30, 2009. They must identify their clients, collect the information necessary to understand the business relationship, and, when circumstances warrant, conduct more thorough checks on the source of funds. Decree No. 2026-310 of April 24, 2026, now requires specific training on these obligations.
The real estate agent occupies a unique position in the transaction process. They meet with the buyer well before the notary, are familiar with the context of the transaction, and are often the first to notice inconsistencies—such as financing whose source remains unclear, an agent speaking on behalf of an unseen buyer, or an offer at the asking price made without negotiation or a viewing. These red flags are not a matter of intuition. They form the basis of their vigilance and must be documented.
Why is the real estate agent on the front lines?
This privileged position allows the agent to identify inconsistencies early on and defines the scope of his or her responsibilities.
What the agent sees before anyone else
The real estate agent becomes involved as soon as the seller and buyer are put in contact with each other, sometimes several months before the notarized deed is signed. This early involvement gives the agent access to information that the notary will not obtain until the transaction is finalized, including the buyer’s behavior during viewings, the consistency between the buyer’s statements about the purchase and the reality of their financing situation, and how quickly they make decisions.
A buyer who does not visit the property, does not negotiate the price, and pays in cash without a coherent economic justification sends a series of signals. The real estate agent is in the best position to identify and document these signals.
What Being a Taxpayer Means
Article L. 561-2 of the Monetary and Financial Code classifies real estate agents, property managers, and other transaction intermediaries as professionals subject to anti-money laundering and counter-terrorism financing obligations (AML-CFT). As such, the agent must:
- identify its customers and verify their identity using a valid official document;
- gather information about the purpose and nature of the business relationship;
- identify the beneficial owner when the customer is a legal entity;
- assess the source and destination of the funds, and then screen them against asset freeze lists, international sanctions lists, and lists of politically exposed persons.
These due diligence procedures are carried out throughout the entire transaction. The agent must retain the documents and information collected for five years from the end of the business relationship. Decree No. 2026-310 of April 24, 2026, adds a requirement for specific training on the risks AML-CFT associated with the real estate sector, along with a certificate of completion that must be presented in the event of an audit.
What to Check, and When
Due diligence is conducted at every stage of the business relationship, from the initial contact through the completion or termination of the transaction.
When establishing a relationship with the buyer
Due diligence procedures must be carried out as soon as a business relationship is established, in accordance with the requirements set forth in the regulations. They must not be systematically deferred until the offer is formalized or the contract is signed. Waiting until the offer is formalized to verify identity and conduct background checks amounts to shifting the burden of verification—which the agent was best positioned to carry out—onto the notary.
At this stage, the agent obtains a copy of a valid identification document, verifies that the identity provided matches the document presented, and then records the date of this verification. For a corporate buyer, the agent obtains up-to-date documents or information that identify the corporation, its representative, and, if applicable, its Beneficial Owners.
The agent also initiates an investigation to identify the beneficial owner—that is, the individual(s) who directly or indirectly hold more than 25 percent of the capital or voting rights, or who exercise control over the governing bodies. This investigation must be based on verifiable sources, not solely on the customer’s statement.
Finally, the agent asks the buyer about the purpose of the project and the source of the funds used. Financing a major acquisition entirely with equity requires an economic justification, which must be documented.
Signs That Call for a Thorough Examination
Red flags may relate to the individual, the legal structure, or the planned financing for the real estate transaction.
Signals Related to the Person
Certain situations require the application of additional or enhanced due diligence measures, depending on their nature and the applicable provisions. This is particularly the case when a customer has a connection to a high-risk country, is identified as a politically exposed person (PEP), is acting on behalf of a third party whose identity has not been sufficiently established, or exhibits significant inconsistencies between their profile and the proposed transaction. These situations do not automatically render a transaction suspicious, but they do require further verification.
Screening against international sanctions and asset freeze lists is a separate obligation. The agent verifies that the buyer, the seller, and, where applicable, the beneficial owner are not listed on the lists maintained by the European Union, the United Nations, and the relevant national authorities.
This verification is performed at the outset of the relationship and is repeated if the lists change during the transaction. If a match is detected with a person or entity subject to an asset freeze, the available information must be reviewed to confirm or rule out the match. In the event of a confirmed match, the applicable asset freeze measures and reporting requirements must be implemented immediately. For more details on the applicable procedure, see Check for an Asset Freeze Order.
Signals Related to Assembly
In its 2023 annual report, which lists 186,556 suspicious activity reports, Tracfin frequently identifies several indicators linked to the scheme. These include a legal entity incorporated shortly before the transaction, a multi-tiered chain of ownership with no economic justification, a proliferation of intermediaries between the apparent buyer and the actual payer, and a quick resale without any renovations or apparent increase in value.
The legal structure can thus serve as a red flag. A real estate investment company (SCI) remains a legitimate vehicle, but an SCI formed the day before the offer, with minimal capital and composed of partners domiciled in opaque jurisdictions, warrants a review of the chain of ownership and the source of the funds.
Similarly, a purchase made by a commercial corporation may warrant additional verification. This is particularly the case when the corporation’s corporate purpose does not include real estate and its principal office is located abroad. The agent must then verify that the transaction is part of an actual business activity.
Signals Related to Financing
Several indicators related to financing may, when taken together, warrant further investigation. These may include payment made entirely in cash; a payer who is separate from the buyer and has no established connection to them; split transfers originating from multiple accounts or institutions located in high-risk countries; or an offer at the asking price without negotiation or any loan contingency.
The agent may ask the buyer for a bank statement, proof of the source of funds, or a written explanation of the financing plan. If the responses remain evasive, the agent may file a suspicious activity report with Tracfin without informing the customer. This report does not result in the transaction being halted, unless otherwise instructed. To learn about the most common mistakes, see Avoiding Errors in Suspicion Reports.
The beneficial owner of a corporate acquirer
Identifying the beneficial owner requires distinguishing between the party signing the transaction and the individuals who actually control the acquiring entity.
Representative and Beneficial Owner
The legal representative who signs the document is not necessarily the beneficial owner. Order No. 2016-1635 of December 1, 2016, defines the beneficial owner as the individual who holds, directly or indirectly, more than 25 percent of the capital or voting rights, or who exercises control over the management bodies. This definition requires tracing the chain of ownership back to the natural persons, even when the acquiring company is itself owned by other companies.
When ownership is direct, identifying the owners is straightforward. It becomes more complicated when the acquiring entity is owned by one or more intermediate companies. The agent must then trace the chain back to the individuals who ultimately control the entire structure and document the sources used, such as the Kbis extract, the articles of incorporation, the register of Beneficial Owners , and the client’s declaration.
If the chain passes through jurisdictions where the registry is not accessible, the agent records this limitation. The agent also requests a statement certifying the identity of the Beneficial Owners.
Reconstructing a Chain of Custody
Company A acquires a property. It is 60% owned by Company B and 40% owned by an individual, C. Company B is itself 80% owned by an individual, D, and 20% owned by an individual, E.
A’s Beneficial Owners hip with C amounts to 40% direct ownership, and with D, 60% × 80% = 48% indirect ownership. E holds 12% indirect ownership, which is below the 25% threshold, unless it exercises effective control over B. The agent records this reconstruction, the sources used, and the date of verification.
When the verification process cannot be completed, the agent documents the steps taken and the obstacles encountered. If the client refuses to provide the requested information or if serious doubts remain regarding the actual identity of the beneficial owner, the agent may refuse to establish a business relationship or file a suspicious activity report with Tracfin.
Coordination with the notary
The respective obligations of the agent and the notary remain separate, but coordinating them enhances the effectiveness of the due diligence conducted on the transaction.
Two moments of vigilance, two moments
The agent and the notary are each liable in their own right and are involved at two different stages of the transaction. Article L. 561-2 of the Monetary and Financial Code classifies both professions as liable parties, without the duties of one superseding those of the other.
The notary conducts his or her own verification checks when drafting the notarized deed, based on the documents he or she collects directly. He or she does not rely on the agent’s due diligence but conducts his or her own.
This independence does not mean that operations must be compartmentalized. The January 2026 Tracfin guide notes that the handoff is more effective when the agent passes on not only the identification documents and supporting evidence collected, but also a record of the checks performed, their dates, and any red flags identified.
This notification does not constitute a report of a suspicious transaction, which is to be submitted exclusively to Tracfin. It does, however, allow the notary to focus his or her review on new information that has come to light between the offer and the signing.
What's Worth Sharing
A usable monitoring file includes:
- copies of verified identification documents, along with the date of verification;
- the Kbis extract and the articles of incorporation for a corporate buyer;
- reconstructing the chain of ownership and identifying the beneficial owner;
- information regarding the purpose of the business relationship and the source of the funds, the date and results of the initial screenings, as well as any further investigations conducted and the reasons for them.
The disclosure of this information must comply with applicable rules regarding confidentiality, professional secrecy, and data protection. Information subject to specific restrictions—particularly that related to a potential report of a suspected violation—may be disclosed only under the conditions set forth in the relevant laws and regulations.
Submitting the documents to the notary does not exempt the agent from retaining his or her own copy of the documents for five years from the end of the business relationship. This period begins on the date the notarized deed is signed or, if the transaction does not go through, on the date of the last action taken.
In the event of an inspection by the competent authority, the agent must be able to provide documentation demonstrating the steps taken in fulfillment of his or her obligations AML-CFT.
Documenting Without Burdening the Agency
A rigorous organizational structure makes it possible to preserve usable evidence while minimizing the administrative burden on the agency’s teams.
What Makes a Trace Usable
A usable audit trail is not based on the volume of documents, but on a series of dated and verifiable pieces of information. The agent must be able to demonstrate that he or she has identified the client, verified the client’s identity, gathered information on the purpose of the relationship, identified the beneficial owner where applicable, assessed the source of the funds, and performed the required screenings.
Each of these steps must be documented, including the date and source. If applicable, the agent must also indicate the name of the person within the agency who carried out the step.
The format is flexible. A spreadsheet, a digital folder for each transaction, or customer relationship management (CRM) software that includes a compliance module AML-CFT may be acceptable, provided that the information is accessible in the event of an audit and that any changes are logged. The January 2026 Tracfin guide recommends storing documents in digital format, with a timestamp and identification of the author of each action.
What Can Be Usefully Automated
Screening against sanctions lists, asset freeze lists, and politically exposed persons lists can be automated. The sources used for screening are updated regularly. Therefore, relying solely on manual verification can create a delay between when these sources are updated and when those changes are reflected in the monitoring system.
Automated screening solutions can regularly update their sources, use matching mechanisms to detect name variations, and maintain a record of the checks performed. These tools can also be configured to continuously monitor clients in the portfolio and flag any new appearances on a list throughout the duration of the business relationship.
The process of identifying the beneficial owner remains largely manual. It requires reconstructing a chain of ownership based on legal documents, cross-referencing the reported information with available public data, and documenting the limitations encountered when the chain passes through opaque jurisdictions.
Some solutions offer modules to assist with data reconstruction, but the final validation remains the responsibility of the professional. To learn more about our compliance solutions AML-CFT tailored for real estate professionals, check out our offerings.
Frequently Asked Questions
Is a real estate agent subject to the obligations set forth in the “ AML-CFT ”?
Yes. Real estate agents and property managers are among the professionals subject to these requirements. They must identify their clients and verify their identities, determine the beneficial owner of corporate buyers, assess the source of funds, conduct screenings against sanctions lists and lists of politically exposed persons, and maintain records of their due diligence efforts.
At what point does due diligence begin for a transaction?
Due diligence begins as soon as a relationship is established, not at the time of the offer or signing. Accepting a listing already triggers a verification process on the seller’s side, while the first contact with a buyer initiates the due diligence process pertaining to the buyer. Waiting until the offer is formalized amounts to shifting the burden of verifications—which the agent was best positioned to conduct—onto the notary.
What signs should prompt a thorough examination?
Among the most frequently observed situations are a buyer who does not visit the property or engage in negotiations, a company incorporated shortly before the transaction, a multi-tiered ownership structure, financing entirely through equity without a coherent justification, a payer who is distinct from the buyer, or a quick resale with no apparent capital gain. A red flag warrants further examination, but cannot, on its own, lead to a conclusion.
How can you identify the beneficial owner of a corporate buyer?
The representative who signs is not necessarily the beneficial owner. The beneficial owner is determined based on the entity’s chain of ownership, reconstructed using verifiable sources rather than relying solely on the customer’s declaration. When ownership involves multiple tiers or foreign entities, the reconstruction process and its limitations must be documented in writing.
Are the agent's duties subsumed under those of the notary?
No. The real estate agent and the notary are each responsible for their own duties and are involved at different stages of the transaction. The notary does not take over the real estate agent’s due diligence but conducts his or her own. However, the handoff should include not only the documents gathered but also the verifications performed and their dates.
If you have any questions about your obligations AML-CFT as a real estate agent, please feel free to ask a question about your obligations.
