Episode 3 - Real estate and money laundering: when assets become vehicles for fraud

Contents

Types of real estate fraud linked to money laundering
AML-CFT obligations for real estate professionals
How AP Solutions IO helps detect suspicious transactions in this sector
Towards enhanced real estate vigilance

In the real estate business, properties no longer simply appreciate in value: they sometimes conceal dubious assets. And the fraud, often well-crafted, evades traditional controls... 

Today, the real estate sector is a prime target for money laundering. In France, the COLB points to a lack of transparency regarding Beneficial Owners, a low rate of declarations and vigilance gaps. The DGCCRF estimates that more than 60% of checks in the sector show anomalies. 

Internationally, the FATF warns of fraudulent schemes involving shell companies, artificial values and hasty resales. The sector combines high transaction volumes, numerous intermediaries and a lack of traceability - an ideal breeding ground for fraudsters. 

In this third episode, we take a look at the most common types of transaction, the obligations of professionals and the practical solutions provided by AP Solutions IO to detect suspicious transactions. 

Types of real estate fraud linked to money laundering 

Underneath its solid, regulated exterior, real estate remains an ideal playground for money laundering. High transaction volumes, complex legal structures, difficulty in identifying the true buyer... The loopholes are numerous. And fraudsters exploit them methodically. 

Increasingly sophisticated practices 

Money laundering in the real estate sector no longer involves falsified documents or crude schemes. It relies on transactions that appear legal, but are designed to obscure the origin of the funds or mask the identity of the Beneficial Owners. Among the most common types of fraud: 

• Cash purchase without clear explanation of source of funds 

• Successive resales of the same property at artificially inflated prices 

• Split payments from multiple countries or banking channels 

• Use of nominees, intermediaries or front companies 

• Opaque arrangements via holding companies, SCIs or offshore structures 

These methods aim to make traceability more complex, while at the same time formally respecting the rules. 

Vigilance no longer limited to documents 

In the face of these patterns, traditional controls are no longer sufficient. We need to cross-reference data, question behavior and develop a dynamic reading of customer profiles. Identifying a fraudulent scheme is no longer a matter of looking at a supporting document, but of looking at the overall coherence of a transaction. 

AML-CFT obligations for real estate professionals 

Real estate remains a prime target for suspicious flows. For you, as a manager, compliance officer or regulatory player, this observation implies a dual requirement: to control risks and to guarantee active, documented and traceable compliance. 

Since the transposition of European directives (5th and 6th anti-money laundering directives), LCB-FT obligations apply to the entire real estate chain: agents, notaries, property managers, promoters, property dealers, etc. 

This regulatory framework commits you directly, well beyond the usual checks. What these regulations mean in concrete terms : 

• Formally identify the customer and the beneficial owner, even in the case of legal interposition 

• Assess the level of risk specific to each transaction (amount, type of property, origin of funds, channel used, etc.). 

• Increased vigilance on atypical transactions: cash payments, use of foreign companies or lack of economic explanation 

• Maintain an up-to-date KYC file, including supporting documents, analyses and history of interactions 

• Report to TRACFIN any transaction deemed suspicious, even without formal proof 

These obligations are not just theoretical: there are heavy penalties for non-compliance (fines, suspension of activity, prosecution). Your responsibility therefore lies as much in the implementation of controls as in their traceability. 

Integrating compliance into your practices is no longer an option. It is now a strategic issue, at the heart of sector risk management. 

How AP Solutions IO helps detect suspicious transactions in this sector 

In real estate, the most dangerous frauds never cry out their name. They advance masked, concealed in complex structures or seemingly innocuous behavior. For industry professionals, the challenge is clear: detect these weak signals without slowing down business. And that's precisely what AP Solutions IO offers, with a RegTech approach designed for your day-to-day business:  

AP Scoring -Contextual risk analysis 

This module evaluates each file according to an evolving scoring model. It does not limit itself to static data, but takes into account behavior, the financing channel, the customer's history and the contextual elements of the property. 

The aim is to prioritize alerts according to their level of real risk, avoid false positives and focus your attention where it's really needed. 

AP Monitoring - Real-time detection of anomalies 

AP Monitoring reacts to any unusual behavior. A change in legal structure, an atypical transaction, the sudden use of several interposed entities... everything is detected, contextualized and logged. 

This continuous monitoring enables you to anticipate deviations before they become critical, without burdening your internal procedures. 

AP Scan - Automated screening of high-risk profiles 

AP Scan cross-references your customer data with sanction lists, PEPs, sensitive geographical areas and regulatory signals. Each new entry or modification triggers an immediate check, with no manual action required. 

The result: smooth, responsive compliance that's always up to date. 

Everything is centralized. Every interaction is recorded and documented, ready to be consulted in the event of an audit. And above all, these tools integrate seamlessly into your processes. No spreadsheets to fill in. No copying and pasting to tinker with. 

Towards enhanced real estate vigilance 

Real estate is far from being a simple asset: it has become one of the preferred vehicles for the most sophisticated money-laundering schemes. High values, chains of intermediaries, intermediary companies... all combine to blur the traceability of funds and complicate the identification of Beneficial Owners. 

This third episode highlighted the reality on the ground: real estate frauds adapt quickly, blending in with customs and exploiting every regulatory blind spot. And yet, the AML-CFT obligations are clear and have been reinforced for several years. The key is to apply them rigorously, without slowing down operations or overloading teams. 

The solution lies in agile, contextualized compliance. Thanks to RegTech technologies, industry professionals today can rely on tools capable of: 

1. Capture weak signals 

2. Automate controls 

3. Document each action for evidentiary purposes 

Do you manage a real estate structure, a network of agents or a company exposed to this type of risk?