Regulatory Alerts2020-07-23 | Circular No.7Red Flags Indicators for Real Estate Sector
Under Section 7(1) of the Anti-Money Laundering Act, 2010, real estate sector entities are mandated to file Suspicious Transaction Reports (STRs) with the Financial Monitoring Unit. The FMU has provided specific red flag indicators to assist agents, brokers, and developers in identifying potential money laundering or terrorism financing. While individual red flags may not confirm illegal activity, entities must evaluate combinations of these indicators alongside comprehensive client profiles and financial analysis to assess risks effectively.
FINANCIAL MONITORING UNIT (FMU) GOVERNMENT OF PAKISTAN 2ND FLOOR, SBP MAIN BUILDING, I.I. CHUNDRIGAR ROAD, KARACHI 4400
FMU-Circular No. 07 of 2020 July 23, 2020
DNFBPs (Real Estate Sector)
Dear Sirs/Madams,
Red Flags Indicators for Real Estate Sector
In terms of Section 7 (1) of Anti-Money Laundering Act, 2010, the reporting entities are required to promptly report Suspicious Transactions Reports (STRs) to Financial Monitoring Unit for potential Money Laundering (ML) / Terrorism Financing (TF) related activities.
The reporting entities also includes Designated non-Financial Business Professions (Real Estate Sector) as per Section 2 (u) read with Section 2 (m) of AML Act 2010.
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In order to identify a suspicion that could be indicative of Money Laundering (ML) or Terrorism Financing (TF), FMU has prepared the red flags indicators that are specially intended as an aid for Real Estate Agents, property dealers / brokers, housing authorities, and builders and developers, which are attached as “Red Flags Indicators for Real Estate Sector”.
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These red flags may appear suspicious on their own; however, it may be considered that a single red flag would not be a clear indicator of potential ML / TF activity.
However, a combination of these red flags, in addition to analysis of overall financial activity and client profile may indicate a potential ML / TF activity.
Encl: Red Flags Indicators for Real Estate Sector.
Yours truly,
Sd/- (Sumera Baloch) Additional Director
Distributed to: The Chairman, Federal Board of Revenue (FBR)