Barbara is an experienced agent employed by a reputable real estate agency.  She had a proposed purchaser contact her from overseas regarding one of her listings.  This purchaser was soon to visit New Zealand but resided overseas.  She was planning a visit to purchase a property for her son to live in while he attended university in New Zealand.

The purchaser duly arrived in New Zealand and met with Barbara to view the property.  She was elusive as to her contact details and told Barbara that she would contact her when required.  She did not give Barbara any personal or contact details.

The purchaser immediately put an unconditional offer on the property, which the vendors happily accepted.  The purchaser insisted on paying a very substantial deposit as part of the purchase price into the agency’s trust account.  The purchaser advised that her overseas account would immediately make payment of this deposit, and the deposit was paid electronically within a few days…

While Barbara thought to herself that this situation seemed a little odd, she did not act on her gut feeling by asking the purchaser any questions about her or the origin of the deposit paid.
It was not until later that it came to light that the funds were part of an international money laundering scheme.  As Barbara is a professional, she is expected to have been alerted to the unusual aspects of this purchase.  She should have made further enquiries about the purchaser and the deposit paid to the agency’s trust account.

Barbara herself is now facing prosecution, substantial fines as well as the loss of her Real Estate Agent Licence.

As you will be aware, there are laws which attempt to counter money laundering (being how criminals disguise the illegal origins of their money) in New Zealand.

The Anti-Money Laundering and Countering Financing of Terrorism Act 2009 gives New Zealand’s financial institutions obligations to detect and deter money laundering.

Real estate agents’ trust accounts have been given a temporary exemption from the onerous obligations under this Act, which could make purchasing real estate more attractive as a way to launder criminal proceeds.

This temporary exemption does not mean that agents are off the hook and don’t need to do anything.

Agents are still obligated to report “suspicious transactions”.  Most agents would be concerned about a briefcase full of cash, smelling of drugs but a suspicious transaction is not always that obvious.

Even if funds are transferred to your trust account from a bank, this is not a guarantee that funds are “clean” and that your obligations have been met.

The world we live in has quickly become an electronic environment.  The majority of transactions no longer involve any cash at all, but rather are payments and transfers made electronically.  Many criminal acts involve fraud and cybercrime, with cold hard cash never being involved.

If you see any red flags or think that a transaction seems “off” it is imperative that you immediately raise these with your manager and have the circumstances further investigated.  If in doubt, ask questions.

If you fail to identify and make enquiries about suspicious transactions and/or you do not report these, the consequences are high if later it is found the funds were laundered.  Remember to be aware and stay alert!  Otherwise you could like Barbara, be facing prosecution, substantial fines as well as the loss of your Real Estate Agent Licence!