P900 million real estate assets subject to forfeiture – AMLC

MANILA, Philippines — The Anti-Money Laundering Council (AMLC) said close to P900 million worth of real estate assets are subject to civil forfeiture cases as criminals typically use real estate for money laundering activities.

AMLC chairman and Bangko Sentral ng Pilipinas Governor Benjamin Diokno said the estimated value of frozen real estate assets as of 2020 accounted for 22 percent of the total assets subject to civil forfeiture proceedings in the country.

Diokno said the financial intelligence unit recently filed a petition for civil forfeiture on assets, including real estate property in Cebu, relative to illegal drugs.

He also said the AMLC has been able to confiscate P30 million worth of real estate that was used as a means to hide the proceeds of crime, including terrorism financing.

The BSP chief said several real estate assets that are subject to existing freeze orders were related to terrorism financing.

“Purchasing real property integrates illicit funds into the legal economy. When used for business activities, the purchased real property, such as a hotel or restaurant, may also provide what appears to be a legitimate source of income,” Diokno told members of the Real Estate Brokers Association of the Philippines (REBAP).

The AMLC chief said condominiums and other real property have been identified as assets of criminals, majority from fraud, corruption, and illegal drugs.

Unlike investments, Diokno said real estate are reliable due to generally stable prices and even profitable as prices are likely to appreciate over time, and the property could be used to generate income.

He added real estate assets are also functional as the property itself could be used as a home, an office, storage, among others.

As such, Diokno said real estate practitioners play an important role in upholding the integrity of the financial system by executing Anti-Money Laundering and Counter-Terrorist Financing preventive measures.

“Now that real estate brokers are covered under the ambit of the Anti-Money Laundering Act, as amended, real estate brokers are obliged to put into place measures to prevent and detect money laundering and its predicate crimes, terrorism, and terrorism financing,” Diokno said.

According to Diokno, the requirements are not meant to burden real estate brokers, but designed to add more credibility, preserve the integrity of the real estate sector, and prevent it from being used as a channel or a repository of criminal proceeds.

Aside from reporting single cash transactions of over P7.5 million, he said real estate brokers are required to conduct customer due diligence or know-your-customer procedures on all clients and keep the records for at least five years.

“Since the purchase of real property from a real estate broker or developer is an official and contractual undertaking, stating personal information, as well as the sources of funds should not be an issue—if the client has nothing illegal to conceal,” Diokno said.

He said real estate brokers are also required to file suspicious transaction reports for transactions where any of the suspicious circumstances listed in the AMLA exists.

“This means that all transactions that are below the threshold or those that are facilitated through banks or in-house financing are not covered transactions. It is also worth mentioning that clients paying real estate brokers and developers in sizeable amounts of cold cash are not conventional in the industry,” Diokno said.