Hills Real Estate was issued a formal warning by the DIA for failing to fulfil its obligations in establishing, implementing, and maintaining an AML/CFT programme. More specifically the agency was found to be lacking in conducting ongoing customer due diligence, monitoring and reviews, and record-keeping. This incident serves as a reminder that real estate agencies must fulfil their responsibilities in combating illicit financial activities.

The DIA has expressed concerns over the use of New Zealand's real estate market as a platform for money laundering. Evidence suggests that criminals are utilising legitimate property transactions to conceal illegal funds, creating a pressing need for real estate agencies to delve deeper into their clients’ identities. In the financial year ending June 2021, NZ Police seized 100 properties amounting to NZD 73.7 million—an alarming increase compared to the previous year's 51 properties totalling NZD 55.7 million. The prevalence of these incidents underscores the urgency for heightened vigilance within the industry.

While many in the sector have commendably demonstrated compliance with AML/CFT regulations, recent warnings issued by the DIA highlight the necessity for all agencies to take their obligations seriously. Real estate operators must not hesitate to seek assistance or guidance when required. Strategi, for example, offers 'mini' AML/CFT audits outside the mandatory three-year audit cycle. Given the upcoming implementation of new regulations by the end of July, coupled with the DIA's specific concerns about non-compliance in the real estate sector, now is an opportune time to prioritise compliance efforts.

The DIA's formal warning to Hills Real Estate, the second agency to receive such a warning in two months, serves as a wake-up call for the real estate industry. Real estate agencies must fully commit to their obligations under the AML/CFT Act, exercising due diligence and staying vigilant to identify and deter criminals. By embracing compliance efforts and seeking assistance when needed, agencies can contribute to a more secure and trustworthy real estate sector in New Zealand.

Get in touch with our team if you have any questions.