ID rules target money laundering and terrorism
Q: I am about to sign an agreement with a real estate agency to sell my home. The agent said I had to provide a huge amount of information about me and my family trust before I could sign the agreement and they would list my home. This isn’t my first time at the rodeo, as I’ve bought and sold before, but this is the first time this has ever happened to me. For example, I sold my mother’s home last year, and they hardly asked for any identification. Do they think I’m up to something or is this a new requirement?
A: There’s nothing like being accused of something to feel like you might be guilty of just about everything. But I think you can relax; your agent isn’t about to dob you in for dodging a parking fine or running an orange light on your way to work. Instead, they’re complying with new rules designed to stamp out money laundering and financing terrorism.
You might think that these things only happen in the movies or overseas, but it’s estimated that $1.35 billion is laundered in New Zealand every year. The true cost, and social impact, is much higher. Criminals use various methods to ‘wash’ the money they make from crimes to avoid detection. Making it look like it’s come from a legitimate source – such as buying or selling property or using financial services – is an established way to do it. Now, thanks to law changes that came into force on January 1, the real estate industry must prove the identities of the people they’re working with.
If you’ve bought and sold a property before, you’ll know that each real estate transaction is a bit like a jigsaw puzzle. All the people involved – banks or lenders, lawyers and real estate agents – play a part to help protect the integrity of the transaction and ensure that the puzzle pieces fit together correctly. This includes making sure that the client is who they say they are to help reduce the risk of criminal activity.
While it may seem a bit of a pain, the real estate agent must confirm your identity, including your date of birth and your address details, before you sign an agency agreement with them. This might seem a bit ridiculous if you’ve known the agent for a long time, or even used their agency before, but it’s all part of the due diligence they need to perform to meet the new rules.
The information you’re asked for will vary depending on whether you’re selling the property as an individual or as part of a partnership, company, estate or trust. If you’re selling as an individual, you’ll need to provide photo ID and be ready to answer any other questions the agency may have. If you’re selling a family trust property, you’ll need to provide this kind of verified identification for all the members of the trust and its beneficiaries.
Ideally, these requirements won’t slow down the process at all. It’s a good idea to get as much documentation ready as you can – when you’re talking to an agent, ask them what they’d like you to bring along. Complying with antimoney laundering rules is like completing any part of the real estate transaction: it works best when everyone follows the process.
Kevin Lampen-Smith is the chief executive of the Real Estate Authority, the independent government agency that regulates the New Zealand real estate industry. Send questions about buying or selling property to susan.edmunds@stuff.co.nz. For independent guidance and information on buying or selling, check out settled.govt.nz.