A Must Read for Property Developers, Lawyers and Auditors.
1 year ago by Jack Evangelides

A Must Read for Property Developers, Lawyers and Auditors.

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A recent report published by C4ADS - a US based non-profit organisation which investigates global conflict and security issues - highlights the urgent need for rigorous scrutiny of individuals and companies investing in real estate. As the cleverly named report “SANDCASTLESâ€? reveals, ‘Real estate is one of the most attractive and widely-used vehicles for moving criminal capital.` The report specifically looks at Dubai`s luxury property market and identifies seven US sanctioned entities with links to property there, but the issue is widespread globally and could easily be prevented or at least minimised in future if the proper checks are undertaken from the outset. Property developers, auditors, conveyancing lawyers and immigration agencies as well as government departments have an obligation to ensure that adequate due diligence is being performed each time a property is sold, especially where this includes the right to residency or citizenship. In many cases, this is reduced to the client filling out a form about themselves, providing passport copies and evidencing the source of funds, but a more thorough investigation should and could be conducted every time. For example, Cedar Rose can offer Global Compliance Checks on any entity (company or person) to identify whether they are sanctioned, wanted for or suspected of criminal activity anywhere in the world. Where the name is Arabic, we have particular expertise in searching all possible translations. We can also conduct PEP Screening to check whether the buyer has close links to particular governments or regimes - and these checks are not expensive at all. However, we would highly recommend that Comprehensive Due Diligence is performed on every purchaser of luxury real estate and the companies they are associated with, and the SANDCASTLES report highlights the absolute and unquestionable need for that.   Bearing in mind that the average cost of such a thorough background scrutiny is approximately 0.1% of the minimum property price required to obtain an EU passport in Cyprus, for example, it is a worthwhile investment indeed to be certain that your clients - who may well become your new neighbours and future citizens - are not connected to narcotics trafficking, arms dealing, financing of terrorism or nuclear proliferation.   Our basic Due Diligence Comprehensive report involves a minimum of 20 hours of research time to thoroughly screen an individual or company and all those connected to it. It may involve site visits and it will involve pulling out originals or copies of corporate records from commercial registries, historical and current associations, adverse media searches in native languages, compliance checks, local reputation assessments as well as identification of the ultimate beneficiary owners behind an organisation. Such a thorough analysis takes around two to three weeks to deliver and could take longer depending how deep the trail goes, but is surely essential to conduct.   For more information on how Cedar Rose can help prevent your organisation from facilitating money laundering or aiding global criminal activity, contact our Client Services team on orders@cedar-rose.com. Why stop here? Dive deeper into the understanding of security and the necessity of due diligence reports by reading our compelling article on cyber crime here. Written by Christina Massaad, Managing Director *** The sole purpose of the article above is to generate public discussion, it has no intention to constitute legal advice. ***