The next time you contract with a Realtor or real estate agent to purchase or sell a property, be prepared to answer myriad questions about your identity and your source of funds. This interrogative exercise is a mandatory obligation of real estate dealers under the Proceeds of Crime (Money Laundering Prevention) Regulations 2007 and POCA Amendments 2013. All this is a part of the government’s effort to clamp down on money laundering and prevent money from criminal activities, to make it into real estate. How much of your privacy are you willing to give up for a transaction on your property?
What Does the Government Want you to Reveal?
What do you need to reveal to the government about your next real estate deal? Your date and place of birth and your nationality are top of the list of questions. You need to provide the name of your employer or business address, a copy of your driver’s licence and proof of your personal address. In addition you need to declare the source of funds for the transaction. The dealer must report to the Financial Investigative Division (FID) of the Ministry of Finance, any suspicious, unusual, large or complex transactions. A client, for example, who agrees to purchase a property at a grossly inflated price would likely be considered with suspicion. Likewise someone who wishes to close the deal in an unusually short time. A “suspicious activity” report to the FID may trigger an investigation into the financial affairs of the individual. Failure on the part of the dealer, to disclose a suspicious action to the authorities is an offense under the law.
What may be regarded in Jamaica as suspicious, however, is often a common practice in other countries. For example, offers to purchase made on prime properties are sometimes so competitive that the successful offer is much higher than the market value. Secondly, it is common place for real estate deals in developed countries to be closed in less than three weeks, a feat almost unheard of in Jamaica.
But why are real estate agents being asked to store and report “suspicious” information about their clients in the first place? Most dealers do not receive client’s deposits or final payments, Most dealers direct clients to the client’s lawyer when a deposit is to be made on the property. So why doesn’t the government designate lawyers to collect information and report suspicious activities? The government tried.
Lawyers Refused to Become Involved
In 2013 the POCA required attorneys at law to comply with its requirements. The Bar Association of Jamaica challenged the law as an infringement of the attorney/client relationship. The Supreme Court granted an injunction to the Jamaican Bar Association halting the implementation of measures mandating lawyers to report their clients for suspected financial crimes. Realtors made no such successful challenge to the Act, even though many agents are annoyed at their designated role as collector of personal information beyond the boundary of the real estate transaction.
How will the requirements of POCA affect your next real estate dealing? Are you comfortable with disclosing to a real estate agent this amount of personal information? As a bona fide property buyer will you spurn Real Estate Dealers and do transactions directly with the property owners. The Act does not require a property vendor to collect any information or report suspicious activities of a would-be purchaser.
Discuss with your Realtor any questions you may have regarding maintaining the privacy of the information that you submit when doing a transaction. If you are making a cash purchase, or an unusually large deposit consult your lawyer for advice of what may be considered suspicious activity.
Please send me your comments of the impact the POCA may have on your next real estate deal.