Wherever big money turns around, the chances of errors and manipulations are always higher there. This is an untold norm. yes, the real estate market, that is found to be valued at $3.7 trillion in 2021, is open to the attack of financial crimes due to its high value. So, there comes in the need for a reliable concept like theDigital Know Your Customer (KYC). These procedures are crucial to protect against illicit financing. As you start to use some of these Innovative solutions like Intelligent Document Processing (IDP), you start to enhance efficiency and security in KYC and AML processes. This is only going to be saving time and money. Let us see how this helps protect the industry against crimes.
Money Laundering in the Real Estate Sector:
Money laundering could always give a significant challenge in the real estate industry. As you are going to be quantifying the extent of money laundering, you may not succeed in the process. Yes, it is difficult due to its illegal nature. For example, the Financial Action Task Force (FATF) estimated that $1.6 trillion was laundered swiftly in only the real estate alone for the year 2021. So, half of the industry is corrupted in a deep rooted fashion.
As there are so many ways of money laundering in the industry, here we suggest you some few points as a hint:
- Manipulation of the Real Estate Market
This is one of the most common strategies of illegal payments. This is to manipulate real estate valuations. This is done notoriously to value a home’s worth and allowing the borrower to qualify for a bigger amount of mortgage.
It is for this purpose; those fraudsters may make fake invoices. They combine with phony businesses, or tamper with other bills. So, the present invoices are not original but only fabricated to enhance property prices. They are benefiting from fraudulently increasing the property’s market value. Buyers shell out more money.
Confusing Ownership Structure:
To build a complex and convoluted ownership structure could be the knack. Yes, that is how the fraudsters cannot conceal their identities and divert suspicion. So, Improving digital KYC and AML processes helps us towards better security. It helps in both identifying and preventing such fraudulent schemes.
Cash Payments:
Ensuring the legitimacy of cash transactions is paramount, at any given day. There are lot of hardships in the process, though. As there are no common methods for money laundering, checks are diversified too. Criminals can hide behind legitimate payment methods. This is possible only to obscure the source of many of those online cash transactions. Small, inconspicuous deposits across multiple banks could be the best typical approach to laundering money. However, at the same time this is going to be making it challenging to trace the source.
Yes, as these funds are deposited into a legitimate bank account, they become “clean”. As this happens, you can use it to purchase real estate or invest in different ways as you like.
Role of Digital KYC in the Real Estate Sector:
Real estate firms have gotten multiple benefits so far from digital KYC. It safeguards businesses and clients from fraud and identity theft while making sure that the real estate activities comply with all legal standards. Robust digital KYC standards lets these real estate firms to identify the good clients and conduct targeted checks, too. In fact, this is improving safety and retaining confidence.
The use of digital KYC in real estate offers the potential to expedite operations, increase security, save costs, and improve overall client experience. So, trust is important. As rules change, digital KYC will be increasingly important in also guaranteeing compliance. It helps in limiting the dangers of fraudulent activity in the real estate market.
Final Remarks:
To establish a robust defines and make your business formidable to those financial crimes, real estate business owners must implement a streamlined digital KYC verification process. In fact, this is aimed at assessing the suitability of applicants. Onboarding processes may also the scrutiny of income sources, verification of names and addresses, as well as to watchlist checks. In addition to that if there are compliance measures checked thoroughly, then we are at it. With meticulous attention to details and comprehensive policies in place, it becomes quite easier. The real estate companies can fully make use of thedigital KYC to combat financial crimes in a smarter manner.
