Property investment is typically a stable asset and because of this, it can attract criminals as well as reputable buyers. The need for cyber vigilance is now vital, more so where it involves money and property transactions.
Seeff Property Group says tenants, landlords, sellers, buyers and property agents all have to step up their vigilance because fraudsters and scammers are getting smarter. The cost of clicking on a link and accidentally changing your banking passwords or transferring a house deposit to a fake account can be devastating.
How criminals creep into property transactions
Laundering money through property transactions easily integrates illicit funds into the legal economy, while providing a safe investment, making it all the more popular. It can even open opportunities for criminals to enjoy an income from an illicit property investment, where the reason they came to own the property is not common knowledge (or just plain dodgy), according to The Financial Intelligence Centre (FIC).
Locally property transactions tend to come with a paper trail including banks, estate agencies and attorneys through conveyancing. This process often excludes estate agents from receiving the funds or registering the property themselves and this can also mean that some due diligence on the origin of funds falls by the wayside, says James George, Compliance Manager, Compli-Serve SA.
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“Unfortunate trends include criminals using opaque financing or cash in a property purchase, using false documentation, or working with suspicious companies that make it difficult to ascertain who the true owner is in a transaction,” says George.
“Criminals may even pay higher rent for a property intended for illegal activities (potentially unknown by the owner). The distance between the location of the property and the prospective buyer or tenant can also play a role, particularly in international property transactions, where jurisdiction might mean more relaxed regulations or controls exist on AML efforts.”
“The overvaluing or undervaluing of property prices is another concern. Money laundering can effectively create distortions in property prices within a suburb or area because criminals are willing to pay more than market value to quickly finalise a transaction.”
Interestingly, most reports of suspicious activity in the sector from 2016 to 2021 were in the form of cash threshold reports (CTRs). This indicates that many rentals are still being paid for in physical cash. It’s important that the purpose of renting be clarified, and estate agents are advised by the FIC to always assess the method of payment and deal size. If a property is of high-value or overpriced and is paid for in cash, it may warrant a second look at the origin of the funds, to be sure that the transaction is legitimate, advises George.
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Seeff highlights some of the new ways fraudsters use to deceive:
Fake property news such as dramatic claims or wild statements about how well or bad the market is doing which is often second-hand and distorted could be used to trick you. Rather speak to a well-established local property agent if you want to know about the market or properties for sale or rent.
Fake sellers and landlords, especially those pretending to be living or travelling overseas while they are selling or renting a property should always be guarded against. Be sure to first verify their identity and the existence of the property or avoid it at all costs. There are plenty of legitimate options available on the market.
Fake agents, especially those claiming they can get you a higher price or offering a low commission should be verified first. Always check that they are in fact registered with the PPRA (Property Practitioners Regulatory Authority) and in possession of a valid Fidelity Fund Certificate (FFC).
Fake property adverts only ever aim to trick you into handing over money. These adverts usually have copied photos and information from other listings and might come with low prices. Only respond to adverts placed on legitimate websites and property portals. If it looks cheap, it is probably a fraud.
Fake buyers or tenants soliciting you directly or with upfront cash or mortgage-approved offers should always first be verified. Letting such a tenant into your property might be the last time you see any cash and you could end up with property damage and a costly and onerous eviction process.
Beware of excuses and delay tactics. It may be an illegally advertised property or one for which the agent does not hold a mandate. Or it could simply be a scam to get your bank details or to get you to hand over money. Rather walk away and look for a more secure opportunity.
Fake emails, WhatsApp and SMS messages are now a daily occurrence. Never click on attachments unless you are certain of the origin. Legitimate agents will have a credible email address. Always verify the sender’s identity and address.
Beware when there are no physical meet-ups. A credible agent will first introduce themselves to you and not just send a random email or message claiming to have a buyer or tenant. Always verify the identity of the agent and the existence of the property before taking any action.
Beware of letting strangers into your property for viewings. There are plenty of stories of criminals posing as tenants or buyers. Rather work with a credible property practitioner who will manage the viewings and vet the visitors to minimise risks.
Beware of handing out your bank details and paying over deposits or other money unless you have met the agent, seen the property and verified the validity of the request. Be especially careful when you are involved in a property transaction and receive requests from agents or conveyancers. First, verify the request before taking any action.
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