AMLR for non-financial firms: Real Estate in focus

The new EU framework for anti-money laundering (AML) and combating the financing of terrorism (CFT) applies to any industry that is typically involved in transactions prone to money laundering. Real estate – with its high transaction values, long-term ownership, and opaque funding sources – is a prominent example. The new AML Regulation (AMLR) specifically highlights the potential risks of complex ownership structures, cross-border financial flows, and anonymity. Given their key role in the industry, it is not surprising that real estate agents (REAs) are already required to comply with AML/CFT regulations under current law and are also explicitly cited among AMLR’s obliged entities (OEs).

There are many potential indicators of heightened AML/CFT risks in the world of real estate. Five examples of red flags for REAs to watch out for are:

• Opaque ownership structures such as layered companies, offshore structures, or proxies that allow share transactions to hide the ultimate beneficial owners (UBOs) of real estate.
• Geographical risk indicators including connections to high-risk jurisdictions and sanctioned states.
• Funding anomalies such as third-party payers, fragmented transfers, or implausible payment schedules. 
• Atypical customer behaviours like inconsistent financial profiles, lack of cost sensitivity or refusing to provide documentation, which can indicate involvement in money laundering or financial crime.
• Transaction-based risk indicators such as property flipping, connections with cash-intensive industries, significant (positive or negative) deviations from market prices, or unclear economic objectives for transactions.

The new regime will introduce stricter and broader requirements for REAs, covering the full range of AML/CFT obligations – from risk assessments and customer due diligence to the reporting of suspicious activities.  In addition, preventing the “non-implementation or evasion of targeted financial sanctions” has been added as an entirely new objective of AML/CFT regulations. Consequently, future obligations will also cover this area, marking a novelty for many OEs, as there are currently virtually no consistent legal requirements for specific sanctions compliance measures.

The AMLR establishes a Single Rulebook to achieve consistent, harmonised expectations for all OEs (see Single Rulebook article). The new EU AML Authority (AMLA) has already consulted on several regulatory technical standards (RTS) with significant implications for REAs, and will draft more during 2026. Key topics include:

The new AML/CFT framework will be highly challenging for the real estate sector and achieving compliance by the application date of July 2027 will require major changes with regard to consistent processes for customer due diligence, document verification or suspicious activity identification. Many REAs may also be used to light touch supervision. In Germany for example, the supervision of REAs is regulated and organized differently in each federal state, leading to significant variations in capacity, resources, and quality. This will also change in the future, as the shift in the scope of OEs and the central role of the AMLA will result in a more focused and consistent supervising activity overall.

The REA sector is also relatively fragmented. Most markets have a long tail of medium, small and even micro firms. However, national and regional networks are also common. If REAs are part of a corporate group, another piece of the AMLR could prove significant: In the future, non-financial holding companies with subsidiaries that are OEs will become OEs themselves, requiring group-wide controls and exec-level AML/CFT leadership.

For REAs, effective planning and prioritisation will be critical to cost-effective compliance. Dividing tasks into immediate, intermediate and long-term goals is a good place to start. In our view, the most urgent tasks include:

• Conducting a risk analysis for the risks of money laundering, terrorist finan cing and the non-implementation or evasion of targeted financial sanctions. This is not only the foundation for a risk-based approach to fulfilling all other AML/CFT obligations, but also usually the first thing supervisors ask to see.
• Developing risk analysis processes that comply with the new legal requirements and AMLA guidelines.
• Delivering a structured upgrade of AML/CFT governance, including clear board ownership and the creation of a robust internal control system tailored to the real estate market.
• Appointing an MLRO (a general requirement from 2027 onwards) and a Compliance Manager. 
• Establishing a group-wide framework for the gathering and validation of customer documentation and UBO verification, aligned with the draft RTS on customer due diligence.
• Creating documentation workflows to ensure audit-ready records. AMLR requires high quality data, and AMLA is likely to use data-intensive techniques (see a turning point in money laundering supervision).
• Conducting iterative gap analyses between existing capabilities and future requirements to generate a roadmap for transformation (see Gap Analysis article).
• Engaging proactively in AMLA’s public consultations, influencing the development of standards and positioning REAs as early adopters.
• Initiating a programme of staff training and stakeholder awareness building.

The EU’s new approach to AML/CFT will be a gamechanger for REAs and other non-financial firms within its scope. Understanding the framework and taking early action to implement the required changes will be critical to achieving compliance without incurring unnecessary cost and disruption.