GREDA raises alarm over money laundering in real estate sector

The Ghana Real Estate Developers Association (GREDA), the umbrella body of property developers, has bemoaned the influx of illicit money into the real-estate sector – describing it as alarming and with dire repercussions for the economy.

With the banking sector having closed all the loopholes for money launderers, GREDA said the real estate sector – built or landed properties – is increasingly becoming a haven for people who have dishonestly acquired wealth; indicating a rapid rise of criminals purchasing high-value properties in recent years.

GREDA’s Executive Secretary Sammy Amegayibor – who made the revelation to B&FT, stressed that this problem is not limited to only Ghana but the whole West African sub-region. Indeed, the disturbing phenomenon was reported on by the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA) at a recent conference attended by actors in the real estate sector across West Africa.

Touching on causative factors, he highlighted that real-estate is an attractive target for money laundering due to its high value, low transparency and ease of ownership transfer. This makes it easier for criminals to use properties to store and move illicit funds without attracting much scrutiny.

“If you look at how the banks and other financial institutions operate these days, you will realise that they have tightened their systems; so, it is not easy for laundered money to pass through. This leaves the real-estate sector as the next frontier; we have noticed that people buy properties in the names of relatives and friends, making it difficult to trace the source and true beneficial owners,” he said.

The presence of laundered money in the sector poses a significant problem for the economy. For instance, with criminals willing to pay any amount for estate properties, property prices in urban centres have skyrocketed over the last few years – making it nearly impossible for lower and middle-class workers to own a house or afford rent fees.

A perfect example of the impact from money laundering can be seen on the streets of Accra and other cities, where unoccupied high-rise buildings – purportedly acquired with illicit money – have become the order of the day.

More worryingly, laundered money may have devastating social consequences and pose a threat to the security of any country, large or small. It provides fuel for drug dealers, terrorists, illegal arms dealers, corrupt public officials and all types of criminals to operate and expand their criminal activities.

“Money laundering fuels corruption and organised crimes, undermines the property market’s integrity and contributes to rising property prices, making it more difficult for people to purchase homes,” Mr. Amegayibor lamented.

According to the United Nations (UN) Office on Drugs and Crime, an estimated US$1.6trillion – or 2.7 percent of global GDP – is laundered each year, with a chunk of that figure finding its way into sub-Saharan Africa, SSA.

It stated that due to loopholes in regulatory frameworks and a lack of collaboration between agencies and regulatory bodies, it has become easy for criminals to mingle dirty money with legitimate business transactions – making it difficult for law enforcement agencies to track and prove the crime.

All-hands on deck

To combat this problem, GREDA is advocating that regulators and real-estate professionals work together to implement better safeguards and rigorous detection mechanisms.

While he said GREDA is sensitising members to be conscious of the phenomenon and carry out thorough background checks on clients before embarking on any high-value transactions, he added that a collaborative effort is needed to prevent these illicit activities from continuing and to safeguard the real-estate sector’s integrity.

Laundered money does not exist in only the real estate sector but almost all sectors of the economy, highlighting the urgency for collaboration to curb the flow of illicit money into the country.

“The need for countries to have strong anti-money laundering mechanisms, coupled with the enhancement of transparent financial integrity, therefore cannot be over-emphasised. Real-estate, the financial sector, security agencies and government must work hand-in-hand to address money laundering holistically,” he concluded.

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