The TRACFIN intelligence service noted in its 2021 annual report that the real estate sector “constitutes a privileged vector for reintroducing, into the financing circuits of the economy, the proceeds of fraud and criminal activities.” ». The real estate sector is therefore considered a high-risk sector for money laundering. Real estate professionals are thus among the persons subject to obligations relating to money laundering and terrorist financing. Among these obligations, one of them is particularly important, namely the reporting of suspicion to TRACFIN by the real estate agent.
The TRACFIN Suspicion Declaration raises several questions:
- In what circumstances must a suspicion report be filed ?
- When should a suspicion report be filed ?
- To whom and in what manner such a declaration must be made ?
Elements of response:
- The real estate professionals must report sums or transactions of which they “know, suspect, or have reason to suspect originate from a crime punishable by imprisonment for more than one year or participate in terrorism financing” ».
- The notification of suspicion to TRACFIN must be made prior to the execution of the suspected operation in order to allow TRACFIN to exercise its right of opposition.
- The suspicion report must be filed, on a dedicated website, by the “reporting party” of real estate professional designated for this purpose.
- The professionals involved in anti-money laundering must designate, by name, to TRACFIN the person within their organization, director or employee, responsible for performing the functions of “reporting officer.” The reporting officer is responsible for the transmission of suspicions to TRACFIN
- Unless rare exceptions, the entire set of persons subject to the regulation of the Hoguet law are subject to this obligation of declaration of suspicion.
What is TRACFIN ?
In 1990, a coordination unit was created within the Ministry of Economy responsible for the processing, intelligence, and action against illicit financial circuits, in short TRACFIN.
TRACFIN is therefore a financial intelligence service..
One of his main roles consists of collecting and analyzing the information obtained from professionals subject to a reporting obligation in order to ensure that the financial operations under his control do not have a reprehensible origin and/or destination.
- Among the individuals subject to a obligation to declare or provide information to TRACFIN one can notably cite: real estate agents,
- the banks,
- insurance brokers,
- the insurance companies and mutual societies,
- the notaries.
Mandatory reporting obligation to TRACFIN for real estate agents
A real estate agent has the obligation to carry out an notification of suspicion to TRACFIN each time he suspects or has good reason to suspect that the transaction he is carrying out relates to sums originating from a offense punishable by a prison sentence of more than one year or is linked to terrorism financing.
To be able to identify the questionable transactions, this assumes that the real estate agent has previously implemented a risk assessment and management system (obligation to implement vigilance measures).
In the event of a real estate agent failing to fulfill its obligation to implement due diligence measures or its obligation to declare a suspicious transaction, the defaulting real estate agent may be subject to administrative sanctions.
The regulations related to TRACFIN is evolving rapidly. It is therefore advisable to be accompanied in order to obtain precise and up-to-date information on the relevant framework.
Real Estate Agent: How to Report a Suspicious Transaction?
It is imperative to strictly adhere to the established procedure before reporting a suspicious transaction.
Obligations to be observed before declaring a suspicious operation
Certain obligations must be observed by the real estate agent before declaring a suspicious transaction to TRACFIN, in particular:
- to have designated within its structure:
– a declarant: responsible for transmission declarations to TRACFIN,
– a representative: responsible for ensuring the interface with TRACFIN, - having implemented measures of vigilance to detect risky operations and persons (internal procedures, risk mapping, etc.),
- having informed his employees of their obligations in matters of combating money laundering of capital and the financing of terrorism,
- have made available to its employees the tools to be able to detect a suspicious operation.
- Depending on the nature of the operation concerned (client, source of funds, property subject to acquisition, etc.), the real estate agent will need to implement a appropriate measures of vigilance.
There are three levels of vigilance:
- normal (low risk),
- mitigated (moderate risk)
- heightened (significant risk).
Also, it is essential for the real estate agent to train his his employees at each of these three levels.
Report a suspicious transaction: the declaration
The notification of suspicion to TRACFIN must be carried out by the real estate agency prior to the implementation of the contemplated operation.
The declaration shall notably include the following elements enabling identification of the declaring agency, the elements identifying the client and the elements leading the declaring agency to make the suspicion declaration.
For reasons of confidentiality, Throughout the proceedings, neither the client nor any third party shall be informed of the suspicion declaration.
There are two declaration methods:
- by online self-declaration, via ERMES (de-materialized declaration device through the Internet),
- by post.
What types of sanctions can the National Commission for Sanctions impose on a real estate agent?
Several administrative sanctions may be imposed by the National Commission of Sanctions to individuals subject to a obligation of declaration and information who have committed a breach, notably in not declaring a suspicious transaction:
- Warning,
- Reproach,
- Temporary ban on practice pouvant aller jusqu’à 5 ans,
- Professional card withdrawal,
- Financial penalties pouvant aller jusqu’à 5 millions d’euros.
The amount and type of the sanction will take into account, in particular:
- of the severity and the duration of the breaches,
- of the degree of liability of the author shortcomings,
- of his financial situation,
- of the importance of gains that he obtained or losses that he avoided,
- of its degree of cooperation during the inspection and procedure before the commission as well as breaches it may have previously committed, etc.
Report to TRACFIN, AUMANS AVOCATS is at your side to assist you
Dedicated to council of real estate agents relating to the various questions arising from the exercise of their activities (Hoguet Law, commercial real estate agent, GDPR, agency transfer, etc.), the AUMANS AVOCATS Law Firm we will assist you with all of your procedures related to your obligations regarding the fight against money laundering of capital and terrorist financing:
- Implementation of internal procedures,
- Advice on the necessity of to make a suspicion declaration,
- Assistance in the drafting of the suspicion declaration,
- assistance in case of data protection audit,
Representation before the National Sanctions Commission in the context of legal proceedings.
