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EFCC Targets Real Estate Investors Over Money Laundering

The Economic and Financial Crimes Commission (EFCC) is tightening regulations on estate surveying and valuation firms, mandating them to subscribe to an alert system and conduct thorough customer screenings. This increased scrutiny aims to curb money laundering, but it is also affecting transactions in the commercial real estate market, reports CHINEDUM UWAEGBULAM.
 
The heightened vigilance by security agencies has dampened the demand for real estate in major cities, particularly high-end properties. The situation escalated when the EFCC notified the president of the Nigerian Institution of Estate Surveyors and Valuers (NIESV) about enforcing regulations for targeted financial sanctions related to terrorism financing and other measures. This enforcement is part of the Terrorism Prevention and Prohibition Act, 2022.
 
A letter signed by SCUML Director, Daniel Isei, highlighted the obligation of Designated Non-Financial Business and Profession (DNFBP) entities to implement these sanctions. The regulations require estate surveying and valuation firms to subscribe to the Nigeria Sanction Committee alert system and conduct sanction screenings before onboarding new customers.
 
EFCC Acting Director of the Lagos Zonal Command, Michael Wetkas, emphasized the necessity of registering with SCUML to monitor and mitigate the risk of real estate operators being exploited by money launderers and terrorism financiers. The law provides a robust framework to support the fight against these crimes.
 
The Guardian reports that the EFCC's Special Control Unit Against Money Laundering (SCUML) has caused a slowdown in the market as prospective investors and Nigerians abroad avoid unnecessary encounters with the economic watchdog.
EFCC clamps down on real estate investors over money laundering
 
 
A recent report revealed that after the Nigerian government reached an agreement with the United Arab Emirates (UAE) on looted funds, there were allegations of war profiteers and terror financiers investing in Dubai’s real estate. The report identified suspicious purchases worth $100 million and traced over 800 properties valued at $400 million to Politically Exposed Persons (PEPs) in Nigeria.
 
Matthew Page, an associate fellow at Chatham House, highlighted the significant real estate holdings of former Nigerian officials in Dubai and the UK. He urged investigators to compare these investments to their known assets and incomes and scrutinize third-party payments.
 
A report by the Civil Society Legislative Advocacy Centre (CISLAC) exposed high-level money laundering in Nigeria's real estate sector. It noted that corrupt individuals use estate firms to conceal illicit funds. The report indicated that over 95% of the market is controlled by informal agents, some of whom operate in foreign jurisdictions or tax havens.
CISLAC’s report called for improved transparency and enforcement in the sector to address these issues, including the imposition of property taxes on unoccupied properties in major cities like Abuja, Lagos, and Port-Harcourt. The report also pointed out that inflated real estate prices due to laundered money have made Lagos one of the most expensive cities in Africa.
 
Estate surveyors and valuers acknowledge that EFCC’s oversight has impacted the sector. Mr. Gbenga Ismail, Chairman of the Lagos branch of NIESV, noted that the scrutiny has particularly affected high-priced real estate assets, leading to a slowdown in investment-related transactions.
Ultimately, while the increased regulation may temporarily slow down deals, it could enhance compliance, credibility, and stability in the long run. The luxury and high-end property segments, which involve larger transactions, are likely to feel the most significant impact due to their susceptibility to irregularities and heightened regulatory attention.

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