AML in real estate: key red flags and how to detect them

Real estate has long been one of the most attractive channels for money laundering.

High transaction values, complex ownership structures, and cross-border flows make property an efficient way to turn illicit funds into seemingly legitimate assets.

Regulators across Europe are well aware of this. Controls are tightening, expectations are rising, and scrutiny is increasing,  particularly with the upcoming EU Anti-Money Laundering Authority (AMLA).

In this article, we'll highlight some key red flags to watch for and what institutions need to do to strengthen their AML controls in the real estate sector.

Why real estate is high risk for money laundering

Property transactions offer criminals a combination of scale, opacity, and long-term value. Several factors make the sector especially vulnerable:

1. High-value transactions: A single property purchase can absorb and legitimise large volumes of illicit funds in one step.
2. Layering opportunities: Complex ownership chains, trusts, and offshore structures can obscure the true origin of funds and ownership.
3. International exposure: Cross-border buyers may exploit regulatory gaps or inconsistencies between jurisdictions.
4. Low transparency in certain markets: Private sales and discretionary pricing can limit visibility into both buyers and payment flows.
5. Asset appreciation: Property tends to increase in value over time, making it well-suited for long-term laundering strategies.

As a result, regulators are escalating enforcement and expanding reporting requirements across the sector.

Key AML red flags in real estate

Financial institutions and real estate professionals are expected to identify and investigate a range of warning signs. The following indicators appear most frequently in real estate-related money laundering cases.

1. Unknown or unverified source of funds

A buyer who cannot credibly explain where the money comes from presents a significant risk, especially when the explanation does not align with their known profile.

Common examples include:

• Sudden access to large amounts of capital
• Funds inconsistent with declared income or business activity
• Use of third-party or unrelated accounts

2. Use of shell companies or complex ownership structures

Criminals often attempt to conceal identity through offshorecompanies, trust arrangements, layered ownership structures, and nominee directors.

Identifying the Ultimate Beneficial Owner (UBO) is essential for any meaningful risk assessment.

3. Cash-heavy or unusual payment methods

Certain payment behaviours should trigger closer scrutiny:

• Large cash deposits
• Rapid transfers from high-risk jurisdictions
• Payments made in round figures or unusual instalments

Patterns like these are often early indicators of laundering activity.

4. Politically exposed persons (PEPs) or RCAs involved

Politically exposed persons and their relatives or close associates carry a higher risk of corruption-related money laundering.

PEP and RCA screening must be comprehensive, continuously updated, and applied throughout the entire customer lifecycle, not only at onboarding.

5. Buyers using relatives, associates, or intermediaries

To reduce visibility, criminals may distance themselves from transactions by involving family members, business partners, and/or representatives with no clear commercial role.

This behaviour is particularly common when public exposure or reputational risk is a concern.

6. Property purchased far above or below market value

Pricing that deviates significantly from market norms can signal:

• Tax evasion
• Undisclosed financing arrangements
• Attempts to integrate criminal proceeds

Both overpricing and underpricing warrant enhanced due diligence.

7. Frequent buying and selling of property

Rapid resale, often referred to as flipping, may indicate:

• Layering activity
• Artificial profit generation
• Efforts to disguise the origin of funds

In real estate AML, transaction velocity is often as important as transaction value.

8. Lack of interest in property details

Legitimate buyers typically engage with:

• Condition and inspections
• Location and market trends
• Long-term suitability

A noticeable lack of interest in these aspects can be a behavioural red flag.

How Trapets helps detect AML risks in real estate

For institutions involved in property financing or property-linked transactions, Trapets supports a risk-based approach to AML through an integrated set of capabilities:

• KYC and UBO identification: Instant screening to reveal complex ownership structures and links to PEPs or RCAs.
• Sanctions and adverse media screening:Identify buyers connected to sanctions, criminal activity, or reputational risk.
• Transaction monitoring:Monitor unusual payment structures, cross-border flows, and inconsistent behaviour.
• Risk-based scoring: Automatically assign higher risk levels to sectors, geographies, and behavioural patterns commonly associated with real estate laundering.
• Case management: Investigate, document, and report suspicious activity efficiently.
• Managed financial crime surveillance: For institutions without large internal teams, Trapets’ specialists handle daily monitoring and investigations using our solutions.

How institutions can strengthen AML controls in real estate

Detection alone is not enough. Institutions should reinforce their frameworks through a combination of policy, process, and training:

1. Enhanced due diligence for foreign buyers: Especially those from high-risk jurisdictions.
2. Strict UBO verification: No onboarding without clear identification of real ownership.
3. Ongoing monitoring: Risk profiles can change long after the initial transaction.
4. Cross-department collaboration: Compliance, credit, onboarding, and legal teams must share information.
5. Sector-specific training: Annual training should address typologies unique to real estate–related laundering.

Act now

Criminal networks continue to view real estate as a low-friction entry point into the financial system. Make sure your institution does not become their next opportunity.

Book a demo with our specialists to see how you can identify AML risks in your company.