By law, New Zealand real estate agents now have to carry out checks on all clients they list for.
These checks, effective January 1, stem from the Anti-Money Laundering and Countering Financing of Terrorism Act, which also came into effect for lawyers and accountants last year.
For individual ‘mum and dad’ property owners, they’ll usually only have to provide proof of identity and address.
For a company, those controlling it – including 25 per cent-plus shareholders – may also need to provide information on their source of funds or wealth.
For a trust, trustees and trust beneficiaries must be identified along with their source of funds.
Agencies must also appoint a compliance officer.
For Colliers Queenstown, the role’s gone to accounts administrator Marie Hendren, who says the Act applies to all their clients “even if we’ve known them for 20 years”.
She says extra checks might also be carried out if a property owner, for example, wants to accept less than the current market value.
Her firm’s using a software provider, 2shakes, to carry out more complex enquiries.
Though agencies only need to do checks on their vendors, Hendren says they’ll also advise purchasers that their lawyers need to do similar checks for them.
Highlands Real Estate Group CEO, Queenstowner Kelvin Collins, says a compliance officer will be appointed across their six Harcourts offices.
He believes the new regime will cost his group $200,000 a year, “but there’ll be a cost for our clients as well, down the track”.
Collins likens it to airport security checks – “it’s a pain in the bum for 99.9 per cent of people, but this is the PC world we live in, unfortunately”.
He believes it will also put a strain on relationships with some clients who’ll baulk at being asked their source of funds.
Local Bayleys managing director David Gubb says his franchise has employed a dedicated compliance officer.
He thinks the regime will take about six months to settle down.
He’s hopeful many vendors will have already provided their lawyers with the required information.
“You’d have thought there’d be some way lawyers and banks and real estate agents could collaborate to save duplication.”