Nigerian Parliament Strengthens AML/CTF Laws for Real Estate Industry

  • Richard Marley
  • January 12, 2022
  • 4 minutes read
  • 2120

Nigerian real estate regulatory authority to mandate businesses to comply with AML/CTF compliance to curb financial crimes.

Nigerian Parliamentary Members are expected to initiate talks on the crucial aspects of the bill that aims to assure that the real estate industry must comply with the Money Laundering Prohibition Act, and Nigeria Financial Intelligence Unit (NFIU) Act as well as stay put with the counter-terrorism financing regulations.

The newly proposed bill provides insights for establishing the Real Estate Regulatory Council of Nigeria as a self-funding institution. The organization aimed to provide a robust, effective, and transparent framework for real estate businesses, and impose necessary standards for curbing money laundering and other financial crimes from the country. However, the Senate passed this bill on November 17, 2021, and was delivered to Parliament House for consensus.

The bill comes up with several objectives; regulating the Nigerian real estate industry by standardizing conduct of transactions, increasing transparency, implementing international standards to flourish businesses, protecting the rights of all stakeholders, and deterring the risk of financial crimes. In addition to this, it also seeks to assure that the businesses work according to the National Building Code in Nigeria; to develop a sustainable playing field to promote the country as a secured investment destination at the global level.

Clause 4 of the law states that the Real Estate Development Association of Nigeria and Council (REDAN) will regulate the real estate businesses development in the country. Promote sustainable development and strategic collaboration with investors in the industry to build housing programs. The government shall work with the private firms to overcome the housing deficit in the country and secure the industry’s interest as well as stakeholders’ funds.

The Council is also all set to provide licenses to the Nigerian real estate business under REDAN guidelines. These include renewal of the license on a yearly basis, payment and fee requirements should be fulfilled, the activity records must be maintained and updated to meet regulatory standards, monitoring and investigating the progress of the real estate projects. 

Additionally, the Council is also determined to make standards and codes for conduct for the real estate industry, including sanctions and hefty fines for violating the provisions of this bill.

PART VI, Clause 30 of the bill also provides that: “A developer shall not accept a sum more than 5% of the cost of the apartment, plot, or building, as the case may be, as an advance payment or an application fee, from a person without first entering into a written agreement for sale/lease with the person.”

Clause 38 of the bill also stipulates that: “If a developer commits, a financial crime in relation to the Council under this Bill, the developer shall be liable on conviction to the penalties prescribed under the Act of the National Assembly or law regulating financial crimes in Nigeria. If an investor commits a financial crime in relation to the duties of an investor under this Bill, the investor shall be liable to the penalties prescribed under the Act of the National Assembly or law regulating financial crimes in Nigeria.”

“A developer who knowingly gives false information to the Council commits an offense and is liable on conviction to a fine of N50 million and shall be heard in a Fast-Track Court. A developer who willfully fails to comply with any order or direction of the Council under this Bill may have his license revoked temporarily or permanently as the Council determines. An allottee that willfully fails to comply with any order, decision, or direction of the Council shall be liable to a fine as may be determined by the Council. A developer who deals in the business of real estate development in Nigeria that: fails to register and be licensed in accordance with the provisions of this Bill commits an offense and is liable on conviction to a fine of not less than N20 million to be garnisheed from the Developer’s Bank Account(s) by application to the High Court,” according to Clause 38.

Suggested Read: “Real Estate Is Critical To Money Laundering”, Says BSP