Recognizing unusual transactions
As a service provider (notary), you are aware of the practices in your industry. Determining whether a transaction is classified as unusual depends, to a great extent, on your professional opinion. Your opinion corresponds with what is considered unusual within your profession. In addition to your opinion, there are circumstances of an unusual nature which must therefore be reported.
If one of the scenarios described in the general examples below (which are not exhaustive) arises, then this is cause to further examine whether the transaction could be connected with money laundering and/or terrorist financing. If you suspect activities of money laundering or terrorist financing, then you must report it.
Red flags – Notary
- The client wishes to set up a company with a dubious objective and/or the company has little or no connection to the client’s profession
- The client repeatedly buys and sells real estate, without taking any interest in the result to be achieved
- The client wishes to found or have founded various companies in a short period of time, in its own name or in another party’s name, without any reasonable financial, legal or commercial reasons
- Another party acts on behalf of the client in the foreground, without any valid financial, legal or commercial explanation of this
- A client wishes to use the third-party funds account for a different purpose than the intended one (without any legal basis). The client transferred an amount into the third-party funds account and asks for this to be returned via another account/other accounts whether or not this is in the client’s name, or asks for the amount to be repaid by way of a check
- The source or origin of the capital contribution from a legal entity being set up is from a subordinated third-party loan
- The client does not live or work in the area of the civil-law notary in question and is not part of the client base of the civil-law notary in question, uses an intermediary that is unknown to the civil-law notary in question or hires the civil-law notary in question for a service for which a civil-law notary in the client’s region could have been hired, all while no explanation of this can be provided which is acceptable to the service provider
- The client may be a front man (a person acting as a front man, under his or her own name, in the deed. While this person does own the purchased premises, in practice he or she often does not have actual decision-making powers in relation to it. A front man does not offer any remedies)
- The Client always uses the same appraiser, financier, mortgage advisor or agency for building inspections
- BC purchase agreement was concluded prior to AB
- Buyer B seems to arrange everything for Buyer C
- In the case of ABC transactions: AC agreements
- Buyer C does not need to deposit a security payment on purchasing real estate.
- The real estate is sold in the condition in which it is later delivered, while the rebuilding and/or renovation has not yet taken place and the purchase agreement makes no mention of any rebuilding or renovation
- The valuation report contains details which do not correspond to the actual state of affairs
- The Client procures the registered property using its own resources (without financing), while there is no economic or legitimate reason for doing so
- The purchase price or security payment is financed by a different financier than the client/mortgage company, without there being any clarification of the relationship between the financier and the client
- Suspected use of forged documents
- The payment is made directly from the buyer to the seller (circumnavigating the civil-law notary)
- The buyer still owes all or part of the purchase price, whether or not the seller acts as the mortgagor