Calls to regulate real estate industry
The real estate industry is to set up a task force to identify risks and traits of money laundering that will lead to establishing a regulatory authority after a big push by the anti-money laundering authority.
This was prompted by the Financial Action Task Force listing the real estate sector as a high-risk area in money laundering in the country. In the 2022 Global Real Estate Transparency Index, based on a global survey of JLL and LaSalle’s extensive network of real estate market experts Sri Lanka ranks at 64 out of 96 countries. Analysts say that this is not good for a country that is targeting real estate development through the port city.
The decision to set up a task force was arrived at in a recent awareness programme for the real estate sector on anti-money laundering (AML), countering the financing of terrorism compliance obligations, and new developments organised by the Financial Intelligence Unit (FIU) of the Central Bank dealing in AML matters.
The real estate sector stakeholders agreed at the seminar that the scattered and disintegrated industry badly needs regulation to elevate it to an international level and have a centralised authority rather than scattered authorities that are now giving approval to different aspects of the industry.
They also agreed that up until a new law or if a Real Estate Act is passed, all the entities and persons in the sector are to be registered under the Construction Industry Development Authority (CIDA). R.H. Ruvinis, Chairman CIDA told The Business that they plan to organise the task force very soon. Three apartment builders and nine land brokers are now registered under the CIDA, he said, while there are nearly 180 apartment builders registered under FIU.
“We need to create awareness about this task force amongst the industry, stakeholders, and the general public. To embark on anything in this country and worldwide, there has to be registration,” Mr. Ruvinis said. He added that by registering land brokers, there will be recognition and transparency to moot foreign investors to invest in Sri Lanka. “This type of recognition and transparency will further lead to more investments in other
businesses by them.”
R. Premalal, Chairman Prime Lands said that it is a good thing to streamline the real estate sector. “We are registered under the CIDA. It should also be noted that the CIDA should cover the whole sector and not only the contractors in the industry.”
Mahasen Samaravijaya, member Condominium Developers Association Sri Lanka agreed that real estate agents need to be regulated. “Certain expatriates have told me that they have had an unpleasant experience with real estate agents in Sri Lanka. In other countries like Singapore, the real estate agents need licences to
operate,” he told the Business Times. At a time when the government is trying to attract foreigners by giving them residential visas, the real estate market has to be transparent for them to set up in the country, he added. “Real estate agents and brokers not being regulated are where the significant issues lie. As a whole, the industry has to have some sort of regulation.”
A CB official said that
there has to be a dedicated AML unit in the police to take money launderers white washing money through real estate transactions to task. “These officials need to have thorough banking experience, they need
to possess an IT background, have analytical skills, and be professionally trained. We need a DIG in charge of AML urgently,” he said.
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