RES exam question on AML / CFT: Salesperson Andre acts for a buyer client who wants to pay a large part of a $5 million…
Salesperson Andre acts for a buyer client who wants to pay a large part of a $5 million price in cash. The buyer will not show any identity document or say who is funding him, and wants the property registered in another person's name. The option is to be signed tomorrow. What follows?
- AAndre proceeds, notes the refusal on file, and finishes the checks before completion
- BAndre does not proceed with the purchase, and considers whether to file a report
- CAndre proceeds, since the seller's salesperson will run due diligence on the buyer
- DAndre stops, and tells the buyer he is being reported so that he can explain his funds
Show answer & explanation
Answer
B. Andre does not proceed with the purchase, and considers whether to file a report
Explanation
Answer: Andre does not proceed, and considers whether to file a report. Without identity or a beneficial owner there is nothing to verify, so the option cannot be signed.Rule: Where customer due diligence cannot be completed, the salesperson must not carry out the transaction and should end the business relationship. He must also consider whether that failure gives reasonable grounds to suspect, in which case a Suspicious Transaction Report is filed.Source: Estate Agents (Prevention of Money Laundering, Proliferation Financing and Terrorism Financing) Regulations 2021, as amended with effect from 1 July 2025; CEA, Guide on the PMLPFTF Regulations (revised 30 June 2025); CDSA
Why the other options are wrong
- Proceed, and finish the checks before completion: Finishing the checks later reverses the timing rule.
- Proceed, as the seller's salesperson checks the buyer: The seller's salesperson checks only an unrepresented party, and the buyer here has Andre.
- Stop, and tell the buyer he is reported: Telling the buyer about a report is tipping off under the CDSA.
Study the concept behind this question: AML/CFT for Property Agents: CDD, Source of Funds & STR
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