The Financial Intelligence Agency of Liberia (FIA) through its Risk and Strategic Analysis Section has released its first critical risk assessment report. In its findings, the Report identifies several deficiencies in Liberia’s Real Estate Sector.

The Real Estate Risk Assessment outlined findings in the Report to include: an existing, yet weak and incomprehensive real estate sector with an AML/CFT framework that does not cover all actors in the sector; an obvious AML/CFT knowledge gap among real property owners such as, their responsibilities of conducting rigorous Know Your Customer (KYC), Simplified Due Diligence (SDD), Customer Due Diligence (CDD), and Enhanced Due Diligence (EDD) before and during transactions; and inconsistencies in the processes/procedures leading to probation of real property deeds by the probate court and dearth of system to identify and verify beneficial ownership of legal persons and arrangements.

In addition to these finding, the report also captured the following:

inconsistent notarization of real property deeds/documents, absence of a system to identify and verify beneficial ownership for both buyers and sellers; and little or no knowledge of reporting entities’ legal responsibilities, and AML/CFT requirements to prevent the sector from abuse by criminals. 

Currently, the report indicates, there are no AML/CFT regulations, guidelines, or directives for the real estate sector – in addition to the nonexistence of a formally-organized real estate agents’ group, and the lack of a dedicated supervisory agency for prudential and AML/CFT purposes. The assessment also uncovered that a huge number of real estate institutions and construction companies operating in Liberia delayed in regularizing their legal status (recertification) and/or sectoral license for up to four (4) years; that most financial transactions – including buying, selling, leasing, and mortgaging – are done informally (person to person) outside the financial system; hence, a lack of audit trail. Based on noncompliance in the real estate sector, real property tax payment, which constitutes about 4% of the general revenue collection, in Liberia is low, despite the sector’s great potential investment.

 The objective of the recent real estate risk assessment was to assess Liberia’s Money Laundering (ML) and Terrorist Financing (TF) risks in the Real Estate sector. The assessment was also intended to review legal and regulatory frameworks relating to the country’s real estate sector, as well as identify the nature of money laundering threats and vulnerabilities bedevilling the sector. Additionally, the risk assessment was focused on identifying the nature of terrorist financing threats and vulnerabilities, and features and types of Real Estate institutions, professionals, and/or products and services that are exposed to ML/TF threats and vulnerabilities in the sector; and to recommend mitigating and monitoring measures.

In terms of its scope, the real estate risk assessment covered, assessing ML/TF threats and vulnerabilities associated with existing legal frameworks, predicate offences, sector developers, brokers, agents, concessionaires, and construction companies.

Other actors considered during the assessment included community/private land administrators, real estate unions (self-regulators), supervisors/regulators, and stakeholder institutions.

Guided by international best practice measures, the assessment was conducted across five counties, namely: Montserrado, Margibi, Grand Bassa, Bong, and Nimba. These counties were selected based on their population and the volume of real estate activities.

In 2023, the second round of Mutual Evaluation Report (MER2) of Liberia, and the recent National Risk Assessment (NRA) Report recommended that Liberia enhance its legal and regulatory frameworks for the real estate sector. The reports also expressed the need to ensure full compliance in the real estate sector through enhanced due diligence in all transactions in the sector to promote transparency and record-keeping. Measures were also recommended to target and expand future risk assessments to include the “informal economy”, which is a component of the real estate sector.  

Similarly, Liberia’s money laundering and terrorist financing National Risk Assessment (NRA) report of 2019 highlighted that the real estate sector is a profitable sector, however, it lacks formal regulator, and lacks the relevant AML/CFT Regulations, and its actors have no awareness/training of AML/CFT related activities. The report recommended that the country should strengthen the regulatory framework of the real estate sector, provide training and awareness, and increase collaboration and information sharing amongst stakeholders. This Risk Assessment report simply highlights these gaps identified earlier in the sector and captured in previous reports.

Another factor discovered by the NRA report of 2019 was that most real estate properties are on leased lands, which are traceable to prominent Liberian families.

The Real Estate Risk Assessment team was comprised of staff of the FIA Risk and Strategic Analysis Section, Regulation & Supervision Section, Analysis Section, and staff of the Liberia Land Authority (LLA) – including County Land Administrators.

Key stakeholders who participated in the risk assessment process include the following: the Liberia Revenue Authority, Liberia Business Registry, Ministry of Justice, the Probate and Circuit Courts, Notaries Public, and the Financial Intelligence Agency of Liberia. Others were Liberia National Police, Liberia Anti Corruption Commission, Liberia Land Authority, lawyers/law firms, Association of Liberia Construction Contractors, Liberia Real Estate Union, the Federation of Real Estate Agents of Liberia (FE-REAL), etc. These entities or individuals play significant roles in regulating, buying, selling, leasing, and mortgaging including but not limited to the processes leading to documentation, investigation, prosecution, and adjudication of cases deriving from the real estate sector.