KYC for Real Estate Agencies: How to Verify Customers and Beneficial Owners
KYC real estate agencies need more than a copy of an identity document. In a property transaction, verification should begin before the notarial stage. The agency should understand who each party is, whether someone is acting on the customer's behalf, who ultimately controls a corporate customer, and whether the information makes sense in the context of the transaction.
KYC real estate agencies: why it matters
KYC is part of the anti-money laundering and counter-terrorist financing framework. Romanian Law No. 129/2019 treats real-estate agents and developers as reporting entities. For rental intermediation, the framework applies where the monthly rent is at least the RON equivalent of EUR 10,000.
The rule for property transactions is specific: the real-estate agent applies customer due diligence to both the prospective seller and the prospective buyer. A file that identifies only the person who signed the brokerage agreement may therefore be insufficient when another relevant party has not been assessed.
Legal requirements: the essential CDD steps
Customer due diligence must be carried out before establishing a business relationship or completing an occasional transaction. Standard measures include identifying the customer and verifying identity from reliable, independent sources; identifying the beneficial owner and taking reasonable measures to verify that identity; understanding the purpose and intended nature of the relationship; and ongoing monitoring.
For an individual, identification includes at least the civil-status data shown in the identity documents required by law. For a legal person, the agency should obtain the information in the incorporation documents or registration certificate and the details of the legal representative entering into the agreement. If another person acts for the customer, the agency must also establish the representative's identity and the nature and limits of the authority.
The beneficial owner is the natural person who ultimately owns or controls the customer or on whose behalf an activity or transaction is conducted. A corporate chart is not, by itself, the end of the analysis. The agency must keep a documented record of the measures taken to identify the beneficial owner.
If the agency cannot apply customer due diligence, it must not establish or continue the business relationship or perform the occasional transaction. Where there are grounds for suspicion, the reporting obligation to ONPCSB must be considered. This article is practical information, not legal advice for a specific case.
Practical workflow: turning the rule into a usable process
The law does not prescribe one universal KYC form. A workable file follows the agency's risk assessment and reflects the property type, value, contact channel, residence, customer structure and the role of every relevant party. The following are practical implementation measures that should be calibrated to the agency's internal procedures.
1. Open a KYC file for both relevant parties
Open one file for the prospective seller and one for the prospective buyer. Connect each file to the property, mandate or brokerage agreement, the stage of the transaction and the employee who performed the check. Record separate roles if the same person is also a representative, attorney-in-fact or payer.
2. Verify an individual customer
Compare declared data with a valid identity document and record when the verification was carried out.
Clarify the purpose of the transaction and the person's role: buyer, seller, representative, payer or another role.
Assess relevant inconsistencies, such as residence, name, declared source of funds or the person conducting the negotiations.
Assign a risk level under the internal procedure and record the reasoning, rather than keeping tick-boxes only.
3. Verify a legal person and its representative
For a corporate customer, a registration number is not the whole answer. Confirm the name, legal form, registered office, relevant activity and the representative who can bind the company. Where authority is not clear, obtain the document that establishes it. Then follow the ownership and control chain to the natural-person beneficial owner.
As a practical measure, keep a concise ownership-and-control diagram showing intermediate entities, ownership percentages, persons who control the customer by other means and the sources checked. A beneficial-ownership register is valuable evidence, but it does not remove the need to consider whether the information is sufficient, current and coherent with the case.
4. Identify and verify the beneficial owner
Request the customer's declaration and documents explaining ownership and control. Compare the information with available official sources and corporate documents. Where the declaration, a register, constitutional documents or reliable public information do not align, clarify the discrepancy and document the result under the internal procedure.
When enhanced checks may be needed
Enhanced measures are not triggered solely because a transaction has a high value. They are used where the risk assessment identifies higher risk or where the law requires them. In real estate, warning signs may include an unnecessarily complex corporate structure, powers of attorney with no satisfactory explanation, unexplained third-party payments, customers whose information is difficult to verify, repeated changes of parties or pressure to proceed before the file is complete.
Possible risk-based responses include obtaining further information about the transaction's purpose and source of funds, escalating the case internally, refreshing the file more frequently and monitoring the transaction more closely. The measure chosen should be proportionate and documented; complexity alone does not automatically require rejection.
Practical KYC checklist for a real-estate agency
Identify both relevant parties: prospective seller and prospective buyer.
Determine whether each party is an individual, a legal person or represented by another person.
Collect identification data and verify documents using appropriate, reliable and independent sources.
Verify the representative and the authority where anyone acts on a customer's behalf.
Identify the beneficial owner of a legal-person customer and document the verification measures.
Understand the purpose and intended nature of the relationship: property, price, roles, financing and relevant timing.
Assess risk using the agency's customer, geography, channel, transaction and ownership-control factors.
Apply enhanced measures where the risk justifies them and record why.
Monitor material changes through the relationship or transaction.
Keep the file, decisions and evidence for the period and in the format required by applicable law and internal procedures.
Common weaknesses in a KYC file
Collecting an ID copy without establishing the person's role in the transaction.
Treating a company registration number as sufficient evidence for a corporate customer.
Accepting beneficial-owner information from one source without checking whether it is coherent.
Failing to record who performed the verification, when and how.
Using a single undifferentiated file for the seller and buyer.
Not refreshing information after a relevant change.
Sources and further reading
The requirements summarised here are based mainly on Romanian Law No. 129/2019, including the provisions on reporting entities, customer due diligence, identification and beneficial ownership. ONPCSB's Beneficial Owner Identification Guide is a useful practical reference; the legal requirements remain those in the applicable legislation and sectoral rules.
Conclusion
Effective KYC in real estate is not about gathering the largest possible set of documents. It is about being able to explain who each party is, who controls a corporate customer, why the transaction is plausible for the known profile and what the agency did when information was unclear.
If an agency is unsure whether it falls within the reporting-entity categories, it can use AML Expert's reporting-entity checker. For a KYC workflow tailored to the business, updated procedures or preparation for an ONPCSB inspection, AML Expert can provide a focused compliance review.
Frequently asked questions
Who should be verified in a real-estate transaction?
The agent applies customer due diligence to both the prospective seller and prospective buyer. Where a party is a legal person or is represented by another person, the checks extend to the representative and, as relevant, the beneficial owner.
Is a beneficial-ownership register check enough?
No. A register is an important source, but the agency must take reasonable measures to identify and verify the beneficial owner and keep a record of the measures taken. The information should be considered together with documents and the circumstances of the relationship.
When should KYC be completed?
The customer and beneficial owner should be verified before establishing the business relationship or completing the occasional transaction. Information should be refreshed on a risk-sensitive basis and when relevant circumstances change.
What if verification cannot be completed?
The law provides that the relationship should not be established or continued and the occasional transaction should not be performed if customer due diligence cannot be applied. Where there are grounds for suspicion, the duty to report to ONPCSB must be considered.
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