Real Estate And Anti-Money Laundering Compliance

Introduction

The real estate sector has long been recognised as a critical driver of economic growth, wealth creation and urban development. However, its inherent characteristics – involving high-value transactions, opacity in beneficial ownership and the frequent use of intermediaries – makes it particularly vulnerable to money laundering and illicit financial flows.¹ This has led to stringent regulatory frameworks, heightened scrutiny by financial institutions, and developing enforcement trends making compliance with Anti-Money Laundering (“AML”) obligations a fundamental component of sustainable real estate practice.

Real Estate and Anti-Money Laundering Framework

In Nigeria, the Money Laundering (Prevention and Prohibition) Act of 2022 (the “Act”) has significantly expanded the scope of AML compliance by expressly classifying real estate professionals as Designated Non-Financial Businesses and Professions (DNFBP’s).² This classification requires real estate professionals to register with the Special Control Unit Against Money Laundering (“SCUML”)³ and places clear legal responsibilities on stakeholders within the sector as they are expected to verify the true identity of clients and investors,⁴ keep proper records of transactions,⁵ and report dealings that appear suspicious.⁶

Also, the Act prohibits money laundering and imposes limits on cash transactions, restricting payments to ₦5,000,000.00 (Five Million Naira only) or its equivalent for individuals and ₦10,000,000.00 (Ten Million Naira only) or its equivalent for corporate entities.⁷ This aligns with the Central Bank of Nigeria’s Anti-Money Laundering and Counter-Financing of Terrorism Regulations, 2022, which mandate stringent compliance measures, including the adoption of risk-based approaches, robust customer due diligence and the reporting of suspicious transactions to the Nigerian Financial Intelligence Unit (“NFIU”).⁸ Although these obligations have long been embedded in the legal framework, enforcement efforts are increasingly intensifying as regulatory authorities strengthen oversight mechanisms.

Regulatory enforcement, particularly within the real estate sector, has been significantly reinforced, largely driven by the Economic and Financial Crimes Commission (“EFCC”), to ensure that property transactions are not exploited as vehicles for concealing illicit proceeds. Consequently, developers and investors are now subject to heightened compliance scrutiny and enforcement risks. Furthermore, recent collaborative initiatives among regulatory bodies, such as the partnership between the Independent Corrupt Practices Commission (“ICPC”) and the Institute of Mortgage Brokers and Lenders of Nigeria (“IMBLN”), underscore a growing institutional commitment to enhance compliance frameworks, promote transparency, combat fraud and money laundering, and foster ethical standards within the real estate sector.⁹

In Nigeria, a growing number of high-profile prosecutions have underscored the nexus between money laundering and the real estate sector. In several of these cases, the EFCC has successfully obtained both interim and final forfeiture orders in respect of properties identified as proceeds of unlawful activities. A notable example is the prosecution of a former Attorney-General of the Federation which involved a 16-count charge bordering on conspiracy and money laundering and resulted in the Federal High Court of Nigeria sitting in Abuja ordering the interim forfeiture of 57 properties linked to the defendants across Abuja, Kano, Kebbi and Kaduna States.¹⁰

The case involving the former Attorney-General, while high-profile, should not be viewed in isolation. The real estate sector has long been regarded as a preferred avenue for the infusion and concealment of illicitly obtained funds. Accordingly, it is now more imperative than ever for key stakeholders within the real estate ecosystem, particularly developers and investors, to take proactive steps to safeguard themselves against being unwittingly drawn into money laundering schemes.

Practical Guidance for Developers and Investors

For developers and investors operating today, practical AML compliance is no longer a theoretical exercise but a critical aspect of day-to-day decision-making. From onboarding clients to structuring complex property transactions, every stage presents potential exposure to financial crime risks. As regulatory authorities intensify oversight and enforcement, developers and investors alike must adopt clear, actionable guide, rooted in due diligence and transparency, to ensure that their projects and investments are not inadvertently used as vehicles for illicit funds. The key elements of this practical guide include the following:

SCUML Registration

The SCUML is a mandatory regulatory body in Nigeria which ensures compliance with AML laws, strengthens financial integrity, and verifies that real estate transactions are not used as a conduit for illegal financial activities. As such, real estate developers and investors should ensure prompt registration on the SCUML Portal by submitting their CAC incorporation documents, Tax Identification Number (TIN) and other relevant documents.

Know Your Customer/Customer Due Diligence

It is the mandatory process of identifying and verifying buyers, sellers, and beneficial owners to prevent money laundering. It also involves assessing risk, understanding transaction purposes, and ongoing monitoring to comply with legal obligations, particularly when dealing with high-value transactions. Developers and investors are to verify clients’ details using National Identification Number (NIN), Bank Verification Number (BVN), Passports, Bank Statements, Declaration of Source of Funds and other utility documents. For companies, a company’s Certificate of Incorporation, Memorandum and Articles of Association, and Register of Directors/Shareholders can be utilised.

Enhanced Due Diligence

The developers and investors should conduct Enhanced Due Diligence on politically exposed persons or clients from high-risk jurisdictions which can be done by actively verifying the legal origin of funds and wealth for large or unusual transactions and identifying the ultimate beneficial owner of the property to avoid masking by intermediaries.

Transaction Monitoring

Developers and investors together with financial institutions should develop and implement automated systems as mandated by the CBN 2026 guidelines¹¹ to detect unusual cash flows. This standard requires all financial institutions in Nigeria to implement automated systems capable of detecting money laundering activities.

Record Keeping

In line with the provisions of the Act, developers and investors should maintain records of real estate transactions, stored securely and accessible for inspection by regulatory authorities when required. Also, timely and accurate reporting of suspicious activities to the appropriate regulatory authorities is critical to staying compliant.

Reporting obligations

Under the Act and the regulatory guidelines issued by the EFCC and the NFIU, real estate professionals must report any suspicious transaction via the Suspicious Transaction Reports (STRs) where a transaction raises red flag such as unexplained wealth, use of proxies, or complex ownership structures. Also, developers and investors must file Currency Transaction Reports (CTRs) where cash-based real estate transactions exceed the statutory threshold of ₦5,000,000.00 and ₦10,000,000.00 or its equivalent for individuals and corporate entities respectively.

Conclusion

Recent laws and cases send a clear and consistent message: the era of informal or passive compliance in real estate transactions is over. The regulatory environment is tightening, enforcement is becoming more aggressive, and real estate transactions are increasingly being scrutinised as potential conduits for illicit finance. For developers and investors, the path forward lies in embedding AML compliance into the fabric of their operations, not merely to satisfy legal requirements, but to protect assets, preserve reputation, and ensure long-term viability. In a market where regulatory attention is intensifying, those who prioritise transparency and due diligence will not only mitigate risk but also position themselves as trusted and credible players in an increasingly compliance-driven industry.

Footnotes

1. Marcus Elvis, Akujuku Victor, and Deeyah Christopher, ‘An Assessment of the Impact of Money Laundering Prevention and Prohibition Act on Real Estate Investment Market Trend in Port Harcourt,’ (2025), International Journal of Innovative Environmental Studies Research, Vol. 13(4) available at https://seahipublications.org/wp-content/uploads/2025/ accessed 25 March 2026

2. Section 17 of the Money Laundering (Prevention and Prohibition) Act 2022

3. Ibid. Section 6

4. Ibid. Section 4

5. Ibid. Section 8

6. Ibid. Section 7

7. Ibid. Section 2

8. Nigerian Financial Intelligent Unit (NFIU)., ‘Report of Nigerian National Risk Assessment on Money Laundering and Terrorism Financing,’ (2016) The National (Money Laundering & Terrorist Financing) Risk Assessment Forum, available at https://www.nfiu.gov.ng/images/Downloads/downloads/nrareport.pdf/ accessed 24 March 2025

9. ICPC, IMBLN Launch Task Force to Tackle Real Estate Fraud available at https://www.thisdaylive.com/2026/03/12/nigeria-launches-icpc-backed-committee-to-professionalise-real-estate-sector/ accessed 25 March 2026

10. https://www.efcc.gov.ng/news/court-grants-interim-forfeiture-of-57-properties-valued-at-n2132bn-linked-to-malami-two-others

11. Baseline Standards for Automated Anti-Money Laundering Solutions issued by the CBN in March 2026 available at https://techafricanews.com/2026/03/12/cbn-mandates-automated-aml-systems-across-nigerian-financial-institutions/ accessed 26 March 2026