This week, real estate agencies and other companies operating in the Portuguese real estate sector will be subject to a new regulation that comes into force on 26th June 2019. This new law for real estate agents in Portugal will introduce new rules on identification of clients, plus more control and reporting of transactions for the purchase, lease, sale or exchange of real estate.
The aim of this new regulation is to prevent and combat money laundering and the financing of terrorism in as far as they involve activities of real estate mediation and promotion, leasing and purchase, sale or exchange of real estate developed by real estate entities, as summarised by the Portuguese news agency Lusa.
What are the new rules for estate agents in Portugal?
- As of Wednesday 26th June 2019, clients of real estate agents must be ID’d before any business relationship can be established. This involves the estate agent taking the name, address, nationality, NIF, profession and employer or, in the case of companies, the address of the head office or branch or the identification of all partners with holdings exceeding 5%.
- In addition to this identification, real estate companies in Portugal are also required to make a written record of the information collected which must be maintained for seven years. They must also define risk management models in order to identify suspicious money laundering or terrorist financing operations.
- These new identification and reporting duties shall be required whenever there is a transaction involving an amount greater than or equal to 15,000 euro if the real estate agent or intermediary suspects that the transactions in question may be related to money laundering or terrorist financing, or where there is doubt as to the veracity of the customer identification data.
- Under these new rules, real estate entities must communicate to the Institute for Public Real Estate and Construction Markets (Instituto dos Mercados Públicos do Imobiliário e da Construção or IMPIC) the details of each real estate transaction in which they are involved, as well as the details of long-term lease contracts with a monthly rental value equal to or greater than 2,500 euro.
- Companies in the sector with more than five employees are also required to have a Regulatory Compliance Officer (Responsável pelo Cumprimento Normativo or RPN).
Difficulties in implementing the new rules may cool the market
Although he considers this new regulation as "a fundamental step" to make the real estate sector more resistant to the possible effects of such crimes, António Oliveira e Silva, a lawyer at Broseta, Roquete Morais e Guerra, warns that some real estate entities will find it difficult to respond to new demands, as cited by Lusa.
"The information reports, the collection and processing of data that is now required from those in this sector, even if they are legitimate demands, will make the day-to-day life of companies more difficult, especially the smaller ones,” explained the lawyer in statements to the news agency.
"There are a number of procedures that are quite cumbersome and that, will obviously increase the costs of companies and market operators straight away," he said, stressing the importance of training employees in the new duties.
One example of the difficulty and importance of training, he says, is the fact that people will have to pay attention to "suspicious signs", and the legislation will also establish a framework for criminal behaviour and misdemeanours, which may involve prison sentences of between two and twelve years, and fines of thousands of euros.
António Oliveira e Silva believes that "immediately" the regulation will cause "some disturbance" and may even contribute to some cooling of the Portuguese real estate sector because there will be fears and doubts about "what to do, what to communicate or not communicate".