KNOW YOUR CLIENT (KYC) – LEGAL OBLIGATIONS.

All professionals involved in the purchase and sale of real estate properties must comply with their obligations with regard to the prevention of money laundering.   Real estate agents, Lawyers, Property Developers and Credit and Financing Institutions must abide by the obligations imposed under Law 10/2010, of 28 April, on the Prevention of Money Laundering and the Financing of Terrorism, and to its relevant Regulations.

The obligations imposed on those professionals by the Law are based on the “due diligence” principle, in the sense that, as individuals obliged by law, they are responsible for adopting relevant measures in order to detect and report any signs of money laundering crimes committed by their clients.

The purpose of the above is to prevent and report any transactions associated with any possible money laundering to the Executive Committee of the Spanish Commission for the Prevention of Money Laundering (Servicio Ejecutivo de la Comisión de prevención del Blanqueo de Capitales (SEPBLAC)).

Lawyers, in particular, are obliged to: formally identify their clients and the actual owners of the respective business and/or transaction; know the business carried out by their clients and verify the authenticity of the related documents provided by them; and especially, in real estate transactions, to check the legitimate source of the funds used. 

 

Client identification

In the event of individuals, the Lawyer must request the relevant Tax ID Card, ID Card or Passport issued by the authorities of their country. Legal entities must be identified by their Deed of Incorporation. In this latter case, any individual acting on behalf of the legal entity or company must be also identified. 

Actual owner of the business

Lawyers must identify the individual on whose behalf they are acting, before accepting any professional engagement. A signed statement by the individual who is hiring the lawyer (KYC form) will be sufficient, but information may be also obtained from reliable third-party sources. 

Business purpose.

Specific knowledge of the professional or business activity of our client is required. To that end, the supporting documents provided by our clients must be reviewed or or consultations made to reliable independent sources. 

Legality of the funds used.

The required documents must be gathered to support the lawful source of the funds, their traceability, i.e. the path followed by the money from the time it leaves its country of origin to the time it arrives in Spain, and finally, the purpose of the funds. 

 

Lawyers, in particular, are obliged to: formally identify their clients and the actual owners of the respective business and/or transaction; know the business carried out by their clients and verify the authenticity of the related documents provided by them; and especially, in real estate transactions, to check the legitimate source of the funds used.

One of the most commonly used methods for the prevention of money laundering and terrorism financing is the “Know Your Client (KYC)” process. This procedure is carried out as a “due diligence” of the client, based on a prior investigation which discloses details of his/her personal and professional life, which will support the information given by the client when registering.

Completing and signing the KYC forms produced by the individuals participating in a real estate transaction is not sufficient. All information supplied by clients must be carefully checked by duly assessing the relevant supporting documents provided.

At the same time, we should not lose sight of the ongoing conflict between the limits of a Lawyer’s duty of confidentiality in respect of the information furnished by their clients in the sale and purchase of property and in which the Lawyer has participated by advising or representing them, and the Lawyer’s obligation in respect of preventing money laundering. 

In respect of anyone using the obligation of professional secrecy to justify being obscure in their activities or, simply turning a blind eye in order not to lose clients, the anti-money laundering regulations are very clear: professional secrecy cannot be claimed in certain circumstances related to money laundering and terrorism financing, and Lawyers must always comply with their obligations regarding the prevention of money laundering, which must be construed in the strictest sense, without including any that go beyond those included in Act 10/2010.

In this context, the role of your Lawyer is absolutely essential, as a catalyst for all information related with the prevention of money laundering which must be furnished by a client taking part in a real estate transaction, and as defender of the confidential nature of that information in respect of the obligations of other agents involved in the transaction for the same client. The Lawyer will ensure the strictest KYC process as required by law, will advise the Client regarding the documents to be provided in order to follow the anti-money laundering protocol, and at the same time, he will be the intermediary between the client and the other agents involved in the transaction to ensure they comply with their respective obligations on prevention.

Amongst the specialties of VOGT Advokatfirma España, S.L. with over 20-year experience in advising non-residents in real estate transactions throughout the Costa del Sol, are the proper collecting and processing of information from their clients with regard to anti-money laundering and the coordination and co-operation with the other agents involved in the transactions in order to follow a successful anti-money laundering protocol, specifically planned for each particular case. 

Our professional team will inform, assist and advise you throughout the entire purchase and sales process, professionally and attentively addressing any circumstances that might have an effect on it, in order to offer you a positive and smooth experience based on transparency, with the advantage that our team can provide full advisory services in any of the following languages: Norwegian, Swedish, Finnish, English and French. 

Enhancement of Vogt team

As a Law Firm aimed at the Scandinavian market the prominent lawyer Mr Göran Rise has recently joined our team of Property Experts. Rise gained a long and broad experience of the profession as a representative and defender in several well-known goals, after joining the Swedish Law Society in 1971. He has a special interest in business law, international housing divisions and asset transfers, since 1999 when he settled professionally in Marbella. 

This addition will help us to complete the highly customized and top-quality advisory service that our law firm aspires to on a day-to-day basis. This means that, in addition to being attended in their own language, clients will also benefit from the immeasurable value of the expertise of our professionals who, with the common basis of the same culture and way of thinking, will help you understand the differences with the practices and formalities in Spain.

Article by José Luis Rojas (Lawyer – Partner, at Vogt Advokatfirma España