According to the World Bank, it is estimated that global money laundering amounts to $1.6 trillion annually. In a 2021 study by Transparency International Ghana estimated that corruption costs Ghana $3 billion annually, with some of these funds potentially finding their way into the real estate market.
There has been a lot of speculation that Ghana is increasingly seeing an influx of illicit money into its real estate market.
According to the Member of Parliament for Ningo Prampram, Samuel Nartey George, many real estate businesses in the country are engaged in money laundering, using inflated prices and frequent transactions to hide the source of their illicit funds.
Although defensive at first, the Ghana Real Estate Developers Association (GREDA) conceded that there is an issue of money laundering in the real estate sector.
However, the lack of a regulatory body to manage the industry has hindered its formal establishment over the past decade. This absence of oversight has created an environment ripe for money laundering activities within the sector.
Threats, Laws and (or Lackthereof) Regulation
The Financial Action Task Force (FATF) identified Ghana’s real estate sector as high-risk for money laundering in its 2022 Mutual Evaluation Report.
Similarly, the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA) has raised concerns about the vulnerability of the sector.
The Real Estate Agency Act, 2020 (Act 1047) was passed to regulate real estate agency practice, commercial transactions in real estate, and establish a Real Estate Agency Council to oversee and enforce compliance with the law.
The Act requires real estate agents to register with the Council, conduct due diligence on their clients, report suspicious transactions, and adhere to ethical standards.
However, the Act alone is not enough to address the complex and dynamic nature of money laundering in real estate.
Could Technology Help?
Technology could play a key role in helping Ghana to address the challenge of money laundering in the real estate sector. Technology could enable better data collection and analysis, improved transparency and accountability, and faster detection and reporting of suspicious activities.
For example, blockchain technology could be used to create a secure and decentralized ledger of property transactions, which could reduce fraud, corruption, and manipulation.
Money laundering is a serious problem that affects Ghana’s real estate sector, and it requires urgent attention and action from both the government and the private sector. Technology could be a valuable tool to help Ghana to tackle this problem, but it also requires political will, legal reforms, and public awareness.
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