Did You Know? Banks and Notaries Can Report Real Estate Agencies for AML Failures

💡 Did you know that banks and notaries can file Suspicious Activity Reports (SAR) or Suspicious Transaction Reports (STR) against real estate agencies, firms, and lawyers if they fail to conduct proper KYC and EDD?

Many real estate professionals assume that AML reporting is only their responsibility. However, banks and notaries are legally required to report suspicious activity even if the real estate agency itself doesn’t find anything suspicious.

How Banks and Notaries Act as "Gatekeepers" in Real Estate Transactions

Both banks and notaries are key players in Spanish property transactions, and they are independent reporting entities under AML law.

🔍 Banks’ Role in AML Reporting

Banks process real estate transactions and handle buyer payments. Because of this, they conduct independent AML checks, even if the real estate agency has already done KYC.

✅ Banks must verify the source of funds before allowing payments.

✅ If a bank finds red flags that the agency missed, they must file a SAR/STR with SEPBLAC.

✅ Banks often freeze transactions if the real estate agency’s due diligence is weak.

🔍 Notaries’ Role in AML Reporting

Notaries in Spain finalize real estate transactions, and as part of their legal duty, they must ensure that AML checks have been properly conducted.

✅ Notaries can refuse to certify transactions if they suspect money laundering risks.

✅ If the real estate agency fails to verify a client properly, the notary can report them to SEPBLAC.

✅ Notaries have a legal duty to ensure transparency in property deals and must report suspicious buyers, sellers, or intermediaries.

Example Case: The Bank That Flagged a Real Estate Firm for Weak KYC

A real estate agency in Marbella facilitated the sale of a €2.5M villa to a foreign buyer.

🔍 The agency only did a basic KYC check:

❌ The buyer provided a passport and a bank statement, but no source of funds documentation.

❌ The funds came from a third-party corporate account in the UAE, but the agency didn’t question it.

❌ The buyer used a complex offshore structure, but the agency didn’t conduct EDD.

🚨 What Happened?

When the buyer transferred funds to a Spanish bank, the bank flagged the transaction as high-risk.

📌 The bank’s AML team:

✅ Requested additional documents on the buyer’s source of funds.

✅ Realized that the real estate agency hadn’t conducted EDD.

✅ Filed a SAR (Suspicious Activity Report) to SEPBLAC about the agency’s failure to follow AML rules.

🔍 The Result? The real estate agency was investigated by SEPBLAC, and their poor KYC procedures exposed them to regulatory scrutiny.

Example Case: The Notary Who Refused to Certify a Transaction

A law firm in Málaga handled a corporate real estate deal where a buyer wanted to purchase multiple properties via a trust registered in a secrecy jurisdiction (e.g., Belize).

🚨 Red Flags That the Notary Identified:

❌ The buyer refused to disclose who controlled the trust.

❌ The law firm did not verify the ultimate beneficial owner (UBO).

❌ The transaction involved multiple offshore accounts in different countries.

📌 The notary’s response:

✅ Refused to sign off on the transaction due to insufficient KYC verification.

✅ Reported the law firm to SEPBLAC for AML non-compliance.

✅ Triggered an AML investigation, which could lead to fines and disciplinary action.

Key Takeaways for Real Estate Firms, Agents, and Lawyers

🚨 If your KYC/EDD process is weak, you can be reported by:

✔️ Banks – When the client’s financial activity doesn’t match their profile.

✔️ Notaries – If due diligence isn’t done properly before finalizing property deals.

⚠️ What does this mean for your agency?

• You cannot rely on banks or notaries to “catch” problems—AML compliance starts with YOU.

• A report from a bank or notary could lead to an AML inspection, risking fines or license suspension.

• SEPBLAC audits real estate agencies that receive multiple reports.

✅ The Solution? Proper AML compliance from the start.

📌 CostaAML ensures your real estate firm meets all KYC/EDD requirements—before banks and notaries raise red flags. Contact us today to check your compliance.