Did You Know? Costa del Sol is a Prime Target for Money Laundering in Real Estate

The Appeal of Costa del Sol for Money Launderers

Costa del Sol is known for its luxury real estate market, high-profile buyers, and international investors. But did you know that these same factors make the region one of Spain’s highest-risk areas for money laundering?

🚨 Criminal networks exploit the real estate sector because:

✅ Property is a stable investment – Unlike other assets, real estate holds value over time and is easy to resell.

✅ High-value transactions mask illicit funds – Large sums can be transferred in a single deal, often with minimal scrutiny.

✅ Foreign buyers add complexity – Cross-border transactions create challenges in verifying source of wealth and funds.

✅ Corporate structures obscure true ownership – Many transactions involve trusts, offshore entities, or nominees that make it difficult to trace the real buyer.

Case Example: The "Investor" With No Loan

A real estate agency in Marbella was approached by an international buyer who wanted to purchase a €3M villa—without a mortgage. This isn’t unusual, but when the agency conducted its standard checks, they noticed some concerning details:

❌ The buyer was from a high-risk jurisdiction with known corruption issues.

❌ The purchasing entity was a shell company registered in the British Virgin Islands.

❌ The funds came from multiple third-party accounts, making it difficult to verify the source.

📌 Mistake: The agency had a basic KYC process but didn’t conduct Enhanced Due Diligence (EDD). They assumed that because the buyer had a lawyer and provided documentation, the deal was safe.

📌 The risk: This could have been a classic case of layering, where illicit funds are injected into the legitimate economy through real estate purchases.

How Criminals Use "Cash" Purchases to Launder Money

While physical cash payments are rare in Spain, buying without a mortgage is a red flag in certain situations. Criminals often:

🔹 Use multiple intermediaries – The money may come from different accounts or be funneled through corporate structures to hide its origin.

🔹 Overpay or underpay properties – They manipulate prices to clean illicit funds.

🔹 Flip properties quickly – Buying and selling within short timeframes to obscure the money trail.

🔹 Use high-risk jurisdictions – Offshore companies or trusts make it harder to identify the Ultimate Beneficial Owner (UBO).

What Does the Spanish AML Law Say?

Under Ley 10/2010 de Prevención del Blanqueo de Capitales, real estate professionals are legally required to:

✔️ Verify the source of funds – Where does the money actually come from?

✔️ Identify the real buyer – Is the client using a nominee or offshore company?

✔️ Report suspicious transactions – Any doubts? You must file a Suspicious Transaction Report (STR) with SEPBLAC.

✔️ Apply risk-based Enhanced Due Diligence (EDD) – Non-mortgage purchases, foreign clients, and high-value properties must be scrutinized.

Why Real Estate Agents Are at Risk

Many real estate firms don’t realize that AML responsibility falls on them, not just banks and lawyers. Failing to comply can lead to:

❗ Hefty fines – Up to €10 million or 10% of turnover for serious violations.

❗ Criminal liability – Real estate professionals can be personally held responsible.

❗ Reputational damage – Being investigated by SEPBLAC can destroy a firm’s credibility.

How CostaAML Protects Your Business

At CostaAML, we specialize in real estate AML compliance and help agencies stay protected by:

🔹 Developing AML policies tailored to Spanish regulations.

🔹 Conducting Enhanced Due Diligence (EDD) for high-risk clients.

🔹 Training real estate professionals on compliance best practices.

🔹 Helping with STR reporting and regulatory requirements.

📌 Do you know if your agency is fully compliant? Don’t wait until SEPBLAC contacts you—contact CostaAML today for a consultation.