Spanish National Risk Analysis (NRA) on Money Laundering & Terrorism Financing Risks

Key AML Risks

The Spanish real estate market continues to be a high-risk sector for money laundering (ML) due to several factors that make it particularly attractive for organized crime and illicit financial flows. Below are the key risks identified in the Public Version National Risk Assessment Addendum 2024:

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1. General Risks in Real Estate

• The real estate sector has traditionally been linked to activities involving the generation and concealment of illicit capital.

• Multiple ownership structures (e.g., co-ownership, trust arrangements, shell companies) make it difficult to trace beneficial ownership.

• Property valuation is highly subjective, allowing for price manipulation to move illicit funds.

• The sector is highly vulnerable to corruption, particularly in high-value real estate transactions.

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2. International Influence Real Estate

• The Spanish real estate market is a prime target for money laundering by organized crime groups due to Spain’s attractiveness as a tourist and investment destination.

• Authorities have detected connections between national and international criminal groups laundering illicit proceeds through property purchases in Spain.

• Luxury goods and real estate are two primary sectors used for ML, as they allow criminals to store value and resell assets without significant depreciation.

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3. Risks Associated with Golden Visa Programs

• Spain does not offer "Golden Passports," but Golden Visas (residence-by-investment) pose ML risks.

• 96.18% of Golden Visas issued between 2017 and 2022 were granted through real estate acquisitions.

• Risks include:

  • Laundering funds through high-value property acquisitions.

  • Tax evasion and avoidance.

  • Circumvention of financial sanctions and cross-border movement of illicit funds.

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4. Role of Notaries and Registrars in Real Estate

• Notaries play a critical role in authorizing and verifying transactions, but they can be exploited by criminals seeking legitimacy.

• Real estate sales, company incorporations, capital increases, and loan agreements are among the most frequently used mechanisms for ML.

• Notaries and registrars must comply with Spain’s AML regulations (Law 10/2010, April 28) and have access to databases to verify beneficial ownership.

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5. Typologies in Real Estate

• Buying and selling properties using illicit funds and reselling them at inflated prices.

• Under- or over-valuation of property to launder proceeds while disguising the true value.

• Layering through intermediaries, including offshore companies, trusts, and proxies.

• Frequent property flipping among related parties or shell companies to create layers of transactions that obscure the original source of funds.

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Mitigation Measures

Despite the risks, Spain has implemented mitigation measures through:

• Stringent KYC and due diligence requirements for real estate transactions.

• Mandatory disclosure of beneficial ownership through property registrars.

• Closer scrutiny of Golden Visa applications to prevent misuse.

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Conclusion:

The Spanish real estate sector remains a key target for money laundering, especially through luxury property acquisitions, Golden Visa schemes, and complex ownership structures. Real estate professionals, financial institutions, and compliance officers must apply enhanced due diligence (EDD) when dealing with high-risk transactions and foreign investors.

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