24 Apr Real Estate Investment and Money Laundering in Spain: Basic Aspects

According to reports by the European Commission (26/6/2017 and 24/7/2019), all sectors of the economy are vulnerable to the risk of infiltration, integration, or ownership by organized crime groups and terrorist groups.

However, the global importance of the real estate sector, together with its other characteristics, has made it a sector traditionally linked to activities involving the generation or concealment of illicit funds. Thus, the European Commission, in its report on cross-border risk assessment, considers that the real estate sector is exposed to significant money laundering risks.

Risk assessment

The FATF (Financial Action Task Force) published in July 2022 a guide on preventing money laundering focused on the risks in the real estate sector, with the aim of providing professionals working in this field with tools and examples to support their recommendations.

In accordance with this guide, professionals should base their risk assessment on three key aspects:

• Geographical: Analysis of the origin, considering whether countries are classified as high-risk.
• Customer-related: Analysis of the parties involved in the transaction.
• Operational: Analysis of the financing methods and mechanisms involved.
  

To properly analyze these aspects, a series of basic preventive measures must be implemented, which can be divided into the following three blocks:

Identification (KYC form)

The first obligation is the proper identification of all natural or legal persons seeking to establish a business relationship or participate in a transaction. For this purpose, the commonly known KYC (Know Your Customer) form is used, which must be completed by the person being identified.

As an example, in the case of a natural person, the following essential information is required: name, address, tax identification number, source of funds, and other related data.

Purpose and nature of the business relationship

Information must also be collected regarding the purpose and intended nature of the business relationship with the client. In particular, this includes the nature of their professional or business activity, taking measures to reasonably verify the accuracy of the information provided.

When the client or the business relationship presents above-average risks, or when inconsistencies are detected between what has been declared and the actual situation, verification must be carried out using reliable independent sources.

Monitoring

Monitoring and analysis of transactions carried out throughout the business relationship must be performed. For example, this includes each purchase and sale or movement within an international real estate transaction where the investment amount gradually increases depending on the ease and profitability of previous operations.

For this reason, it is common in this type of real estate investment transaction to request updated information periodically, in order to maintain the level of security achieved through the two previous steps.

Simplified and enhanced due diligence measures

Depending on the perceived risk of a specific transaction or business relationship, there may be cases in which a very low risk allows for simplified measures. For example, identification of the parties involved may be carried out after the transaction, or the amount of information required may be significantly reduced.

Similarly, depending on certain parameters, such as clients located in high-risk countries or transactions involving foreign currency exchanges above certain thresholds, the risk will be higher. In these cases, a greater and more detailed amount of information will be required prior to carrying out any transaction.

High-risk countries

The FATF periodically publishes two lists identifying high-risk countries.

The first one (Black List) includes countries for which member states are called upon to apply countermeasures. The application of countermeasures refers to effective actions taken by states to protect their financial sectors from risks originating in those countries.

Currently, this list includes:

The second list (Grey List) includes countries whose strategic deficiencies in anti-money laundering measures make them subject to increased monitoring and warning.

Entre ellos, la última actualización de la lista (de febrero de 2026) incluía:

Knowledge and prevention

In conclusion, conducting transactions in the real estate sector, especially those with an international component, requires a deep understanding of the associated risks and anti-money laundering obligations. Having proper legal advice from the outset not only facilitates compliance with these obligations but also helps streamline transactions, avoiding unnecessary delays and ensuring that investments proceed smoothly.

At Navarro Llima Abogados, we have a specialized platform for international real estate investment, through which we provide comprehensive advisory services in purchase and sale transactions, combining legal and regulatory analysis with a practical market perspective.