A home in Manurewa that Hills Real Estate listed for sale in November 2021 at a higher price than what it was sold for just days earlier. Photo / Supplied
A home in Manurewa that Hills Real Estate listed for sale in November 2021 at a higher price than what it was sold for just days earlier. Photo / Supplied
An Auckland real estate agency - whose director was previously accused of flipping homes and driving house prices up - has been formally warned it has failed to comply with anti-money laundering laws.
The Department of Internal Affairs said Hills Real Estate failed to set up a programme to verifyand monitor the true identity of the owners of homes it sells as required under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009.
“Hills has failed to meet its AML/CFT obligations relating to the establishment, implementation, and maintenance of an AML/CFT programme,” Te Tari Taiwhenua-DIA said.
“Further, DIA found that Hills failed to conduct ongoingcustomer due diligence, monitoring and reviews to identify grounds for reporting suspicious activity, as well as failure to keep records in accordance with the requirements of the AML/CFT Act.”
The agency is required to take immediate action to “rectify” its non-compliance, DIA said.
Hills Real Estate principal Anjini Lata said the agency had used third-party software companies to keep anti-money laundering records but had run into trouble when changing to a new software company.
That was because they did not have access to their old records, she said.
The company had since recovered the records and was complying with the laws, Lata said.
The Ministry of Justice said the Government brought in new anti-money laundering changes in 2019 because criminals often use real estate to convert the money they make from illegal activities into legitimate assets.
The changes aimed to deter criminals and prevent laundering by making it easier for authorities to find out where “dirty” money came from, prosecute criminals, seize illegally earned money and assets, and stop crime and terrorism, it said.
The DIA said there is evidence large sums of illegal cash are being laundered in real estate.
“For example, in the financial year ending June 2021, 100 properties totalling $74 million were seized by NZ Police, which was an increase from the previous year where 51 properties totalling $56 million were seized,” it said.
Hills was the second agency to receive a formal warning in the past two months, Mike Stone, the DIA’s director of the AML/CFT Group, said.
“Real estate agencies should take note of the two recent warnings and expect stronger action in the future from DIA for serious breaches of the AML/CFT Act,” he said.
The 2019 laws require real estate agents to identify all legal beneficial owners of each property before the agents enter into a contract to sell the homes. They must then continue monitoring their records and keeping an eye out for suspicious transactions.
Hills Real Estate’s Lata said the DIA inspected her company last November.
It was then it found out it didn’t have access to all its records, she said.
She said her agency used one software company to record its anti-money laundering documentation from when Hills Real Estate started in January 2021 through to October that year when her agency changed to a different software company.
But because Hills didn’t print off its records, it didn’t have access to the records from the first software company when the DIA inspected them, she said.
Her team had since recovered the old documents and checked them.
It had also already implemented all DIA’s recommendations to become fully compliant with the AML/CFT laws ahead of an August deadline, Lata said.
When asked if she was confident that sellers hadn’t used Hills Real Estate to launder money, Lata said: “No, nothing like that”.
It comes after the Herald earlier in 2019 identified Hills Real Estate director Rickhil Prakash as one of the nation’s top 10 most prolific property traders.
Then in November 2021, two home buyers told the Herald it was “heartbreaking” to watch as Prakash snapped up homes they tried to buy, and then immediately put them up for sale again through his agency for up to $100,000 more.
First home buyer Garry Singh said in 2021 property traders were pushing up house prices after a home he wanted was sold and relisted days later for $100,000 more. Photo / Alex Burton
Home buyers Garry Singh and Andrew Robins said Prakash’s actions had helped push sky-high Auckland house prices to record highs at a time when homes were out of reach for many.
Singh said he was the leading bidder for a Papakura home at a November 2, 2021, auction, having bid $870,000, before the auction went to a 15-minute recess and a new phone bidder suddenly emerged and paid $900,000.
Just days later, he saw the same home advertised on Facebook Marketplace by a Hills Real Estate agent for more than $1 million, he said.
Similarly, Robins said he went to an auction for another Papakura home that sold on October 12, 2021, for $801,000, before it was relisted a day later by Hills Real Estate for $850,000.
He said other homes he saw sold were also relisted by Hills Real Estate within two days for prices more than $100,000 higher.
“It is heartbreaking when you find out that a house you are interested in is getting sold the next day for inflated prices,” he said at the time.
But Prakash said at the time he was not pushing prices up and was running a legitimate business because he risked making a loss if he couldn’t resell the homes for higher prices.
He said he used a trading company to buy homes before listing them for sale with Hills Real Estate, which is a separate company.
“Everything is all legal, we are buying from outside companies, we’re not buying from our vendors, we are buying from other agencies.”
He paid all appropriate taxes and disclosed all relevant details when buying and selling homes, he said.
“So I am just buying as a normal buyer, and if I can sell it for more, I make profit.”
