Gatekeepers such as lawyers, accountants, real estate agents and trust or company service providers (TCSPs) are crucial in preventing corruption and money laundering. Yet, a report established by the Financial Action Task Force (FATF) revealed significant gaps in their compliance with anti-money laundering (AML) and counter-terrorist financing (CFT) measures.
Are gatekeepers — lawyers, accountants and real estate agents — supposed to be heroes in the fight against corruption, or are they just unintentional facilitators?
It was found that often key preventive practices like Customer Due Diligence (CDD) and supervision are not properly implemented, especially in sectors like real estate and legal services.
Although some countries perform well, many major economies — representing over half of the world’s GDP — are underperforming. The problem? Weak internal controls and ineffective supervisory frameworks that fail to close loopholes for illicit financial activity.
A Closer Look: Where Are the Gaps?
One of the major gaps highlighted in the report is the inconsistency of Customer Due Diligence (CDD) across gatekeeper sectors. Many gatekeepers aren’t asking the right questions about where their clients’ money is coming from. Additionally, the absence or weak enforcement of CDD, particularly for Politically Exposed Persons (PEPs), creates significant vulnerabilities in the global financial system.
Case in point, in certain jurisdictions, gatekeepers are not required to collect or record sufficient information about their clients. Accordingly, the absence of CDD leads to missed opportunities for detecting and preventing money laundering. FATF highlights
that without these preventive measures, financial transactions that should raise red flags pass unnoticed. For example, some sectors, like real estate, involve large sums of money in single transactions but lack the proper CDD requirements, which makes it easy for corrupt individuals to hide illicit funds through property purchases.
The report stresses that adequate CDD measures are fundamental to combating financial crimes, yet many FATF member countries struggle to enforce them effectively. The gap in applying CDD is one of the main reasons gatekeepers remain vulnerable to exploitation by money launderers and corrupt actors.
Furthermore, without thorough CDD measures, corrupt individuals can easily obscure the source of their funds, often through shell companies or complex ownership structures that hide the real beneficiaries. For example, lawyers and trust or company service providers (TCSPs) are frequently involved in creating these shell companies, which, when set up across multiple jurisdictions, make it incredibly difficult for authorities to trace the flow of illicit money. FATF’s StaR Initiative even found that shell companies were used in 85% of grand corruption cases.
Additionally, a specific concern raised is the inadequate identification and monitoring of Politically Exposed Persons (PEPs). PEPs, by nature of their positions, present higher risks of involvement in corruption or money laundering. The FATF review found that not all jurisdictions enforce enhanced CDD measures for PEPs, allowing illicit individuals to exploit this oversight.
Supervision: A Missing Piece of the Puzzle
Another significant issue is the lack of effective supervision. In many jurisdictions, gatekeepers are not under sufficient regulatory oversight. Internal controls, such as compliance officers and employee training, are often either inadequate or non-existent, particularly in smaller firms. Moreover, many regulatory bodies don’t have the necessary powers to impose penalties for non-compliance, leaving these sectors vulnerable to misuse.
The FATF report highlights several loopholes that corrupt actors exploit within gatekeeper sectors, notably, the lack of consistent regulation and oversight for professionals like real estate agents and trust or company service providers (TCSPs). In many jurisdictions, these sectors are either under-regulated or self-regulated, which makes it easier for corrupt individuals to launder money without triggering alarms. Another loophole involves the weak enforcement of beneficial ownership transparency. Complex ownership structures — often designed by lawyers or TCSPs — allow criminals to obscure who truly controls assets, making it difficult for authorities to trace illicit funds.
The report emphasises that closing these loopholes requires tightening regulations and improving cross-border cooperation to prevent gatekeepers from becoming vehicles for corruption. In addition, the absence of risk-based supervision in many jurisdictions allows gatekeepers to slip under the radar, leaving high-risk individuals unsupervised for long periods. FATF urges jurisdictions to prioritise closing these regulatory gaps, enhance transparency, and ensure that all gatekeepers are properly equipped and trained to detect suspicious activities.
Reinforcing Global Anti-Corruption Measures
Corruption not only undermines public trust and diverts resources from essential services but also threatens global stability. There is a need for regulatory authorities to strengthen supervision, impose penalties for non-compliance, and ensure gatekeepers are adequately equipped to flag suspicious transactions. By strengthening regulation and supervision of gatekeepers, countries can close critical loopholes and reduce the risks of money laundering and corruption.
The report calls for more collaboration between governments, gatekeepers, and civil society in order to promote compliance and close the loopholes that allow corrupt actors to operate freely.
By enhancing transparency, improving due diligence, and strengthening supervision, gatekeepers can fulfill their role as defenders against corruption, rather than accidental facilitators. The FATF’s review serves as a wake-up call — one that urges countries to prioritise the fight against corruption before the problem spirals further out of control.
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Written by Andie Henderson, Legal and Compliance Associate, FAI Comply
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