Buyers and Sellers must complete AML Screening Forms during each transaction in Portugal, like in all other European countries.

When buying or selling real estate in Portugal, it is standard procedure for both parties to complete Anti-Money Laundering (AML) screening forms. This is not merely a bureaucratic requirement but a legal obligation under national and EU regulations aimed at protecting the integrity of financial and real estate markets.

Here’s what buyers and sellers need to understand about this process and why it matters.

The Regulatory Framework
Portugal’s AML laws are aligned with the EU’s 5th Anti-Money Laundering Directive, which extends due diligence responsibilities to professionals in real estate transactions. This includes estate agents, notaries, lawyers, and financial institutions. These entities are required to identify and assess the risk of money laundering or terrorist financing, and to report any suspicious activity.

To comply with these obligations, parties involved in property transactions are asked to complete AML forms that enable screening against:
– Sanctions Lists
– Politically Exposed Persons (PEP) registers
-Adverse Media databases

Understanding the Screening Criteria
1. Sanctions Lists
These lists are issued by international bodies (e.g., the UN, EU, or OFAC) and include individuals, organisations, and countries subject to economic or travel restrictions. Engaging in a transaction with a sanctioned individual is a serious offence with legal and financial consequences.

2. Politically Exposed Persons (PEP)
A PEP is someone in a high-ranking public position, or closely associated with one, whose access to power and influence may elevate the risk of corruption or bribery. Even if the individual resides outside of Portugal, they must be identified and assessed under PEP guidelines.

3. Adverse Media
This involves checking for credible, publicly available information linking a person or entity to criminal activity, legal proceedings, or reputational concerns. While not always definitive, such findings can trigger enhanced due diligence.

Why Ongoing Monitoring is Important
AML compliance does not end at the point of transaction. Ongoing monitoring is a key component of risk mitigation. For example, if a party is added to a sanctions list after a property purchase, the estate agency and financial institutions involved must be able to demonstrate that they had proper screening and follow-up procedures in place.

This is especially critical in luxury transactions, where the value and international nature of the clientele increase exposure to regulatory scrutiny.

What This Means for Clients
Completing an AML screening form is part of ensuring that all parties comply with the law and that the transaction proceeds without legal impediments. It also protects clients from inadvertently becoming involved in transactions with individuals or entities that could raise compliance issues in the future.

Clients should be aware that this screening is not a reflection on their personal credibility, it is a standardised risk management procedure applicable to all high-value transactions in the EU.

In a nutshell, in today’s regulatory climate, due diligence is not optional—it is foundational. AML screening is a necessary measure that helps safeguard all parties in a property transaction and ensures compliance with international law. Buyers and sellers in Portugal’s real estate market should expect this step as part of a responsible and lawful transaction process.