Revival of fraud, money-laundering feared

KUWAIT CITY, July 23: The Ministry of Commerce and Industry’s recent decision to streamline the process for obtaining commercial licenses, including home licenses for real estate brokerage, has sparked controversy among real estate professionals. While the ministry views these changes as a progressive step for entrepreneurs and small business owners, many real estate brokers are concerned that the new regulations could reignite issues of fraud and money laundering in the real estate sector. Imad Haidar, Head of the Real Estate Brokers Union, expressed strong opposition to the new home licensing rules, arguing that they could lead to an increase in itinerant brokers and fraudsters exploiting the system. He highlighted concerns that these changes could reverse the progress made between 2017 and 2022 in combating real estate fraud and money laundering.

Haidar criticized the decision to include real estate brokerage in the special nature activities category, warning that it undermines previous efforts to safeguard the real estate market. He emphasized that real estate transactions often involve substantial sums -- ranging from hundreds of thousands to millions of dinars -- and that such significant deals should not be handled by brokers operating from home. The risk, he argues, is that this could encourage money laundering and other fraudulent activities.

“The decision on special nature licenses is beneficial in many areas, but real estate brokerage should be exempt,” Haidar stated. He argued that real estate brokerage requires rigorous oversight and a legal entity with a physical location to ensure the integrity of transactions.

Haidar suggested that the new home licensing rule could be implemented as a transitional phase, allowing brokers to operate from home for a year. If successful, they could then establish an official office. If not, the license could be canceled without significant loss. This approach, he believes, would balance the needs of emerging entrepreneurs with the need to maintain market integrity. To improve the real estate sector, Haidar proposed several measures including exempting Real Estate Brokerage from Special Nature Licenses. He advocates for removing real estate brokerage from the list of activities eligible for home licensing.

This is in addition to reinstating educational requirements and activating broker identification and ensuring that real estate brokers are recognized across all government agencies involved in real estate matters. Haidar’s proposals aim to strengthen the real estate market’s regulatory framework and ensure that brokers operate with the necessary oversight and legitimacy. He called on decision-makers to reconsider the current approach to licensing, stressing the importance of protecting both investors and the integrity of the Kuwaiti real estate market.

By Marwa Al-Bahrawi

Al-Seyassah/Arab Times Staff