Luxury property across Africa has long been a magnet for illicit financial activity. From offshore residences used for tax evasion to the seizure of assets from sanctioned individuals, real estate remains a key target for money launderers.
According to RelyComply, South Africa, in particular, has come under scrutiny as criminals continue exploiting the system despite increased global oversight from the Financial Action Task Force (FATF).
The case of alleged fraudster Nicole Johnson demonstrates the weaknesses that persist. Despite facing over 100 charges and being denied bail, Johnson reportedly managed to purchase a luxury apartment while incarcerated by using unregistered developers to bypass verification checks. No alerts were triggered, highlighting major flaws in how South Africa’s property system monitors suspicious financial activity.
Since the introduction of the Financial Intelligence Centre Act (FICA) in 2001, South Africa has attempted to build a robust AML framework for property transactions. The legislation established the Financial Intelligence Centre (FIC), which mandates institutions to conduct know your customer (KYC) checks, risk assessments, and suspicious activity reports (SARs). Over time, FICA’s scope has widened beyond banks to include estate agents, legal practices, developers, and mortgage lenders—entities now defined under the Property Practitioners Act.
Estate agents are typically the first line of defence, required to flag cash or high-value transactions. Conveyancers and banks are then responsible for enhanced due diligence, while legal representatives confirm the source of funds. Developers, however, remain a weak link—particularly those operating outside FIC registration, as evidenced in the Johnson case.
The incident underscores how enforcement gaps and poor inter-agency coordination allow criminal networks to exploit the system. A lack of centralised oversight means that even clear red flags can go unnoticed. With limited state resources and siloed responsibilities, South Africa’s system often relies on financial institutions to act as de facto law enforcement, rather than on coordinated government intervention.
Several key challenges continue to hinder AML compliance in property markets. Smaller firms often lack the resources for sophisticated compliance systems, while complex ownership structures obscure the true beneficiaries behind property transactions. The definition of an Ultimate Beneficial Owner (UBO) in South Africa—anyone holding 5% ownership—further complicates efforts to trace control through layered entities, shell companies, or trusts.
Technology gaps are also evident. Without automated KYC, transaction monitoring, and accessible SAR reporting tools, accountable institutions struggle to identify suspicious activity in real time. Furthermore, an inconsistent enforcement culture and privacy barriers prevent the necessary data-sharing between public and private entities to expose criminal patterns.
South Africa’s ongoing efforts to be removed from the FATF greylist make reform essential. The country’s experience offers lessons for other African markets on the importance of proactive compliance. Institutions must follow existing AML guidance, ensure regular training for all property professionals, and invest in shared compliance services and RegTech solutions that simplify monitoring and reporting.
Centralised registries of UBOs, trusts, and shell companies would also strengthen transparency and accountability. By building digital frameworks for cross-sector coordination, property stakeholders can improve early detection of suspicious transactions and reduce systemic loopholes.
Ultimately, the South African case is a cautionary tale for the entire continent. Criminals continue to exploit real estate as a preferred channel for laundering illicit funds, but with the right collaboration between regulators, property professionals, and technology providers, these vulnerabilities can be reduced. Strengthening AML defences in property markets will be critical to maintaining the integrity of financial systems across Africa.
RelyComply recently recorded a video on the topic of the Nicole Johnson loophole, which delved deeper into the case and how Johnson was able to perform the action. During the video, representatives from the company, including Ebrahem Sadien, MRLO and risk and compliance manager, unpacked the loopholes in the system.
You can watch the video here.
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