Money Laundering Risks in the Real Estate Sector: A Study of Compliance Measures and Regulatory Framework in India
Abstract
India's real estate sector has traditionally represented a high-risk avenue for money laundering owing to cash-intensive transactions, benami property schemes, deliberate undervaluation of properties, and the use of shell companies to obscure ownership structures. Despite two decades of legislative reforms—including the Prevention of Money Laundering Act (PMLA) 2002, the Real Estate (Regulation and Development) Act (RERA) 2016, and the Benami Transactions (Prohibition) Amendment Act 2016—structural weaknesses within the sector remain significant. This study examines the relationship between money laundering risk indicators (dependent variable) and compliance measures and regulatory enforcement intensity (independent variables) using a descriptive-analytical framework based exclusively on secondary data sourced from FATF Mutual Evaluation Reports, Enforcement Directorate annual reports, FIU-IND publications, Ministry of Finance records, and peer-reviewed academic literature spanning 2002 to 2024. Analytical techniques employed include qualitative content analysis, thematic coding, comparative analysis, trend analysis, and Pearson correlation. The findings reveal that the most critical compliance gap was the 21-year delay in designating real estate intermediaries as reporting entities under the PMLA—remedied only in May 2023. While regulatory enforcement intensity increased substantially—with PMLA asset attachments rising eleven-fold between 2014–15 and 2021–22—conviction rates remained critically low at 2.1%, severely undermining the deterrent function of the framework. Pearson correlation analysis yielded r = +0.71 for compliance measures and r = +0.68 for regulatory framework strength against risk indicators. The study concludes that India's anti-money laundering (AML) architecture is legislatively sound but operationally deficient, and recommends prioritizing prosecution capacity, cross-agency data integration, and uniform RERA implementation as immediate reform priorities.
Keywords
Money laundering; Real estate; PMLA; Compliance measures; Regulatory framework; Benami transactions; FIU-IND; FATF; India
Citations
IRE Journals:
Noor Tashfeen, Dr. Hanish Kukreja "Money Laundering Risks in the Real Estate Sector: A Study of Compliance Measures and Regulatory Framework in India" Iconic Research And Engineering Journals Volume 9 Issue 10 2026 Page 1526-1535 https://doi.org/10.64388/IREV9I10-1716330
IEEE:
Noor Tashfeen, Dr. Hanish Kukreja
"Money Laundering Risks in the Real Estate Sector: A Study of Compliance Measures and Regulatory Framework in India" Iconic Research And Engineering Journals, 9(10) https://doi.org/10.64388/IREV9I10-1716330
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