Money Laundering in the Property Industry
Long gone are the days of slapping down on the table a wod of cash and expecting the estate agent to count it then hand you over the keys when purchasing a property. Who, what, where, when and why is most certainly the questions you will need to ask today and rightly so.
Though it has of recent years been progressively highlighted, with much attention focused towards it, the UK property industry still holds great potential for those looking to launder money. The main reason being is that most property transactions will involve larger amounts of money and in most cases there are no restrictions on who can purchase and from where.
So what exactly does money laundering mean – Money laundering is a process which criminals use to make it look like the money they have is legitimately earned. What they’re doing is taking ‘dirty money’ – and effectively ‘cleaning’ it (source equifax).
Firstly let us understand exactly what anti-money laundering means – also known as per its abbreviation, AML, the phrase is there to cover all aspects of the law, the formal processes and regulations that are there to prevent the illegal gain of income. AML is a big issue on a global scale that helps to supply criminals and even terrorists with ill gained monies.
Both sellers and buyers always need to be vetted and there are many warning signs, not only cash-only buyers, which can present themselves to you:
- Payments from multiple (sources) people / businesses / locations / bank accounts
- Payments from someone outside of purchaser and their immediate family
- Payments from unknown third parties to include nominee businesses
- Payments from one party yet the property will go in another party’s name
- Unusual sale price such as undervaluing or over pricing
- Gut Feeling – Sometimes our intuition can tell us if something just does not seem right
Within estate agency we can relax and know that nearly all purchases / sales take place genuinely though it is also important to know that we are all responsible to reduce money laundering crime and it is our duty to vet each and every transaction we put through. Not only should estate agents request full evidence / identity from parties within a transaction, they also need to communicate the reason why as many, both innocent or suspect, might challenge such vigorous checks ie it’s my house and it’s just your job to sell it and not ask questions!
Make sure you’re confident that your client is who they say they are. You may want to ask your client further questions if:
- their attitude is unusual – for example they’re disinterested, secretive or vague
- they’re eager to undertake a quick transaction
- they request key changes mid-way through a transaction (source lawsociety)
As an estate / letting agent you should take it upon yourself to be up to date with the current regulations and expectations of you, what identity you should be requesting, what checks are needed and what you need to do if you suspect that money laundering is taking place. Be aware that be it cash or money within a high street bank, there is no reason for it not to be fraudulent / laundered, be alert and suspect the unsuspected!
Further official reading can be made on the UK government website: The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017
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