SWORD OF DAMOCLES HANGING OVER UK PROPERTY INDUSTRY (HINT: IT’S MONEY LAUNDERING).

In the ancient tale of Dionysius and Damocles, Dionysius, a powerful and rich man, offers Damocles the chance to sit at his throne to experience what Dionysius himself experiences every day. For all its splendor the throne has the unfortunate characteristic of having a large sword hanging over it by a horse hair. Pragmatically, Damocles retreats and Dionysius resumes his kingly duties, which include power and riches, but also require good management his risks, including that horse hair, lest its burden fall upon his head.

Money laundering is an increasing risk for estate agents, accountants, and lawyers in the UK property market. In the macro picture, there is an increasing amount of wealth channeled into UK property bolstered by rising prices in the housing market. This is a juicy target for any would-be money launderers.

On the other hand, anti-money laundering regulations have only become applicable to the gatekeepers to the property market–primarily estate agents and solicitors–in the last decade. These entities are predominantly small and medium sized enterprises that conduct business in a forthright manner trying to help people into the homes that they want to live in. This is an industry that is still dominated by face-to-face chats, phone calls and many walks around the local neighborhood. However, it is these very enterprises that are now required to do anti-money laundering processes under the Money Laundering Regulations 2007. Essentially, processes that were once required really only in financial firms are now required of firms operating in the property market. The problem is that there is very little accumulated industry knowledge when it comes to anti-money laundering processes.

If these processes are done poorly, the penalties can be severe. UK estate agents were fined £246,665 in 2014 for “significant and widespread” failures in money laundering processes.These failures included:

  • Failures to apply adequate customer due diligence measures when carrying out estate agency work.
  • Failures to conduct ongoing monitoring of business relationships.
  • Failures to establish and maintain appropriate policies and procedures on adequate record keeping, internal controls or risk assessments.
  • Failures to train relevant employees in how to recognise and deal with transactions and other activities, which may be related to money laundering and terrorist financing.

Simple, preventable risks that did not need to increase business friction.

Regulation of the property sector is changing though. Formerly under OFT, from 2014 it is now regulated under HMRC. Under the new regulatory framework, according to the HMRC, “Senior managers are personally liable if they don’t do everything they need to do to protect their business from money laundering and terrorist financing.”

Companies in the UK property market need to take money laundering seriously. There are simply too many holes in the industry where dirty money can flow into and back out of the property market, and it is a matter of time before that horse hair snaps and the sword comes crashing down on the businesses of many in the property sector.

How can MatrixVision help? MatrixVision provides a full compliance management platform to reduce KYC friction for good customers, and for yourself, and reduce the risk of KYC misses.Tailored for Property Professionals and configured for your AML rules, it ensures that your staff and business processes do what they need to do.

Download a PDF detailing all you need to know here

or

Visit us to try a demo

Alex Evans

You May Also Enjoy

Estate Agent Talk

Will the ‘Our Future Homes’ report address the needs of an ageing population?

Will the ‘Our Future Homes’ report address the needs of an ageing population? By Kevin Shaw at Leaders The government recently published an independent report, ‘Our Future Homes’, which considers our ageing population and looks at how housebuilders can meet the wants and needs of older people. It is widely acknowledged that not enough new homes…
Read More
Breaking News

Zoopla: Over a quarter of parents ‘lie or break rules’ to get children into their preferred school

Admission Impossible: Over a quarter of parents admit to ‘lying or bending’ rules to get their children into preferred schools Over a quarter (27 per cent) of UK parents admit to flouting the rules to get their children into schools, rising to 38 per cent in London The number who admit lying is on the…
Read More
Breaking News

Government planning reforms to protect nature

News that the Government has warned that the planning system must protect nature, as it unveils reforms Partner Alison Ogley, Freeths commented: “This is a potential game changer addressing the current inertia in the system, providing a solution that is more effective than individual developers trying to address environmental improvements on a project by project…
Read More
Love or Hate Rightmove
Breaking News

Surge in demand for investment sector as interest rates drop

The latest insights from the UK’s number one commercial property website Rightmove reveals that there has been a surge in demand to invest in commercial property compared with the same period a year ago, as interest rates drop following the second Bank Rate cut. The trend marks a continued recovery for the investment sector as…
Read More
Letting Agent Talk

7 Ways Self Storage Supports Business Growth in 2025

As businesses face increasing challenges in managing costs, scaling operations, and adapting to changing markets, self storage has emerged as an indispensable tool for success. Whether you’re a small startup or an established multinational company, self storage offers a practical, affordable, and secure way to handle the demands of modern business. As businesses grow, they…
Read More
Estate Agent Talk

How much would Bridget Jones’ iconic London apartment cost today?

How much would Bridget Jones’ iconic London apartment cost today? A new study has revealed that the average price to purchaseBridget Jones’ iconic London apartment in the Borough Market area is now £415,090. The study calculated that this is a price increase of 182% since the first film premiered in 2001. The research obtained data…
Read More