How estate agents can help win the war on financial crime

Financial crime within the property sector is on the rise and the stats are alarming. According to data from Apex Bridging, there were a total of 1.1 million cases of property fraud between April 2022 and March 2023, a 15 percent increase on the previous year, while a CIPFA study found that of 80,000 cases of fraud in UK local authorities, property fraud accounted for 71 percent. 

The fraudulent activity can range from individuals falsifying mortgage applications to complex organised schemes involving multiple properties and false identities and the consequences can be devastating for individuals, businesses and the economy as a whole, not to mention the lack of trust it builds in the industry.

It’s no surprise therefore that the property sector is under increasing pressure from regulators (and the ever-evolving legislation they must adhere to) in the battle against dirty money. Regulators are imposing crippling fines for any compliance breaches, which is concerning considering that 1 in 5 regulated businesses are unaware of the penalties associated with non compliance and that’s not forgetting the significant reputational damage that comes with non-compliance. 

Historically, firms have employed teams of people to combat money laundering, but regulators are now expecting to see digital solutions in place to counter the risk of financial fraud, and with good reason. Technology can be the deciding factor in the war on financial crime and here’s why:

Better risk detection

Technology platforms can analyse historical data to predict potential incidents of money laundering, enabling estate agents and other property companies to take preventive measures, while also identifying unusual patterns or changes in customer risk profiles, which may also indicate suspicious activity. 

Advanced analytics can help companies identify complex patterns across large datasets, making it easier to detect networks of fraud. It is also possible to assign risk scores to individuals or entities based on their likelihood of being associated with money laundering. This helps in prioritising high-risk cases for further investigation.

Enhanced customer due diligence

Automated software platforms can analyse customer information, public records, and other data sources to perform thorough due diligence on clients, identifying potential risks or suspicious behaviour before they are signed up.

RegTech automates the process of verifying customer identities and conducts enhanced due diligence on individuals and on companies, ensuring compliance with Know Your Customer (KYC) and Know Your Business (KYB) regulations, both vital components of anti-money laundering efforts.

More accurate identity verification

Biometric verification is a powerful tool in enhancing anti-money laundering and fraud detection. It involves using unique physical or behavioural characteristics of an individual to verify their identity. Traits like fingerprints, facial features, iris patterns, and voiceprints are unique to each individual and are nearly impossible to replicate or forge. This makes them highly reliable for verifying that clients are who they say they are.

Continuous and real-time monitoring

Real-time alerts allow for immediate action when suspicious activity or changes in a client’s risk profile are detected, such as being named on global sanctions lists, adverse media, new directorships, or political exposure. Automating the periodic review of customer data can help estate agents to prevent or minimise potential financial losses, swingeing fines and damage to their reputation. By identifying and acting upon suspicious activities in real-time, estate agents can reduce the risk of financial losses associated with incidents of economic crime.

Continuous monitoring with real-time alerts can also help refine the accuracy of anti-money laundering systems over time. This reduces the number of false alerts and decreases the need for manual intervention.

To the future

As the landscape of financial crime continues to evolve, property firms must ensure they do the same. By leveraging the right technology, they can ensure they not only meet regulatory requirements and safeguard their operations, but also protect their reputations and crucially, maintain that all important customer trust.