The National Association of Estate Agents says HMRC have been making unscheduled visits to individual agency offices to check on their compliance with anti-money laundering procedures.
“We wholeheartedly support HMRC in conducting these checks and in the wider battle to fight the criminals. We also want to ensure that NAEA agents are the best in the business, but understand that with so many other priorities it’s easy to let your knowledge slip, and even the most diligent of agents need refreshers now and again” says a statement issued by the association.
It is not known exactly how many visits have been made but it is believed that they were not triggered by suspicions of illegal activity or flouting of the approved anti-money laundering processes.
As a response the NAEA has issued a round-up of the duties of agents on this issue.
It says that in terms of suspicious activity, agents should look out for:
- any activity which does not make professional or commercial sense or where clients appear uninvolved or uninterested in the process;
- property prices that do not correspond with market value. An agent’s own experience of the market should indicate whether a property has been properly valued;
- properties that have multiple owners or are owned by nominee companies – they may be an attempt to disguise the true owner and/or to confuse the audit trail;
- purchases made without a property being viewed (not including auctions), or having only been viewed over the internet;
- sudden or unexplained changes in ownership, or immediate resale (flipping) of property at a higher, artificially inflated value;
- a previously sold property which reappears on the market having been extensively renovated, without an obvious source of funding (run-down properties may be bought legally, but then renovated using criminal funds);
- customer similarity (a group of purchasers with similar profiles purchasing new builds or off-plan). This can be an indicator of organised mortgage fraud (mortgage fraud for profit) or ‘flipping’;
- inconsistent or weak reasons for paying cash; offering large amounts of cash as the means of payment for property purchases, deposits, rent, interest or fees;
- the use of cash coupled with a quick sale, or cash exchanges directly between seller and buyer, including cash deposit;
- doubtful or unusual sources of funds. This includes unusual involvement of third parties, cash gifts, or large payments from private funds, particularly where the buyer appears to have a low income. This type of funding may be an attempt to disguise the true owner of the property;
- poor explanations for the early redemption of previous mortgages, especially where there has been a penalty cost involved.
If an agent suspects illegal activity, they should complete a National Crime Agency (NCA) Suspicious Activity Report in line with the Proceed of Crime Act 2002.
For SARs to be of maximum use to law enforcement they should contain all available Customer Due Diligence information.
All information should be completed in the relevant fields. SAR glossary codes should be applied to allow quick identification of the reason for suspicion. Dates of birth are vital for identifying individuals correctly and all addresses should include postcodes. Accuracy is extremely important so information should be checked before submission.
It is good practice to open the SAR with a brief summary to illustrate the reasons for suspicion and provide a chronological sequence of events detailing the dates of any activity or transactions. If a SAR is of poor quality it prevents analysis from being completed.
More information on money laundering, glossary codes and guidance notes for Submitting a SAR can be found within the Regulated Sector section on the NCA website, at www.nationalcrimeagency.gov.uk