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Estate agents 'no longer biggest money laundering risks', report suggests

A survey undertaken by the respected Economist Intelligence Unit and a risk solutions company suggests that estate agency may be one of the least appealing sectors for money launderers to use for their illegal activities.

Although there has not been an authoritative ‘pecking order’ of which sectors of the UK economy were used by money launderers, there has been a widespread belief that estate agency - especially for the purchase of high-value properties in London and some other cities - was a key risk.

However, the EIU survey conducted with LexisNexis Risk Solutions suggests the gaming sector and non-property high value vendors - that is, businesses who accept or make payments of over €10,000 - were perceived by compliance experts as the most appealing for criminals looking to launder money.

Those two sectors were nominated by 15 per cent and 12 per cent of compliance experts respectively. 

However the legal sector (four per cent) and estate agents (six per cent) were perceived as being at the lowest risk. 

This is despite recent increased pressure and penalties from regulatory bodies such as HMRC and the Solicitors Regulation Authority (SRA) into their respective sectors. 

Almost three quarters of the compliance experts responding to the survey thought the regulations they have to comply with are proportionate for their sector, when compared with other non-regulated organisations.

The survey was small - just 204 individuals - but these were termed as “senior compliance, finance and legal executives from regulated industries at the centre of the fight against money laundering” including members of the banking industry, financial technology sector, legal professions, real estate sector, and gaming and gambling industries. 

As recently as March this year the influential Treasury Select Committee urged the government to ensure that estate agents were more closely monitored to ensure they abide by anti-money laundering regulations, and the same body wanted all agents to be registered with HMRC for anti-money laundering. 

In the same month HMRC revealed that it had fined both Countrywide and now-defunct online agency Tepilo over £250,000 combined for breaches of anti-money laundering rocedures. 

HMRC officers had also, separately, made unannounced visits to some 50 estate agency offices across England to check on AML processes.

The new LexisNexis/Economist Intelligence Unit study reveals that some 68 per cent of all businesses - across all sectors, not just estate agencies - think enough is being done to tackle the country’s dirty money problem, despite recent money laundering scandals sweeping the EU and numerous regulatory crackdowns.

Some two thirds believed enough was being done to combat the issue - despite the National Crime Agency estimating that over £100 billion of illicit funds pass through the UK each year.

Some 41 per cent were concerned about a lack of understanding of the different ways in which criminals launder money within their own organisations, while 18 per cent of respondents thought events like Brexit were the largest risk to fighting future financial crime.

“The report’s findings are undoubtedly concerning. Whilst there has been recent praise for the UK’s anti-money laundering efforts and a number of high-profile initiatives like the Economic Crime Strategic Board have been set up by government to further help combat the issue, the financial crime environment is fast-changing, and so firms cannot be lulled into a false sense of security” claims Steve Elliot, managing director at LexisNexis Risk Solutions.

Renée Friedman, managing editor at the Economist Intelligence Unit, adds: "With criminal methodologies evolving so rapidly, the need for stronger regulatory guidance and better information sharing between regulated businesses is paramount. Compliance teams, if they are to be fully motivated to engage in more than just box ticking exercises, require timely and sufficient feedback on enforcement outcomes."

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