Estate agents and others in the property industry have much more to do to deter money laundering.
That’s the view of a security expert at LexisNexis Risk Solutions, an anti-money laundering and security consultancy.
He says 74.5 per cent of estate agents questioned in a survey think enough is being done by the UK regulator and regulated businesses collectively to tackle the issue, but LexisNexis RS is more critical.
It says compliance monitoring service Transparency International believes £4.4 billion of property in the UK has been purchased using ‘dirty money.’
The Fifth EU Money Laundering Directive - which came into effect last week - includes new requirements for Enhanced Due Diligence when dealing with transactions involving high risk.
LexisNexis RS says estate agents often manage transactions involving international buyers, and therefore should be aware of the additional checks for transactions that involve countries deemed “high risk”.
The Fifth Money Laundering Directive also attempts to further crack down on money laundering in the property market by regulating all lettings of higher value property – defined as units rented for over 10,000 euros per month.
Meanwhile, the Home Office has announced that it is considering forcing estate agents to hand over private information on the buyers of upmarket properties in a bid to combat this problem. HMRC is also overseeing a crackdown on those agents who turn a blind eye to financial crime.
Now Michael Harris, director of financial crime compliance at LexisNexis RS, says: “There’s still a long way to go for the property sector overall to tackle the issue of money laundering. Estate agents do not solely carry the burden – mortgage brokers, conveyancers and financial institutions are also responsible for preventing property being purchased with dirty money – but they do still have a big part to play.”
Harris continues: “To help ensure compliance, estate agents should undertake an assessment to understand their exposure to new ‘obliged entities’ (ie, any organisation or individual that falls under anti money laundering legislation as a result of the latest directive), apply enhanced due diligence measures in line with new requirements, ensure processes are in place to enable data to be shared on demand, if requested, and consider whether they need more robust regtech solutions to carry out background information searches.
“Estate agents should also invest more funds and time into educating staff in recognising the red flags of money laundering. Only then will estate agents have the best chance of fighting financial crime and meeting their legal obligations.”