In total, Transparency International calculates some 500 properties across the UK worth a combined £5 billion are owned with what it calls ‘suspicious wealth’.
And this isn’t just a campaign against corruption by organisations like TO - the UK government itself admits that many of these deals have been through corporate structures or trusts based in jurisdictions where it is difficult or impossible to identify the ultimate beneficial owner.
The government and its security services have made clear during the Ukraine crisis that they believe some of those owners to be money-laundering Russians.
So far, so what? You may say it’s always been this way, and how can the little old agency industry stop those nefarious Russians bending the rules and acquiring property?
Well for a start our industry can actually abide by the current rules, modest as they may be in their scope. At the moment some agents are - scandalously - playing fast and loose with money laundering buyers.
The National Crime Agency says the property sector in the UK accounted for less than one per cent of suspicious activity reports during the 2018-19 financial year, the most recent period for which it has published figures.
This is almost certainly not an indication of the low level of money laundering in the UK property business - more, surely, it is a signal that the agency industry is not properly engaged with the anti money laundering compliance practices.
The NCA warned that among estate agents advertising properties for sale at £5m or more, half had failed to register with HMRC for anti-money-laundering supervision in 2019 or had failed to pay their annual fees for this service.
Think about that for a moment - half the agents concerned are, effectively, breaking the law.
Martin Cheek of SmartSearch, a player in the AML industry, recently wrote on EAT: “Clearly, many estate agents are not taking their AML obligations seriously, however, this has serious consequences. Not only are agents that don’t comply helping aid money laundering - which is not only a crime in itself, but an enabler of serious organised crime - but they are also leaving themselves open to reputational damage, huge fines and even lifetime bans.”
And here’s the rub. Maybe these agents break the law because they calculate they will get away with it.
There’s widespread recognition that money laundering is a significant issue, but how thoroughly is this policed?
Can anyone recall a large scale money laundering probe into an agency since the £215,000 fine for Countrywide - almost exactly three years ago - for failing to implement AML regulations properly?
And what about the fall-out from Channel 4’s 2015 programme called, appropriately, From Russia With Cash?
In it an undercover reporter posing as a Russian politician targeted five high end London agents in a bid to see how they operate to counter money laundering. Some at least appeared to fall very short of abiding by the rules, prompting trade body investigations - but little, some say, in terms of action against any offenders.
This week I asked Propertymark what had become of the investigation it launched into the issue at the time - answer came there none.
And this is, perhaps, why agents believe they can ignore this red tape.
Of course if we are to believe Foreign Secretary Liz Truss - commenting in between photo opps which might come in handy if there’s a Tory Party leadership election - that’s all about to change.
She has pledged broad, unspecified, new powers to stop money laundering, believed to include Unexplained Wealth Orders.
The National Crime Agency is understood to have prepared a hit list of high net worth individuals - mostly Russians - who may have UWOs imposed on them, restricting future purchasing rights for properties and theoretically including the possible seizure of existing properties
Truss has said: “Whether you support Russia’s aggressive actions against Ukraine, or you’re of wider significance to the Kremlin, we will have the power to sanction you. Nothing is off the table and there will be nowhere to hide. This will amount to the toughest sanctions regime against Russia we have had in place yet, and mark the biggest change in our approach since leaving the European Union.”
Now that the Ukraine crisis appears to have moved from the firing line to the back burner, I for one am not holding my breath that Truss will follow through.
What a shame - and it really is a matter of shame - that the absence of a war effectively means we return as a nation to turning a blind eye to money laundering.
Our industry would do well to take the moral high ground and finally get tough with dodgy funds from some overseas buyers.
Our government may be reluctant to enforce the law but we could do our industry a favour and not follow suit. Then at least one good thing would have come out of the Ukraine stand-off.
*Editor of Estate Agent Today, Letting Agent Today and Landlord Today, Graham can be found tweeting about all things property at @PropertyJourn