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By Collette Allen

Chief Operating Officer, SmartSearch


Time is running out for legacy customer checks

As another round of property firms is fined, named and shamed for breaching anti-money laundering rules, it feels like the road is running out for those who still rely on outdated, manual checks to verify customers.

HMRC has included more than 30 estate agents, commercial property firms, valuers and auction houses on a list of 79 firms reprimanded for breaches of the regulations between April and December last year.

In other words, the property sector accounted for almost half of all those censured.


Don’t get me wrong, I have huge sympathy for agents and property firms trying to keep pace with the ever-changing compliance rules, which have been amplified since the pandemic and Russia’s invasion of Ukraine.

The UK property market is at the centre of money-laundering activities in the UK and many agents, particularly those in big cities, unwittingly find themselves on the front-line in the fight to prevent the crime.

But, frankly, relying on manual checks is like going into that gunfight with a letter-knife.

Of course, as the chief operating officer of the UK’s leading supplier of anti-money laundering (AML) software, you would expect me to say that.

But the potential seriousness of this issue goes way beyond a sales pitch.

Money laundering is often seen as a faceless, white-collar crime. However, in reality, it is nothing of the sort. It is a front for the proceeds of the greedy and the purveyors of misery - people traffickers, tax dodgers, scammers who prey on the most vulnerable and corrupt officials illegally diverting vital aid money from countries where the people desperately need it.

Some would go even further. Commentators like Oliver Bullough, author of Butler to the World: How Britain Helps the World's Worst People Launder Money, Commit Crimes, and Get Away with Anything and presenter of How to Steal a Trillion, BBC Radio 4’s excellent recent series on money laundering, believe that money laundering threatens to undermine the UK’s open economy and national security.

And the National Crime Agency, the UK’s leading agency against organised crime, agrees: “Money laundering”, it says, “has the potential to threaten the UK’s national security, national prosperity and international reputation.”

So the compliance pressure on the property sector is only going to increase.

However, the stick of fines and reputational damage should not be the only driving factor pushing the property industry towards a more robust verification of the people with whom it does business. There is a carrot, too. And that is a significantly improved journey for its customers.

One of our clients is Becky Eglinton, director of Huntingfield Estates in Framlingham, Suffolk.

For Becky, electronic verification is as much about speed as it is about security: The difference between paper and electronic verification is vast and a major plus point is the ease of use. Whether we want to verify a UK resident’s address or verify documents, everything is quick and easy to use.

“When the fifth money laundering directive was announced, I knew we needed to put a better system in place and I am very happy we did so.”

And Lesley Sorbie, of Druce Marylebone, an estate agent in London, the UK city at the epicentre of property money-laundering deals, agrees: “Outsourcing has been one of the best decisions we have made. It has enabled us to rest easy.”

However, despite the best efforts of some property firms to invest in the latest AML technology, the sector still finds itself at the sharp end of money-laundering in the UK.

Experts at Transparency International UK estimate that £6.7 billion of suspicious funds have been invested in UK property since 2016.

The reasons for this are, of course, complex. But part of what continues to attract criminals to the property industry is undoubtedly its slow adoption of electronic verification.

And, while it is easy to have sympathy for firms who are unwittingly caught out by increasingly high-tech criminals, those which do not protect themselves with robust AML technology have to understand that they are opening themselves – and the UK - to being complicit in some of the world’s worst crimes.

*Collette Allen is Chief Operating Officer at SmartSearch

  • Michael Day

    Digital ID may well be a straightforward way to handle the vast majority of U.K. based ID requirements. Agents should be using a digital provider as they need to undertake PEPS and sanctions checks and all of the decent providers have access to the live datasets.

    Moving forward once the Digital Trust Framework is in place then we may not have the issue of ID being required several times by several participants in the process.

    What however never gets mentioned by digital ID providers is that ID is only part of AML compliance - the other element is undertaking a risk assessment on the people and transaction they are undertaking.

    Knowing who someone is is a mandatory requirement but so is looking at the risk profile - for example a PEP automatically would be a higher risk and require greater vigilance.

    Ascertaining source of funds as part of that risk assessment is probably the most important element. Note I said source not proof of - every money launderer that has ever existed had the money - it’s where it came from that is key!

  • Andrew Stanton PROPTECH-PR A Consultancy for Proptech Founders

    Agreed Michael, with the DTF moving forward at speed, we very much have been on this journey as a huge advocate and participant with government bodies and the stakeholders, as it is the cornerstone of a digital solution that should have been in place some time ago. The other point you make - the risk assessment is again an area that needs to be tightened up, I remember years ago dealing with a PEP, politically exposed person, and I thought it strange that they were perceived to be a higher risk group, not lower risk because they moved in circles with a bigger opportunity to commit criminality, strange really you would have thought they would pillars of the community.


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