Estate agents operating in the prime property market are opening the door to much more than a premium-priced home, if they are not up to date with the latest anti-money laundering (AML) regulations.
A government report has revealed half of estate agents advertising properties for sale for £5 million or more last year had not registered for money laundering or paid their annual fees.
Not only is this against the law, but this staggering statistic highlights an appalling lack of security at this end of the market.
These are not only superprime properties but also superprime targets for money launderers looking for a way to process their ill-gotten funds.
Non-compliant estate agents are effectively rolling out the red carpet for fraudsters.
Of course, there are more layers of ID verification and AML protections in place further into the house buying process, with lenders and conveyancers.
But estate agents represent the first line of defence and are quite literally opening the door to would-be criminals through non-compliance.
The report also highlights a lack of training in AML procedures in these businesses which is unacceptable at a time when the threat of money laundering and financial fraud has increased significantly in 2020 due to the coronavirus outbreak.
With regulation being introduced relatively recently in the estate agent sector, it may be no surprise that compliance isn’t complete across the industry.
But as the National Risk Assessment report itself says, that makes property purchases an attractive method to launder illicit funds due to, ‘the large amounts that can be moved and the low levels of transparency of ownership or source of funds’.
This report should be a wake-up call for estate and lettings agents particularly at this time where they could find themselves subject to punitive fines and potentially criminal proceedings for breaking the law.
Everyone knows the pressure that has been on the sector since the stamp duty holiday was announced and the focus has been on making sales. Things like AML compliance go to the back of queue at times like this, but actually it should be right at the top of the priority list for 2021.
Businesses in the property sector need to ensure they are compliant with the law and secure against the threat posed by money laundering.
The best way to do that is to move away from manual document checks, to electronic verification (EV), which is not only more accurate, but much quicker and Covid-secure because it can be done remotely.
These electronic solutions remove high cost and long delays from existing manual processes ensuring your business remains compliant at all times. Also, with solutions available via a web browser or API connections, businesses can be up and running and operational within 24 hours.
With the new year upon us, we urge all businesses who haven’t already done so in the property sector, to resolve to make 2021 the year of the EV switchover.
Martin Cheek is MD of AML compliant platform Smartsearch.