Land Registry data shows that the level of property fraud – which is when criminal attempt to sell homes that don’t belong to them – has doubled over the past 10 years and more than quadrupled in terms of value from £7 million to £25 million between 2013 and 2017.
And recent figures from fraud prevention service Cifas show that mortgage fraud by production of false documents increased by 14% in the first 6 months of 2019, while fraud by submitting altered documents rose by 32% or nearly one-third.
Two weeks ago we reported on a property fraud case that was said to have ‘struck at the heart of conveyancing’ because the fraudster involved had been able to easily dupe both the conveyancer and estate agent involved using a fake passport.
We asked two anti-money laundering companies, who are at the heart of the property industry’s attempts to fend off illegal activity, to give their view.
Jerry Walters, MD of Financial Crime Services
“There is definitely an element of truth in these reports and it’s certainly a significant problem,” he says.
“From first-hand experience I have seen cases where organised criminals have hijacked the identity of property owners to acquire mortgages and property titles without the knowledge of the registered owner.
“These are sophisticated and complex crimes which make use of false ID’s – everything from passports to wage slips. Such cases are real and highlight a distinct lack of customer due diligence undertaken by lenders, letting agents and conveyancing solicitors alike.”
Martin Cheek, MD of AML specialist SmartSearch.
“Fake documents are increasingly difficult to detect, which is why it’s more important than ever that firms take a more sophisticated approach to ‘Know Your Client’ and due diligence processes. There has never been an instance of mortgage fraud where electronic ID verification has been used.
“We have argued for a long time that electronic verification (EV) should be mandatory – it is demonstrably more secure than manual checks and is also quicker and more cost-effective for firms.
“New EU money laundering regulations due to be implemented in January stop short of making EV mandatory, but it’s clear there’s a big push coming from the EU and UK authorities on money laundering, so this is the next logical step.”