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Estate agents must do more to stop mortgage fraud, warns senior legal expert

Council member of The Law Society says too many estate agents don't understand their AML obligations.

Nigel Lewis

Estate agents need to do more to prevent mortgage fraud by being more aware of the riskiest properties and transactions, and having a better understanding of the anti-money laundering (AML) regulations, leading property lawyer Peter Rodd has told The Negotiator.

Peter, who is a Council member of The Law Society and works for Kent legal firm Boys & Maughan, says too few agents fully understand their anti-money laundering (AML) obligations and that if they did, being one of the best-placed stakeholders in the conveyancing process, this in turn would help reduced the number of mortgage fraud cases.

“If estate agents were more aware of what signifies a high-risk transaction – i.e. high value, unencumbered, empty or tenanted properties particularly where the seller is looking for a quick sale and prepared to accept a discounted price for the property, then we might be in a better place,” says Peter.

“Good knowledge of the AML regulations plays a part in preventing fraud, so estate agencies ought to be trying to do their basic AML checks properly, or some extra ones, and although it’s not going to be a foolproof solution, if the various stakeholders work together better to share information then it might reduce the risk of similar cases happening.”

The way the market operates also troubles Peter – agents only get paid when a sale goes through. This means agents are disincentivised to flag up any concerns bout a transaction and risk it falling apart.

He says that recent cases to go through the courts have highlighted how agents could do more to prevent fraud taking place, despite all of them having different outcomes for the defendants, one of which included an estate agent.

These include P&P Property vs Owen, White & Caitlin and Winkworth; Purrunsing vs A’Court & Co & Nor – a high profile case because two of the fraudsters were a mother and daughter – and Miscon vs Dreamvar.

“The real difficulty is that you have so many stakeholders in the conveyancing process – which can include two conveyancers, an estate agent, mortgage broker and lender,” says Peter.

“And if you look under the comments from the judge particularly in the P&P case, he was not terribly complimentary about the work which the estate agents did in terms of their AML obligations.”

“Estate agents are really in the best position to spot the fraudsters because in the majority of cases they will speak to both the seller and the buyer and see the property.”

Peter says he thinks the recently updated AML regulations, which came into effect last week, will tighten things up a bit, which will mean estate agents will really need to understand their obligations under the AML regulations and the extent to which they should carry them out properly.

“I have spoken to various estate agents about AML and they’re not always terrible clued up, and in an ideal world, estate agents should be better trained to understand the risks involved in the process and their obligations,” he says.


June 30, 2017

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