REVEALED: Most common anti-money-laundering ‘red flags’
New data from Thirdfort reveals the most common reasons for red flags to appear during AML Source of Fund checks.
Not having a mortgage has been revealed as the most common red flag to appear during anti-money laundering (AML) checks, new data from Thirdfort shows.
The client due diligence platform completes around 20,000 Source of Funds (SoF) verifications via the app every month and has shared the top five types of red flags that arise during this process.
Not having a mortgage is at the top, accounting for 22%, meaning that the buyer is not using a mortgage to buy the property. This is followed by the buyer receiving a gift to either partially or fully fund a purchase, accounting for 20% of cases.
Both of these are considered red flags as they indicate a higher risk of money laundering as the buyer may be using illicit funds outside of what’s in a bank account to buy the property.
Also in the top five is overseas funds, a high cash deposit and frequent cash deposits.
Olly Thornton-Berry, co-founder and managing director at Thirdfort, said: “While such red flags do not necessarily indicate money laundering or fraud, property professionals may need to undertake enhanced due diligence and request additional evidence to support the transactions and ensure they meet their regulatory requirements.
“By using Thirdfort’s Source of Funds tool, conveyancers and estate agents can ensure that they do not miss such red flags, and they gather additional relevant evidence quickly and securely.”
Source of funds tool
Thirdfort’s Source of Funds tool enables buyers to provide information and evidence relating to the funds used to purchase a property quickly and securely. Buyers complete a flexible questionnaire through the app capturing information, including common fund types such as mortgages, savings and gifts and less common examples like cryptocurrency.
The app prompts buyers to provide documentary evidence to reduce the back-and-forth with the professional advisors. Finally, the app asks buyers to provide bank statements using open banking, instantly providing the data and insights professional advisors need to verify their client’s source of funds.
Once the data is analysed, Thirdfort also highlights common red flags to property professionals, which, in addition to the above, also include if the buyer’s declared savings exceed the savings in their account and when the median value of the cash deposits made to the buyer’s account exceeds £500.
