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Following a Channel 4 documentary, estate agents must safeguard their reputation and review their anti-money laundering processes

Fraud & Verification

Following a Channel 4 documentary, estate agents must safeguard their reputation and review their anti-money laundering processes

Following the recent Channel 4 documentary, “From Russia with Cash”, the programme has highlighted serious concerns about how easy it is for illegitimate funds from abroad to be placed into the UK housing market.

It is clear from the documentary that if you are an estate agent and you want to safeguard your reputation and prevent money laundering in the property market it is worth reviewing your anti-money laundering processes.  You must make sure as a business you can;

  • Demonstrate your own ‘due diligence’
  • If you can’t comply with the customer due diligence measures, you must not carry out a transaction with or for the customer and not establish a business relationship or transaction with the client.
  • Any relationship must be terminated, and you must consider whether to make a suspicious activity report.
    • Verify a customer’s identity and where applicable the identity of a beneficial owner, before entering into a business relationship or an occasional transaction.

The findings of the documentary have also been discussed in the House of Commons and an Early Day Motion has been called on the Land Registry to require greater transparency for overseas company purchases of property in London.

For those who didn’t see the programme, an undercover reporter poses as a Russian government minister (Boris) to investigate increasing evidence that London’s property boom is being partly fuelled by criminals laundering money.

  • ‘Boris’ and ‘Nastya’ (his girlfriend) were seen looking at a range of high value properties in central London.
  • During their discussions with various estate agents, the representatives were told that the source of the funds, claimed to be from the Russian Government, was not legitimate.
  • For a well-trained estate agent, this would have been a trigger to look into the individuals’ identities much further.

London is now commonly described as one of the money laundering capitals of the world, due to the influx of funds obtained through the process of criminal activity, which is then channelled into the UK by purchases of expensive property. Whilst estate agents and legal firms have to check all of their vendors, they are also checking their potential buyers as this is often a key indicator of anyone using a fraudulent identity.

The HMRC, who has regulated estate agents since 2014 (Money Laundering Regulations 2007: the supervision of Estate Agency Businesses), has increasingly been conducting site visits to firms to check the strength of the due diligence processes. With the spotlight moving to the estate agency and legal sectors following the documentary, it is likely that these site visits will increase (with the SRA also making a number of visits too).

For more information please contact jenna.douglas@callcreditgroup.com or +44 (0) 113 220 1616

Author: Jenna Douglas

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