The scale of illicit funds funnelled through the UK property market is staggering, with estimates suggesting that billions are laundered annually.

Highlighting the sheer scale of the problem, in one recent high-profile case, an Azeri tycoon built a property empire worth £50 million, via an “extraordinarily complex” money laundering operation.  

Estate agents play a critical role in safeguarding the integrity of the property market. However, keeping up with the various anti-money laundering (AML) responsibilities can be challenging in an industry notoriously pressed for time. Nevertheless, compliance is not optional, and a failure to meet the specific obligations placed on estate agents could be a criminal offence. So, how can agents combat dirty money and stay on the right side of the law? 

Understanding the scale of the problem  

The UK’s money laundering problem is significant, especially in London. Indeed, “nearly 40% of the dirty money in the world is going through the City of London and other crown dependencies”. According to one report: 

• Over 18,000 offshore companies owning nearly 52,000 properties in England and Wales have either ignored the law requiring them to declare their ownership on the Register of Overseas Entities (ROE) or have submitted information which makes it impossible for the public to find out who owns them. 

• Over 4,000 companies are held by trust arrangements, making it difficult to determine who is behind them.   

London has some of the highest property values in the world, making it an attractive market for criminals seeking to launder large sums of money through single transactions. And, while the UK has stringent AML regulations in place, loopholes and gaps in the system make it easy for criminals to exploit.  So, what can estate agents do?  

Estate agents and AML  

There’s no question that more needs to be done at a regulatory level if the UK is to stand any chance at combatting the UK’s dirty money problem, but there are things agents can do, including:  

• Register: Estate agencies must register with HMRC for AML supervision. It’s a criminal offence to trade as an estate agency business without being registered. It is also a criminal offence to trade if your registration with HMRC has been cancelled. 

• Know Your Customer (KYC): Conducting thorough background checks on all clients is essential. This includes verifying their identity and understanding the source of their funds and wealth. 

• Enhanced Due Diligence (EDD): Agents must conduct more detailed investigations for high-risk clients, particularly those from jurisdictions with a high risk of money laundering.   

• Monitoring suspicious activity: Being vigilant for red flags such as clients unwilling to provide information, unusual payment methods, or transactions significantly above market value is a must.  

• Reporting suspicious activity: Agents should report any suspicious activities via a Suspicious Activity Report (SAR). 

• Staff training: Regularly training staff on AML regulations and the latest money laundering techniques helps to keep everyone vigilant and compliant.  

• Process: Ensuring your agency has robust internal policies and procedures in place will help to detect and prevent money laundering. 

• Technology: Advancements in technology provide powerful tools for estate agents to combat money laundering. AML software can automate many aspects of the due diligence process, reducing human error and increasing efficiency. 

Even with all of the above in place, achieving AML compliance can feel like an uphill struggle. Or, according to our friends at Armalytix, like “trying to plug holes in a dam”. Criminals are becoming increasingly savvy and continually seek to exploit weak points in the property process.  

Despite the challenges, agents must play their part to protect against illicit exploitation – not least because doing so protects them from fines, reputational damage and criminal charges.    

Speak to our specialist compliance advisers today 

Providing sound knowledge, practical solutions, and AML training, we help our estate agent clients understand the regulations and industry requirements and adapt their processes and procedures accordingly. 

Find out more about our Estate Agent AML Support Services, or get in touch today for an initial chat about how we can help. Email [email protected] or call 020 3051 2049