Are agents reporting money laundering suspicions? | AVRillo

Are agents reporting money laundering suspicions?

Tuesday 24 November 2015  / Ruth Montia

Money laundering

Transparency International are an anti-corruption campaign group and have released a report saying British estate agents reported only 179 suspicions of money laundering in a whole year.

The report covers many sectors of trading and its states the real estate sector in the UK is particularly exposed to this crime and corruption as it allows substantial sums to be held in the purchase of a single high-value asset and the funds can alternatively be reinvested later.

The report says “Our recent research found that over £180m worth of property in the UK has been brought under criminal investigation as the suspected proceeds of international corruption since 2004, which was described by law enforcement authorities as ‘only the tip of the iceberg.’”

Transparency International believe estates agents have one of the lowest ‘Suspicious Activity Reporting’ records of any industry. Between October 2013 and September 2014 there were just 0.05% reported which represented a decrease of 16.74% compared to the previous year.

The report suggests that the luxury new-builds in central London are most likely to be associated with money-laundering.

Other weaknesses it highlights in the UK are stated as:

“Chief among these is that AML regulation for estate agents only requires due diligence checks on the seller, not the purchaser. The regime relies on lawyers to cover any estate agency risks, which ignores the risk of complicit lawyers. Weaknesses also include the lack of recorded sale price by the Land Registry; the historic lack of regulatory sanctions for AML breaches; and low levels of awareness of AML responsibilities within the sector.”

The link between property purchase and offshore company secrecy was mentioned in the report saying “The UK’s official record of corporate landholdings, maintained by the Land Registry, shows that there are over 36,000 properties in London held by companies registered to offshore secrecy jurisdictions, both residential and commercial, representing an estimated 2.25 square miles of London property.

“More than 1,000 London properties are owned by overseas companies registered in unknown locations. The City of Westminster, Kensington & Chelsea and the City of London have the highest ratio of properties registered to offshore secrecy jurisdictions. In general, the higher the average property price in a borough, the more likely it is to have a relatively large number of properties registered offshore.”