The property market in the UK, like elsewhere, is not spared from financial fraud. But in order to reverse the tides, estate and letting agents must ensure they put in place effective digital ID verification and due diligence systems.
This is according to Tim Barnett, Chief Executive Officer of Credas Technologies, a Cardiff-based digital ID verification and compliance software provider.
His remarks, shared in a news release, come in the wake of findings of the Suspicious Activity Reports (SARs) Annual Report 2023-24 by the UK Financial Intelligence Unit (UKFIU) which indicate that the property market in the UK remains a major target for financial fraudsters. Going by the report, 1,044 SARs were submitted by estate and letting agents in 2023-24, a 9.9 percent increase from the year prior, although this is said to represent only an insignificant number of total SARs.
According to Barnett, estate agents who want to effectively tackle financial fraud challenges in the ever-evolving property market, must make sure they adopt the right anti-money laundering (AML) measures.
“The latest SARs report shows progress, but estate agents must do more. Criminals continue to exploit the property sector, and while reporting has increased, the numbers remain worryingly low. With £240 million in criminal assets denied last year, the financial crime risks in real estate are clear,” Barnett said.
He therefore advises that “estate agents must take their compliance obligations seriously, ensuring they have robust identity verification and due diligence processes in place,” given that “the property sector remains a key battleground in the fight against financial crime.”
Last year, Barnett also share insights on how the UK can strengthen its AML regulations. Early this year, the UK also announced a timeline for the implementation of new measures to better tackle money laundering and corporate fraud.
Meanwhile, in a recent blog post, Credas also made the case for agents to have robust AML check mechanisms in place for the property industry in the UK which has evolved to become one of the most financial crime-prone sectors. For example, a Transparency International UK analysis reveals that about £5.9 billion worth of suspicious money was used to purchase property in the UK through Overseas Territory companies.
Credas argues that because of the high risk of fraud in the sector, estate agents have the obligation to adopt AML and customer due diligence and compliance processes in line with the UK’s Money Laundering Regulation 2017. Such AML checks, he points out, should include proof of identity for the client, source of funds, and proof of ownership for the person selling the property.
Going further, the firm highlights the necessity for estate agents to conduct AML checks for several critical reasons, namely to ensure regulatory compliance, enable agents identify and prevent illegal activities such as money laundering, fraud or terrorism financing, protect their business, and to help prevent organized crime, among other reasons.
The company indicates that among its services, it enables real estate and letting agents seamlessly carry out the required anti-money laundering checks – from ID verification to sanctions screening – when selling a house.
Credas believes respecting AML rules is crucial for the property market. There have been reports of some agents being sanctioned for non-respect of AML rules. In one instance, at least 144 agents were sanctioned for offences committed between October and December 2023, with imposed fines of between £1,250 and £52,000.
Recently, the Council of Europe announced that in collaboration with the Financial Monitoring Center, the Ministry of Justice, the Chamber of Advocates and the State Revenues Committee of Armenia, it held a capacity building event to encourage compliance with AML procedures. The event brought together legal professionals, real estate brokers and gambling service providers in that country.
In order to better check the flow of funds into the global real estate market, Transparency International says it collaborated with the Anti-Corruption Data Collective (ACDC) to develop the Opacity in Real Estate Ownership (OREO) Index, an Index that evaluates the ideal framework to protect real estate markets from suspicious funds.
Article Topics
AML | Credas | digital identity | financial crime | fraud prevention | ID verification | identity proofing | KYC | real estate