Criminals working across borders, a globalised banking system, super-fast digital money transfers and crypto currencies. All these have made money laundering easier, faster and more international.
This claim is being made by Michael Day, a former Connells executive who has carved out a niche in the industry as one of its premier trainers.
He argues that it doesn’t matter how much wealth a criminal amasses, or the route it takes to their bank accounts; without being laundered this dirty money is hard to spend. It’s why they are attracted to property; their dirty money is converted into a high-status asset.
Research last year by Landmark Information revealed that only 16 per cent of agents fully understood AML regulations and that only 38 per cent had an AML reporting officer in place.
But Michael is keen to emphasise that estate agents are on the front line of the fight against dirty money, and that they need to comply with the law through registering for supervision with HMRC and flagging up suspicious activity.
Because most estate agents work daily at the coalface meeting clients, I believe that if they look close enough most can smell when something’s not right”.
Whether they’re new to the business or seasoned AML reporting officers, his key message remains the same despite the changing legislation; risk assessment should be the highest priority.
Or to use Michael’s straight-forward language, does the client in front of them ‘stack up’ in their eyes?
“It’s all about looking at someone, asking the right questions, having the correct procedures in place, but also estate agents need to use their sixth sense,” he says.
“Because most estate agents work daily at the coalface meeting clients, I believe that if they look close enough most can smell when something’s not right”.
He also reminds agents that although they don’t handle the money, they are in a key position within the transaction. They see the client when the house goes on the market, and are usually the first person to talk to a buyer before a lawyer or a lender is involved.
“Either you won’t get the right answers, or something won’t stack up. For example – a buyer who insists on dealing via a third party,” he says. “But the biggest issue when dealing with a buyer is where is the money coming from,” he says.
But the biggest issue when dealing with a buyer is where is the money coming from”.
“I get a lot of agents who tell me they’ve got ‘proof of funds’ and that they saw a copy of a bank statement with £1 million in it, but they haven’t looked at when the funds went in or out, and where they came from”.
Michael understands the difficulties faced by estate agents who may be suspicious of their client; to file a SAR about a vendor or buyer may put a sales commission at risk. But it could also be allowing a money launderer to slip through the net.
“It’s the law of the land,” says Michael. “And if they have the correct processes in place and follow the procedures, then getting AML right is straightforward and easy,” he says.
Michael has had several estate agents file an SAR recently. This includes an estate agent who noticed that a solicitor in an ongoing transaction had been replaced without any reason given. After the original solicitor refused to speak to them and the new conveyancer appeared to be using a personal email account, the estate agent submitted a SAR.
The second involved an individual who visited an agency and made a cash offer for a property but, when challenged on the source of their wealth, was hesitant. They subsequently said that the money came from dividends from a business. But enquiries proved the individual was not a shareholder in the company and the transaction was flagged within a SAR.
“Both these cases highlight how agents mustn’t just rely on checking people at the beginning of a transaction; they need to keep an eye on everything during the whole process as the sale progresses,” says Michael.