Money Laundering in Estate Agency

Money laundering is how criminals change money and other assets into clean money or assets that have no obvious link to their criminal origins.

Money laundering can take many forms, but in the property sector it often involves:

  • buying a property asset using the proceeds of crime and selling it on, giving the criminal an apparently legitimate source of funds
  • criminals may also hide behind complex company structures and multiple accounts to disguise the real purpose of a transaction and hide its beneficial ownership
  • a more direct method may involve paying an estate agent or auctioneer a big deposit and reclaiming it later
  • the money for a purchase may be the result of mortgage fraud

Tax evasion is a criminal offence that can lead to money laundering. For example, the sale price of a property may be set below the Stamp Duty threshold by manipulating the price of furniture and fittings. In a commercial setting, there may be underreporting of business turnover.

Responsibilities of Senior Managers

Senior managers are personally liable if they don’t do everything they need to do to protect their business from money laundering and terrorist financing.

You’re a senior manager if you’re a director, manager, secretary, chief executive, member of the management committee or someone who carries out those functions, or any partner in a partnership or a sole proprietor.

Senior Managers Core Obligations

They must:

  • identify and manage effectively, the risks that their businesses may be exploited to launder money or finance terrorists
  • take a risk based approach that focuses more effort on higher risks
  • appoint a nominated officer to report suspicious activity
  • devote enough resources to deal with money laundering and terrorist financing

Senior Managers: Action Required

  • carry out a risk assessment identifying where their business is vulnerable to money laundering and terrorist financing
  • prepare a policy statement and procedures to show how the business will manage the risks of money laundering and terrorist financing identified in risk assessments
  • make sure there are enough trained people equipped to implement the policy adequately, and systems to help them
  • monitor effectiveness and make improvements where required

More Information on How to Comply Money Laundering Regulations 2007: supervision of Estate Agency Businesses

Topic: Sales

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