Purchasing property in the UK is a common method used by serious organised criminals to launder the proceeds of criminal activity. The sheer size of the property market in the UK and the high value of property assets means that extremely large amounts of criminal funds can be ‘cleaned’ in a single transaction.

OUR WORK

In January 2019, NAEA Propertymark joined the UK Government’s task force to tackle economic crime. The new Economic Crime Strategic Board led by the Home Secretary and the Chancellor sets priorities and scrutinises performance against the economic crime threat, which is set out in the Serious and Organised Crime Strategy. More info...

What are we calling for?

FIFTH MONEY LAUNDERING DIRECTIVE

Landlords and letting agents should be included within the Money Laundering Regulations to reduce the risk of cash payments being used to ‘clean’ dirty money. The Government should remove the EUR 10,000 monthly rent threshold and set this at zero to create consistency and cover all tenancies let in the private rented sector.

SUPERVISION

The role of professional bodies should be expanded to take on Anti-Money Laundering supervision rather than relying upon HMRC to act as a regulatory body for several diverse sectors. Self-regulatory bodies acting as supervisors are best placed to understand their sectors and gather information about developing risks and anti-money laundering methodologies.

IMPROVED GUIDANCE

Alongside guidance on filling in a suspicious activity report, guidance from HMRC should include real-life examples from estate agents who have given reports to the National Crime Agency (NCA), to illustrate the process and explain the steps required. This would help to better explain to staff and MLROs about how long the process can take and what the outcomes can be.

REGULATE THE SECTOR

Whilst the property sector remains largely unregulated, and without minimum standards, the industry is vulnerable to attack.

Increasing the Number of Suspicious Activity Reports (SARs)

Estate agency staff must raise an internal report where they know or suspect another person is engaged in money laundering (whether a transaction has taken place or not). Propertymark is working with the National Crime Agency (NCA) to educate agents about when a SAR is necessary and the consequences for failing to do so.

Register of overseas entities

NAEA Propertymark has long called for a public register of overseas beneficial owners. Property is a high-risk sector for laundering money, with the true identity of owners often hidden through the illegal use of overseas shell companies. We believe:

• The Register should work alongside the requirements of the Money Laundering Regulations.
• The Government should seek to ensure that the Register does not operate on a self-certified basis.
• For the Register to be effectively administrated and monitored, Companies House needs to be properly resourced.

Giving evidence to the Treasury Select Committee

Following our written submission to the Treasury Select Committee’s Inquiry into Economic Crime, NAEA Propertymark Chief Executive Mark Hayward gave oral evidence to MPs. Despite a ramping up of compliance activity since the introduction of the Money Laundering Regulations 2017 Mark Hayward argued:

• Agents were not given sufficient time to adapt to the changes.
• De-risking by banks is preventing some estate and letting agents from opening client accounts.
• Fines for those agents flouting the rules are not publicly being made known.
• Only interim guidance was available.
• There is a need for better guidance for reporting suspicious activity.
• The rules do not cover letting agents.
• There needs to more tools to help regulated agents understand enhanced due diligence.
• The public register of overseas companies owning property in the UK must be set up as soon as possible.
• There is no single Act of Parliament that sets out the UK financial sanctions regime.

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