When you hear the phrase ‘organised crime’, what does it make you think of? Illegal gambling? Counterfeiting intellectual property? Drug trafficking? When it comes to the property industry, agents may find themselves encountering another form of organised crime – money laundering.
At the NAEA Propertymark conference in February, Richard Riley, Director of Economic Crime, Cyber and Anti-Corruption at the Home office, discussed the issue.
He said: “At the heart of serious and organised crime, there is a money issue, and criminals get involved because their motive is profit, and along with that come power, status, influence and image.
“Money laundering is present in almost every area of crime, and while some may think that it is a victimless crime, it is not.”
Property investment is a popular choice for criminals, looking to create a cover for their illegally earned income. Think Walter White and his car wash, from HBO TV show Breaking Bad – not only does it provide criminals with an explanation for their income, it allows them to establish themselves as an individual involved with the property sector in that location, providing them with a legitimate reason to be there.
It is imperative that estate agencies are registered with an anti-money laundering scheme. As stated on the Gov.UK website, it is a criminal offence to trade as an estate agency business, without being registered.
This law may also affect letting agents, if they offer estate agency services to landlords. If you and your agency only carry out lettings work, then you do not need to worry.
However, the EU introduced a change to anti-money laundering law last July, which may end up also affecting the UK, depending on the aftermath of Brexit. The Government has shown an interest in adopting the EU’s Fifth Money Laundering Directive, which would introduce a key change to agents dealing with high-value lettings.
This change will mean that estate agents who facilitate the letting of a property, where the monthly yield is €10,000 or more, will need to register with HMRC.
As a property agent, you need to stay alert, when dealing with transactions. You need to consider that, if you do not report suspicious activity, you might become associated with the crime.
If you suspect possible money-laundering activity, visit flagitup.campaign.gov.uk for help on how to submit a Suspicious Activity Report (SAR).