One of the biggest obstacles in tracing proceeds of crime is that law enforcement receive few reports of suspicious customer activities that are related to real estate, and those they get aren’t always useful, according to Transparency International. Just 179 of the 354,186 reports filed in the year ending in September came from property brokers.
“For an individual estate agency, regular business with any high-net-worth individual can be very lucrative for the company and, therefore, there can be a lack of incentive to report of suspicions,” Maxwell said. “A similar risk arises in small practices in the legal and accountancy sector.”
Her Majesty’s Revenue and Customs, which regulates property brokers, has started making unannounced supervisory visits to property brokers to ensure they are carrying out proper due diligence including identifying the true owners, the tax agency said by e-mail.‘Back-Covering Exercise’
A big part of the problem is that the filings aren’t driven by a desire to genuinely police against money laundering, according to Dick Gould, joint deputy head of the proceeds of crime unit at the SFO.
Suspicious activity reports “are supposed to identify what is being laundered, and at the moment you get a lot of institutions, predominantly banks but not only banks, using it as a back-covering exercise,” Gould said.
Gould also said that while anonymity around property ownership draws suspicion, there are many high-net-worth individuals who own houses through trust funds and corporate structures for legitimate reasons. That can make it harder for law enforcement and the property industry to police.
“It’s really important we have effective collaboration and exchange of information between national financial intelligence units,” Toon said. “If we are seen to be a major money- laundering problem, then that undermines confidence in the U.K. as a place to do business.”