AML Update: Channel 4 exposes Estate Agents as facilitators for money laundering
- AuthorSarah Canning
The recent Channel 4 documentary “From Russia With Cash” has shown 5 London estate agents turn a blind eye to a potential money laundering scenario when presented with a corrupt foreign purchaser at a property viewing. The programme heightens the focus upon all agents as the profession is seen as facilitating money laundering.
If you have yet to see the documentary, I would strongly recommend that you and your team watch it and honestly appraise your own systems. Would your organisation have acted any differently?
What happens exactly in the documentary?
The scenario portrayed by the undercover reporters consisted of a Russian Healthcare Minister visiting the UK with his girlfriend and during the visit they seek to purchase a house in London. Whilst viewing each property, the official discloses to the various agents that the money to be used for the purchase comes from the Russian government and backhanders he has received to top up his low government salary. As a result, the bogus purchaser insists that the purchase has to be with absolute discretion and requests help in hiding his identity.
How did the estate agents respond?
Without exception, all of the estate agents indicated that they could assist although some suggested it was inappropriate for the prospective purchaser to tell them anything further. Others, however, disclosed how the transaction could proceed with absolute discretion suggesting the lawyers to approach, what information to give the lawyer and how to use an off shore company to conceal the identity of the purchaser.
This has not helped the perception that the National Crime Agency already has of the estate agency profession. Having been gatekeepers for law enforcement, the estate agents are now viewed as part of a growing problem. A paper written by Deutsche Bank this year showed that £1bn a month of unrecorded capital comes into the UK and much of that finds its way into the London property market. Most of the money was found to be from Russia. Further figures on corrupt cash produced by the NGO Transparency International indicated more than 36 000 properties in London had been bought through off shore companies with a high proportion purchased anonymously to cover up the source of funds.
Where does this leave the UK property industry?
The global Financial Action Task Force (FATF) are due to visit the UK and assess the effectiveness of our regulatory compliance. With many experts commenting upon London as the capital of money laundering, it could prove an uncomfortable visit and so we can expect regulators to tighten their controls. The problem is not isolated to London and the onus is on all of the regulated sector to ensure that their AML compliance is effective.
If you have any queries regarding your AML compliance, we are able to help. We shall also be running a course for Estate Agent Money Laundering Reporting Officers and Deputy Money Laundering Reporting Officers shortly. If you would like to register an interest in the course and receive more information, please let me know by commenting below or emailing me on firstname.lastname@example.org.