Conveyancers Complicit In UK’s Money Laundering Woes
421 properties worth over £5 billion were bought in the UK using suspicious wealth.
Stakeholders responsible for the prevention of money laundering through property transactions have been accused of struggling to stem the flow of illicit money, according to the recent report ‘At Your Service,’ compiled by Transparency International UK.
Of the total number of properties purchased using suspicious wealth, a third (138) were sold without the intervention of law enforcement agencies with an overall property wealth of £660 million.
67% (283 properties) of those with access to suspicious funds continue to own property in the UK, worth in excess of £4.4 billion.
Only a fraction (£220 million) has been seized by the National Crime Agency (NCA) using increased powers from Unexplained Wealth Orders (UEO). Although the report claims this figure should be significantly higher, pressures on regulatory bodies is restricting further seizures.
Whilst looking at the involvement of solicitors in property acquisition, the report analysed 293 property transactions ‘involving suspicious wealth relating to politically exposed persons (PEPs) from high-corruption-risk jurisdictions or those charged or convicted with, or alleged to have committed, corruption offences.’
The report estimated the property was worth over £4.4 billion.
Overall, 56 law firms were involved in 132 of the transactions that were worth more than £3.2 billion. The firms either offered conveyancing services or formed and maintained the entity used to make the purchase.
The law firms ranged from major international businesses to those employing less than 10 members of staff.
The report also claimed that 87,000 properties in England and Wales alone are owned by companies based in secrecy jurisdictions which significantly reduces the information available about the beneficiaries.
Of this total number, the report used Land Registry data on property owned by offshore companies to find the 56 law firms involved in 4,200 further transactions involving ‘secretive corporate vehicles’ which could be using property to launder money.
Overall, the report found inadequate systems for anti-money laundering regulation (AML) supervision.
In particular, there was a perceived inconsistency in the quality of supervision across different bodies and leading to ineffective regulation; potential conflicts of interests from regulators and insufficient civil sanctions deterring law firms from taking a stricter stance on AML procedures and approaches.
The report recommends regulators are given additional sanctioning powers to offer meaningful and credible deterrents.
Police departments and AML regulators were also encouraged to penalise breaches of the Money Laundering Directive (MLD) 2017 with severe criminal prosecution.
A lack of adequate resourcing and investment on enforcement agencies is placing too much pressure on the current system. The National Crime Agency’s financial intelligence unit, who process and record suspicious activity reports (SARs), was seen to be suffering from ‘seriously concerning’ understaffing. It was recommended that further investment in IT improvements and more staff could help create a more efficient system which would ensure more illicit funds are captured before a property transaction completes.
Do regulators need more support to create an adequate system to both support and sanction the conveyancing sector in the fight against money laundering? Are conveyancers doing enough to stem the flow of illicit money entering the UK property market?