Money laundering through property is a major problem, especially in London.
If you’re a solicitor involved in property transactions, you have duties under the Money Laundering Regulations 2017 to:
- identify and verify the identity of your client
- identify and take reasonable steps to verify any beneficial owners of your client
- get information on the purpose of the client’s business relationship with you
The last requirement means more than just finding out that a person wants to sell a property. It includes looking at all the information in the retainer and deciding if it’s consistent with a lawful transaction or not. This may include independently establishing whether the client is the owner of the property they want to sell.
Make sure you monitor the retainer to remain alert to suspicious circumstances that may indicate money laundering.
For more information on your obligations under the Money Laundering Regulations 2017, read our practice note on anti-money laundering. See section 4.6 for a further explanation of what is required in relation to ongoing monitoring.
Warning signs of money laundering
Warning signs of money laundering through the property market include:
- cash-only buyers
- an unusual sale price
- the buyer attempting to mislead a lender, for example by exaggerating the sale price
- payments from a number of different individuals or sources
- funds provided by one person and registration in another person’s name
- funds provided by unknown third parties
- transactions involving nominee companies or multiple owners
- sudden or unexplained changes in ownership
- direct payments between buyers and sellers
Challenging money laundering
Ask your client to explain the sources of their funds and check their explanation is valid. Remember that payments made through the mainstream banking system are not necessarily clean.
Read our guidance for conveyancers on how to comply with the:
Reporting suspicious activity
If you know or suspect a money laundering offence is taking place, you must make a disclosure to your firm’s Money Laundering Reporting Officer (MLRO).
If you are the MLRO and you know or suspect a money laundering offence, you must submit a suspicious activity report (SAR) to the National Crime Agency.
However, you should not submit a SAR if the information giving rise to your suspicion or knowledge is covered by legal professional privilege (LPP), unless the crime/fraud exception to LPP applies.
For more information on submitting a SAR see chapters 6 and 9 of our anti-money laundering guidance.
You may also reveal confidential information if reasonably necessary to defend yourself from a criminal charge or civil claim by your client, or to defend yourself if your conduct is under investigation by the Solicitors Regulation Authority (SRA) or the Solicitors Disciplinary Tribunal.
Your responsibilities under money laundering supervision