Criminals who launder large sums are usually fairly sophisticated, often belonging to a criminal network. The first thing agencies need to be alert to is obvious signs that something ‘doesn’t feel right’.
Do you know who you are doing business with and where the money is coming from? It sounds simple, but it is a fundamental question for agents who want to avoid facilitating money laundering.
It is important to have in place a solid internal compliance framework and employees with a good understanding of the risks involved and how their role exposes them to that risk. Practical steps to consider include:
- Following up-to-date government guidance and legislation and making decisions based on that information. Are you aware of the increased risk factors to lettings and estate agencies following the UK government risk assessment in December 2020?
- Knowing where the risks in your business lie. Identify markets, offices and teams that have the greatest exposure to high-risk transactions.
- Ensuring that your customer due-diligence measures are up to scratch. Do you identify and verify customers and their beneficial owners? If this process is automated or done externally, does a person review or analyse the content? Be alive to the increased risks that come with complex offshore structures and foreign investment. ‘Less haste, more speed’ is a good rule to follow.
- Performing enhanced due diligence and introducing monitoring if a deal is higher risk.
Being risk-aware and compliant need not involve substantial costs, but make sure you focus more resources on potentially problematic deals. Failing to monitor ongoing business relationships makes it easier to fall victim to initially plausible deals, which then lead to progressively riskier transactions. Criminals are manipulative and will develop and exploit relationships with agents who are a ‘soft touch’ and do not apply the same standards of scrutiny as time passes.
James Millward is a senior associate in the corporate crime and investigations team at Brodies