The impact of money laundering is significant as it underpins and enables most forms of organised crime, allowing crime groups to further their operations and conceal their assets. The National Crime Agency (NCA) estimates that there could be hundreds of billions of pounds laundered in the UK annually.
As such money laundering continues to be a high business priority across all sectors, even more so for those involved in the buying and selling of property, with the property sector remaining particularly vulnerable due to the large amounts of money which can be laundered in a single transaction.
So, what’s being done to combat money laundering? The Legal Services Affinity Group (LSAG) is made up of both regulatory and representative bodies for legal services in the UK. It has produced guidance on the anti-money laundering (AML) regulations, which has been approved by HM Treasury and is the source of official guidance for those in the legal sector.
In December, LSAG published an important update to its anti-money laundering (AML) guidance. Unusually, they took the step this time of publishing intended changes to the identification and verification aspect of client due diligence due to just how fundamental this aspect of AML control is.
These changes will only come into effect if HM Treasury approval is granted. The proposed changes will ensure that not just a client’s identification is verified but that government documents verifying the name, address and date of birth of the beneficial owner are also supplied. These heightened checks aim to clamp down on properties being purchased by an ‘agent’ who simply fronts the transaction but isn’t the beneficiary of it.
In January, schedule 3ZA, which was the old statutory list of High Risk Third Countries (HRTC) was repealed. HRTCs will now be defined as those who are subject to increased monitoring (‘grey list’) or to a call for action (‘blacklist’) by the international Financial Action Task Force (FATF).
The FATF is the global money laundering and terrorist financing watchdog. It sets international standards that aim to prevent illegal activities and the harm they cause to society. It’s incredibly important that all actors involved in property transactions be they lenders, conveyancers or estate agents keep themselves abreast of these changes.
Sector risk assessment
As a regulator, it is our duty to assess the money laundering risk in the sector we regulate – the legal sector. Annually, we run this exercise to help us and the practices we regulate identify and address changing risk effectively. This year saw us introducing four additions to the risks for the legal sector:
AML toolkit
Our AML toolkit is available to anyone through our website and provides guidance and advice to CLC regulated firms on how to remain compliant with up-to-date AML regulations. There are a number of resources such as an AML risk assessment template, that are designed to help practices meet AML requirements.
While money laundering does remain a threat to businesses, it’s important to beware of the range of indicators that can help identify potential money laundering, and the requirements on businesses to ensure they adhere to the most current AML guidance.
Remember, if you become suspicious of money laundering activity you have a duty to raise it with your nominated money laundering officer (MLO) who can advise on submitting a suspicious activity report (SAR) through the National Crime Agency’s new SAR portal.
Stephen Ward is director of strategy and external relations at the Council for Licensed Conveyancers
