The Home Affairs Committee has called for “much stronger” supervision of estate agents to tackle money laundering.
In a report published today, the committee slams current supervision of the property market as “totally inadequate, and that poor enforcement has laid out a welcome mat for money launderers”.
The committee said that enhanced supervision must include both sides of the transaction – buyers and sellers.
Letting agents as well as sales agents should have responsibility and use the Suspicious Activity Reporting regime.
The report says: “At the moment it is far too easy for someone intent on laundering money to buy a property with their ill-gotten gains and rent it out in a very buoyant and robust letting market, and take in clean money in perpetuity.”
Letting agents would have to do due diligence when taking on new clients.
The committee also says that the online platform where Suspicious Activity Reports are logged is so overloaded as to be “completely ineffective”.
The ELMER system was designed to manage 20,000 reports a year, but is currently processing 381,882. The committee called for it to be replaced by a more robust system by the end of this year.
The committee was told that the UK and London in particular is particularly susceptible to money launderers not just because it is a global financial centre, but because of the lifestyle and culture.
One witness, Henry Pryor, said that last year there were 1.2m property transactions in the UK. Out of those 2.4m buyers and sellers, only 355 Suspicious Activity Reports were generated.
Pryor told the committee that the rules and penalties were “quite sufficient but it is woefully inadequately policed”.
He went on: “I would say that if, for example, the buyer of a property was the second son of a world leader in a country in the middle of South America – how does he have £8m to buy a flat in Mayfair? Personally I would be suspicious.
“But it does not seem that my professional colleagues are as sceptical as I am, which is unfortunate.”
Pryor also told the committee: “At the moment, we have the equivalent of a welcome mat out for anybody to come if you want to launder your money. I am afraid that school leavers would know how to do it.”
Other reforms that the committee wants to see include the creation of a specialist court, and assets to be frozen as soon as the money launderer becomes aware of the investigation. The committee notes: “Waiting for a conviction is far too late.”
Convicted criminals would not be allowed to leave prison until they had satisfied the confiscation order.
Comments (12)
Best report it to Boris he is now in charge of MI6.
Sorry, not sure why all the formatting data is showing with my comment. I have asked Eye’s tech to remove it.
you are clearly subversive……..and may even be a threat to the state………. some-one has clearly hacked your computer and a bot is monitoring your correspondence?
So we have become Agents for the State, as opposed to Estate Agents.
As letting agents we jump through so many hoops, and have so may roles, we have become transparent, we are Legionella competent inspectors, we are HMRC tax informers for UK and Non UK Landlords, we are smoke and CO alarm installers, we are prescribed information givers, we are How to rent guide guides and now in the most recent legislation we are Immigration Officers.
I’m sure our ex home officer minister and now PM has plenty more up her sleeve to add to our ever increasing roles.
In the meantime, not that I need any more job roles but I might as well apply for both head judge on Strictly and the England managers job.
Well… that was… something
Estate agents call for ‘much stronger supervision’ of MP’s
Estate agents rally round to tell the Government that they are paid to sell or let property and not to control our borders or police the property investment arena for money launderers as they do not deal with the monetary transaction.
Particularly as the Government favour the on liners. Should get interesting when buyers have to provide ID as they cannot pop into the on liners local branch!
You tell me, is money laundering more likely from sight of the original documents or a certified copy sent in the post?
Agents can also get fined £1000s for letting to someone without the right to reside in the UK. What about border control who are paid to police our borders. Are they fined for letting them in?
Well said Thomas. Of course some onliners can be as good or better than some traditionals.
But in the acceptance that there are good and bad in both camps. The ultra new brilliant destructive agency/ or low cost list models (that are often cr@p) devised by some tech kid nd a wanna get rich VC do need to come under fire as best agents abide by. That includes the fines when things go wrong.
National online distant agents surely must be looked at as a higher risk.
Government and Treasury need to look closer at new proptech’s looking to by pass agents and connect sellers and landlords with buyers and tenants.
If tech’s want to play agents and take the cream, then they should play the game fully under agency rules and regs.
What about supervising the banks and lawyers who handle the money? Estate Agents don’t touch the buyers cash. Yet another appalling example of how inept some Committees can be. They can’t keep their own house in order so how can they possibly have the gall to spout trash about a business of which they have no expertise whatsoever.
JWVW – you’re very right, agents don’t handle funds generally. But government and Treasury included res agents as another layer where agents might observe a instance that might be cause for concern.
Long, angry rant deleted…., what is the point?
The Labour government ignored this from 2004, the Conservatives ignored this from 2010, in 2012 HMRC wrote to say detection of money laundering and tax evasion was “of no interest”. In 2015 Land registry told Ros Renshaw “he doesn’t understand the data”
Let’s hope Mrs May, Mr Hammond and Mr Lewis are finally prepared to listen.
Need to replace Lewis with Clarkson, Just does not work without him 😉