ECSH53125 - General risks in the estate agency business sector

UK property purchases are an attractive method to launder illicit funds due to the large amounts that can be moved through or invested in the sector, and the low levels of transparency of ownership or source of funds. Purchases made by corporate structures or trusts based in secrecy jurisdictions pose the greatest level of risk, due to the difficulties in determining the ultimate beneficial owners.

Criminals often purchase properties as long-term investments and to release their criminal funds. The high amounts of money that can be moved in one transaction and the appreciation in value, along with the enjoyment criminals can get from high-end properties, makes them very attractive to criminals.

Common risks throughout the sector my present as, but are not limited to, the following:

  • Super-prime property (defined in the National Risk Assessment 2020 as property within the top 5% of the most valuable in a geographic area or postcode), due to the significant economic value and ability to launder or conceal large sums of money in a few transactions.
  • The number of politically exposed persons (PEPs) involved in super-prime property purchases are disproportionately far higher than in other property deals.
  • Purchasers of super-prime property often want to use complex or offshore legal entities to buy or sell property.
  • Residential property sales are higher risk as there are more properties sold, customer turnover is higher, the property is easier to sell on, and it can be lived in using criminal funds.
  • Commercial property sales may use complex, opaque company structures and are less likely to raise suspicions in the commercial sector than in the residential market.
  • Commercial property may be purchased by criminals as premises for cash intensive businesses involved in money laundering or predicate offences, such as human trafficking.
  • Non-resident customers.
  • Use of third-party identity providers.

 

Further information on risks

More information regarding EAB risks can be found within:

HMRC’s “Understanding risks and taking action: estate agency businesses” document on GOV.UK.

National Risk Assessment 2020.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)