How do you help ensure AML compliance in property transactions? The latest blog from our Anti-Money Laundering and Know Your Client expert looks at Transparency International's recent report on corrupt capital and UK property.
The political and legal assault on corruption follows a number of scandals and misbehaviour in much of Europe, and is a consequence of a society that is losing its patience. Some jurisdictions are a long way from being on track, even if they are well recognised as being among the world's top financial arenas.
In March 2015 Transparency International, a leading non-governmental anti-corruption organisation, published a quite impressive report on how corrupt capital is used to buy property in the UK.
It sounds stunning but it is true; the data shows that UK property can provide a secure investment, but there is evidence that it has also become a safe haven for corrupt capital.
Surprisingly still now in the UK, property can be acquired anonymously through companies registered in "secrecy" jurisdictions and anti-money laundering checks can be bypassed.
Currently, real estate agents in the UK are compelled to carry out due diligence on only one side of a property transaction, the seller, stymieing the effectiveness of AML in the property sector.
Transparency International's research shows that there are 40,725 properties registered to overseas companies in London, including both residential and commercial properties. Even more unexpectedly, cash payments are not uncommon in the property market and again AML checks may be bypassed.
To address wider money laundering risks associated with anonymous companies in the UK, the government has recently set out legislation to require a public register of the true owners of UK-registered companies. Although this is a step forward, no British Overseas Territory has yet accepted the Prime Minister's call for public transparency of who owns companies.
The mentioned report contains a series of recommendations in order to strengthen the safeguards in the UK against the risk of being involved in money laundering acts.
The risk of being involved in money laundering cases is high and the reputation risk is something to be guarded with considerable great attention. Of course, having the support of an experienced and professional service provider can help to ensure compliance.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
