Anti-money laundering expert calls for developers’ loophole to be closed

A company that runs an anti-money laundering verification platform has called for all property sales to be brought under the law.

EYE exclusively revealed on Monday a loophole by which developers selling their own new homes do not have to be registered for anti-money laundering purposes.

Estate agents selling those same properties must be registered by law with the supervisor HMRC.

Developers are however regarded as peer to peer or private sellers, and do not have to check the identity of the buyer for AML purposes.

Now AML specialist SmartSearch, which works with thousands of estate agents to ensure their compliance, has said the anomaly could be “opening the gates” for criminals.

Managing director Martin Cheek said: “Whilst developers may not meet the definition of an estate agent under S.1 of the Estate Agency Act 1979, they are still without doubt selling property on a commercial basis.

“They should, therefore, be following the money laundering regulations.

“By not requiring developers to be AML registered, we are opening the gates for money launderers.

“The UK property sector is already one of the biggest targets for money launderers. Loopholes like this make it even more vulnerable.”

He said the issue is not just about developers, but about individuals and any business that owns property and sells it.

Cheek said: “Individual sales are another way money launderers can exploit the system.

“For example, a foreign company owns a multi-million-pound house in Knightsbridge. It looks legitimate, but the company is ultimately owned by a corrupt politician.

“Under current rules, that corrupt individual can just sell the company as a whole, to another corrupt individual. In this situation, no Know Your Customer (KYC) checks are undertaken, and as far as the law is concerned, the transaction is perfectly fine.”

Cheek called for the law to change to ensure that any businesses vulnerable to money laundering – such as property developers – comes under the regulations.

He said: “If we do not bring all property sales into the regulations, we are giving criminals an easy ride.

“Conducting AML checks does not need to be cumbersome. Electronic platforms are reliable and secure, and can perform AML checks in a matter of seconds.

“The technology to catch the launderers is out there, but if businesses are not obliged to undertake AML checks, they won’t.”

Developers selling homes do not have to register for AML but estate agents do – taxman clarifies

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2 Comments

  1. htsnom79

    Whilst developers may not meet the definition of an estate agent under S.1 of the Estate Agency Act 1979, they are still without doubt selling property on a commercial basis.

    Give me strength, this content is just gash

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  2. RedRebel

    Just might mean that developers need an AML service then if this law changes! What about FSBO, do we need to bring the public into this as well

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