Estate agents need to take urgent action to ensure they are fulfilling their anti-money laundering obligations, as new research suggested that residential property deals set off more red flags in the legal sector than any other activity.

That’s the warning from anti-money laundering specialist Fortytwo Data, which said it had found that suspicious home transactions flagged to the National Crime Agency surged 66% in two years.

It also claimed that nearly a third of all anti-money laundering (AML) reports across the entire legal sector related to residential conveyancing.

Fortytwo Data found that of the 506 AML reports in the legal profession between 2014 to 2017, residential house purchases accounted for 158 red flags.

Around two thirds of cases of wrongdoing are serious enough to be referred to Solicitors Disciplinary Tribunal, the Solicitors Regulation Authority (SRA) revealed.

Last month, the SRA launched a new Flag It Up campaign aimed at lawyers.

To put the figures into context, Land Registry figures suggest there were just over 850,000 residential transactions in 2017 alone.

That total was 14.6% down on 2016 when there were 996,650 residential transactions.

As such, the number of transactions flagged between 2014 and 2017 represent a tiny proportion of residential transactions overall.

Nonetheless, BBC crime drama McMafia, which reached its finale at the weekend, has focused attention on the way organised criminals launder their cash.

Journalist Misha Glenny, whose book McMafia inspired the series starring James Norton, said he believes London has become a “centre of laundering filthy lucre” as “unsavoury characters” from around the world buy up property.

Julian Dixon, CEO of Fortytwo Data, said: “Urgent action is needed to ensure estate agents and solicitors fulfil their anti-money laundering obligations.

“If someone is buying expensive property but doesn’t have an obvious source of income, concerns should be raised.

“Greater awareness is vital. The Solicitors Regulation Authority is heading in the right direction.

“Estate agents should identify the risk posed by individuals. But a survey of 100 estate agents found nearly a quarter didn’t have an AML officer or processes in place.

“The interesting question is, why are concerns not being raised earlier by estate agents?

“Answering this will give important insights into how money launderers are evading detection altogether and what can be done to strengthen reporting so fewer criminals slip through both nets.”

Nearly three years ago, a Channel 4 programme called From Russia With Cash, alleged that top estate agents in London were turning a blind eye to apparent money laundering by corrupt foreign buyers.

The programme featured two undercover reporters posing as an unscrupulous Russian government official called Boris and his mistress Nastya, for whom he wanted to buy a property.

The programme claimed to show that agents were made aware they were dealing with dirty money but agreed to a potential deal anyway, instead of alerting the authorities.