Does The UK Have a Money Laundering Problem…and Can Legal Tech Help?

New research has found that a quarter of UK estate agency branches have failed to register with HMRC for money laundering supervision, according to analysis by the property and legal tech company, Thirdfort.  

Just 16,730 UK branches out of 22,270 across the country have registered with HMRC, the anti-money laundering supervisor for the sector. So, some 5,540 branches, or 25%, have yet to register, they said.

Money laundering costs the UK more than £100bn annually and has been highlighted as a growing risk in residential and commercial property off the back of the Pandora Papers leak. A joint report from HM Treasury and the Home Office in 2020 assessed the risk of money laundering in the estate agency market as medium, up from low, they added.

Common failings included a ‘lack of bespoke policies, controls and procedures aligned with an appropriate risk assessment of each firm’s clients’.

Olly Thornton-Berry, co-founder and Managing Director of Thirdfort, said: ‘Money laundering is a serious and growing risk in the property sector and HMRC is hot on the heels of those agents that fall foul of their regulatory obligations. 

‘The failure to tackle money laundering has significant implications. Not only does it support criminal activity, but it leaves agents open to reputational damage, fines and even bans.’

At this point the company naturally pointed out that their tech can help.

Thirdfort combines Open Banking, data analytics, and the latest in biometric and cryptographic verification to meet AML obligations and automate ID checks. It is the only company to combine an ID and source of funds checks to offer AML for estate agents, they said.  

The app also enables real-time checks of all major Know Your Client (KYC) databases, including ongoing Politically Exposed Persons (PEPs) and sanctions monitoring.  

And regardless of the tech solutions, this remains a really big issue……if you care about criminality becoming completely normalised on our streets, that is…..

P.S. by strange coincidence, Mishcon de Reya, the law firm where Thirdfort was a member of its first tech incubator cohort some years ago, was hit this month by a £232,500 fine after an investigation by the Solicitors Regulation Authority into the ‘breaching [of] money-laundering rules‘.

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