HMRC has conducted fewer than 55 investigations against estate agents for breaches of the UK’s money laundering regulations in the past six years, according to information gathered by law firm Fieldfisher using freedom of information legislation. This is despite the fact that estate agents have been singled out by the security minister Ben Wallace as a “weak link” in the UK’s anti-money laundering defences.
“We have a huge problem, particularly in London with property,” explains Kyle Phillips of Fieldfisher. Until recently, UK legislation allowed people to buy property in the name of a company, rather than an individual. “If you’ve got money in whatever country – China, Russia or Saudi Arabia, for example – and you want to make that money legitimate, you buy that property in the UK in the name of the company,” said Phillips.
That can turn illicit money into clean money through the value of the property and selling it on, or earning money through rent on the property. “It’s an easy way for them to launder money,” says Phillips. “They’ve put it through the UK property system, and all of a sudden it’s clean. It’s all good and well having the laws in place, but if they’re not being implemented properly, there’s no point.”
In response to Fieldfisher’s request, HMRC said: “As well as criminal investigations, HMRC also carries out interventions on its supervised businesses to ensure they are complying with the money laundering regulations.” HMRC added that they had completed more than 5,000 interventions in the past three years, and that the value of penalties in the past two years had increased from £558,000 to £2.3 million.
HMRC oversees estate agents as well as six other industries, monitoring 27,000 businesses in all.